How to write a small business employee handbook
Employee handbooks are not only an excellent way for small businesses to convey to employees the various company policies and procedures, benefits, and the mission and values of the company, they are helpful in disciplining employees as well.
Why have an employee handbook?
In some cases, having written policies may be required by law, but the employee handbooks also help businesses avoid potential claims of discrimination or unfair treatment among employees. One example of a legal requirement to have a written policy is if your small business is subject to Family and Medical Leave Act (“FLMA”). In that case you must have a written FLMA policy in place.
When should a small business consider drafting an employee handbook?
Employee handbooks are important for companies of all sizes—from one to 100 employees. There is no employee threshold as to when an employee handbook should be written. The employee handbooks should be seen by a business as a useful tool defining the expectations of the company, their management, and employee conduct.
Do I need a lawyer to write my employee handbook?
At the very least, as a small business, you will want to have legal counsel review your employee handbook. Employee handbooks must be tailored to the state and locality where the employee is located. A lawyer will provide your small business with the expertise and guidance on compliance with state employment laws, which can drastically vary from state to state, and the large number of federal employment laws. In addition to state and federal laws, many times there are city or county ordinances that may need to be taken into consideration when drafting your written policies.
At the federal level alone, for example, employers must comply with:
The Family and Medical Leave Act (FMLA);
COBRA;
Equal Employment Opportunity Commission (EEOC) anti-discrimination laws;
The Americans with Disabilities Act (ADA), the Fair Labor Standards Act (FLSA), and
The National Labor Relations Board (NLRB) rulings and guidance.
Is an employee handbook considered an agreement?
No: small businesses should be careful in the language they use, to avoid the employee handbook being considered an agreement. While it is highly recommended that a company have their employees sign a written acknowledgement that the employee has reviewed the handbook, asked questions of management, understands the handbook, and agrees to comply with it, the employee handbook should not be construed as an agreement by the employer.
If the employee handbook is drafted in a way that could be seen as an agreement, it could affect at-will status in at-will employment states. In order to avoid the employee handbook being held out as an agreement, avoid using language that can be construed as obligations on the employees. Don’t use “shall” or “will”. Also, be sure to talk about how the employer has the sole discretion to amend, modify, and delete any provisions within the employee handbook.
If an employee does not want to sign the acknowledgement, it is always a good idea to make a note that the employee refused to sign the acknowledgement. It is also always recommended to have more than one employee in a meeting where the handbook is given to another employee or if you are doing anything that is disciplinary in nature.
Employee handbooks are both a sword and a shield.
It is extremely important that employers understand employee handbooks are only useful to the employers if the employers are following their own policies. If an employer does not follow its own policies and procedures, the employee handbook could actually be used against the employer by the employee.
For instance, in Montana—which is not an at-will employment state—an employee can only be discharged (after a probationary period) for good cause. Good cause is defined based on several factors, but one is the employee’s material or repeated violation of an express provision of the employer’s written policies.
Therefore, in Montana, it is extremely helpful to employers to have express written policies and procedures in order to have the option to terminate employees who violate those policies. However, if the employer materially violated an express provision of its own written personnel policy prior to the discharge. , the termination may be considered a wrongful discharge.
Even in states without this explicit statute, an employer is at risk of liability or at the very least a counterclaim if an employer is not following their own policies and procedures and terminates an employee for a violation of an unwritten policy.
How often should I review employee handbooks?
Employee handbooks should be reviewed by legal counsel every year. Especially given that in the past few years there has been significant changes in federal and various states’ employment laws.
What should I include in my employee handbook?
At-will status (or the probationary period if applicable, like in Montana which is not an at-will employment state)
Background and history of the company
The company’s mission statement and values
Purpose of the handbook
Discretion of company to make changes to any policy or procedure in the employee handbook
An equal employment opportunity statement
Anti-harassment policies
Employee benefits
Drug-testing procedures
Timekeeping
Leave, holidays, jury duty, voting
Wage and attendance
Pregnancy accommodations
Communication and IT policies
Outside employment policies
Confidentiality policy
Vehicle or phone policies
Workplace safety and behavior policies
Grievance policy (depending on the state law)
Acknowledgement (can be online but it is recommended to have a paper copy and include the executed copy in the employee’s personnel file).
Every state will have particular laws on many of the topics listed above. Do not simply take an existing employee handbook from a Google search and assume it will be in compliance with your state’s employment laws.
For instance, you may find a use-it-or-lose-it vacation policy, which would be against the law in both Colorado and Montana. Or you may find a handbook that does not provide paid for sick leave for employees, which is now a requirement for all employers in Colorado, and you would find yourself in violation of the law
Write your employee handbook to comply with laws and set clear expectations
Drafting an employee handbook is an excellent opportunity for a small business to make sure they are in compliance with the various federal and state employment laws. In addition to protecting yourself as an employer, you will also set your employees up for success by laying out your expectations clearly and in a written format for them to review at any time.
Need help writing your small business employee handbook?
While hiring a business lawyer can seem daunting, most employers quickly realize that employment law is complicated and having the peace of mind you are legally protected is worth the upfront