Creating an Employee Handbook for Your Business

An employee handbook is a useful tool to communicate with employees, lay out expectations, and provide them with resources. It can also help protect your business from lawsuits and other claims that could result from miscommunication.

No matter how many employees you have or what industry you work in, an employee handbook is an essential resource to cultivate a transparent and efficient workplace.

However, the process can seem daunting at the outset, and creating such a detailed document can be an overwhelming process. Below, you’ll find ideas on what should be included in an employee handbook, how an employment lawyer can help, and a few tips to help get the process started.

Why you need an employee handbook

An employee handbook has many jobs, but its primary purpose is to promote clarity about the standard operating procedures of an organization. It also demonstrates the company's desire for good relations with its employees and provides a resource for employees to quickly get answers if questions arise.

Here’s what an employee handbook can do for your company:

• Provides clear communication to employees about company policies, expectations, and procedures
• Clearly outlines disciplinary procedures for company policies are broken
• Reduces legal risk by communicating about and ensuring compliance with employment laws and regulations
• Ensures consistent application of policy across an organization, which is crucial for fair treatment
• Provides a clear and consistent framework for handling any disputes or disciplinary actions and resolves any ambiguity about the process
• Communicates and reinforces company values and operational philosophy, which can help shape and maintain company’s culture
• Serves as a warm welcome to new employees and provides an opportunity to learn about your company through the story of your company’s history, a statement of core values, or a vision for the future

When it comes to the employer-employee relationship, clarity is key. When done correctly, an employee handbook can be a go-to resource for your employees when they have questions or concerns.

What’s included in an employee handbook

A well-written employee handbook can facilitate communication between employers and employees by ensuring that necessary information is laid out in a comprehensive and consistent manner.

An employee handbook should offer new hires all the information they need to understand what working at your company will be like, what benefits they will receive from the company, what expectations they must meet, and what policies to abide by while working at your company. It can also describe workflows, standard operating procedures, or best practices.

An employee handbook should outline the following:

• The company’s mission and vision
• Employment basics, such as confidentiality agreements and equal opportunity employer statements
• Workplace policies
• Compensation and development packages
• Benefits and leave policies
• Code of conduct
• Disciplinary actions
• Employee’s acknowledgment of receipt

This comprehensive collection is an essential resource for new hires. A new employee should receive the handbook along with all other legal documents on their first day of work and it should be easily accessible for all employees to reference when needed.

Company welcome and mission

While an employee handbook is a formal document that should address a few specific topics, it should also be personalized to fit your company and brand.

To open the handbook, you can include a welcome message, a summary of your company's values and mission, and a vision statement. As one of your first touchpoints with new employees, your handbook sets the tone for their time working with you.

Employment basics

The section on basic employment policies will be more formal and provide details on the terms of their contract and job classification.

You might include any (or all) of these:

• Legal employment terms
• Contract types (e.g., full-time, part-time, interns, independent contractors)
• Confidentiality agreements
• Rules on attendance
• Employee rights
• Performance reviews

This is also a great place to include  legal disclosures (such as an Equal Employment Opportunity Commission statement) and mandatory notices about workplace rights.

Workplace policies

In the section on workplace policies, you should include any policies about what the company expects of employees while working at your company. 

This might include a variety of cultural or legally protective topics: 

• Employee etiquette
• Security 
• Data protection
• Safety regulations
• Emergency procedures
• Drug-free workplace
• Anti-harassment

Compensation

This section will lay out how your employees can expect to be paid and when.

• Expected salary ranges
• Working hours
• Invoice procedures for independent contractors
• Pay schedule
• How payment is delivered
• Overtime exempt or non-exempt status
• Promotion guidelines
• Performance evaluation metrics

Benefits and leave policies

In addition to salary compensation, many employers offer additional benefits to employees. After the compensation section, the benefits and leave policy section is one of the most important to employees.

As benefits packages get more diverse and adapt to the shifting cultural and technological climate, it’s important to make sure employees understand all of the benefits they have access to. This ensures that employees have a reference point to understand their benefits and utilize them appropriately.

Here are some of the most important points:

• Leave policies, such as public holidays, vacation time, paid time off, unpaid time off, sick leave, and special leaves (such as parental, mental health, bereavement, or family care)
• Time off for jury duty and voting
• Professional development benefits for career growth
• Health insurance, including any health-related benefits employees might have access to through the company (such as stress management counseling, smoking cessation programs, or wellness workshops)
• Retirement plans
• Worker’s compensation laws and information
• Expenses and reimbursements
• Company car or mileage reimbursement agreements
• Remote or hybrid policies
• Technology stipends
• Equipment agreement
• Any additional benefits, such as: gym membership, time off for volunteer work, company retreats, offered discounts, parking arrangements

Code of conduct

This section of the handbook provides your employees with a framework for expected employee behavior at the workplace and during work hours.

Your code of conduct should be very clear on these topics:

• Workplace etiquette and treatment of others
• Communications policy
• Dress code
• Internet use policy
• Work-from-home or hybrid expectations
• Workplace relationships
• Conflict of interest
• Employment of relatives
• Workplace visitors (including children)

Disciplinary actions

This section includes your policies on what happens if one of the stated rules is broken or disregarded. This section is important for ensuring equality and avoiding unfair treatment claims.

• Grounds for disciplinary action (or termination)
• Disciplinary steps and categories
• Performance improvement plans
• Steps for making complaints about co-workers or managers

Acknowledgement of receipt

One of the most important sections of your employee handbook is the acknowledgment of receipt. This acknowledgement serves as a formal agreement between the company and the employee.

Each employee should sign a form acknowledging that they have received and understand the employee handbook. This form should be securely stored for the duration of the employee's time at your workplace and for a period of time afterward.

Other ideas to include

Employee handbooks vary in length, design, and detail. Beyond the ideas above, there are a few essential legal points to emphasize:

• The employee handbook does not constitute an employment contract
• Employment is "at-will," and that either the employer or the employee may terminate the employment at any time, with or without notice or reason
• Your company is an equal opportunity employer and has a policy against unlawful discrimination and harassment in the workplace
• The terms of any employment contract or specific benefit plan document will take precedence in the event of any discrepancy with the handbook
• Changes may be made to the handbook at any time

While employee handbooks are particularly important for new hires, even seasoned employees can benefit from a handbook as a single reference point to dispel any disagreements or inconsistencies.

Key legal considerations

One of the most important parts of running a business with employees is being aware of your legal requirements as an employer. For example, you will need to comply with laws regarding tax withholding, worker's compensation, unemployment compensation, minimum wage, overtime pay, nondiscrimination, sexual harassment, and accommodations for disabilities. State or federal law also may require that employees be given leave for such events as jury duty, court appearances, voting, or military service.

There are numerous federal and state laws that may affect the employer-employee relationship. Their relevance to your company may depend upon such factors as the nature of your business activities or the number of employees you have. For example, the federal Family and Medical Leave Act (FMLA) applies to companies with at least 50 employees.

Some laws may require that legal notices be placed in conspicuous places in the workplace, in which case it is not necessary to duplicate the information in the employee handbook. However, you may wish to do so in order to provide your employees with a single place to look for all pertinent information.

In short, there’s a lot of information to wrangle and a lot of laws to keep in mind, so it’s important to stay organized. To ensure that your employee handbook complies with all state and federal laws, you might want to have it drafted or reviewed by an experienced employment attorney. 

5 ways an employment attorney can help

Engaging an employment attorney in the creation or revision of an employee handbook is an investment in your company’s operational stability and legal safety. There are many ways an employment attorney can help ensure that your company policies are legally enforceable and properly communicated.

1. Drafting and revision

A lawyer can help you to draft or revise your employee handbook. An experienced attorney can help to make sure that your policies are clear and use precise language.

While you can find employee handbook examples online, having a lawyer review your existing policies and handbook can minimize future legal risks.

2. Compliance with applicable laws

One of the most important things an experienced employment lawyer can help with is to ensure that your handbook complies with federal, state, and local employment laws. 

3. Implementation guidance

An attorney can also provide you with advice on the proper procedures for introducing the handbook and obtaining acknowledgment of receipt.

4. Risk management

Overall, having an attorney draft or review your employee handbook is about risk management. Employment lawyers can write clear, enforceable language that will hold up in court if your company ever faces a lawsuit or complaint. They can also share strategies to protect your company from legal disputes.

5. Updates and changes

Over time, state and federal employment laws may change. A lawyer can help you handle those updates and ensure that your handbook remains legally enforceable in a shifting legal and cultural climate.

Tips for employers implementing a handbook

If you’re planning to create and implement an employee handbook, here are a few tips to help you get started:

• Make sure all employees receive a copy and sign an acknowledgment form
• The handbook should be easily accessible to all employees
• Digital handbooks make it easier for employees to use and search for what they need
• Handbook acknowledgments should be saved in an employee's personnel file
• Your employee handbook should be regularly updated (at least every two years)
• If you make updates or changes to the employee handbook, those changes should be clearly communicated to employees in a timely manner

FAQs

Who should receive an employee handbook?

Every single employee at your company should receive an employee handbook and sign a document acknowledging that they received it.

Can the employee handbook be used as a legal document?

When phrased properly, certain sections and phrases in an employee handbook can be considered contractually binding. Unless specifically stated, an employee handbook is not considered a legal document and should not be used in place of an employment agreement or contract.

Do small businesses need an employee handbook?

All businesses can benefit from an employee handbook! No matter the size of your operation, a handbook is a way to set clear standards for employees and communicate what you offer as an employer. 

How often should an employee handbook be updated?

There is no set time frame for updating your employee handbook but it’s best practice to review and update it at least every two years.

How do I develop a proper employee handbook?

There is no one-size-fits-all solution to a perfect employee handbook. You can find an employee handbook template online, but it’s a good idea to have it reviewed or drafted by an employment attorney who can advise you on your unique situation.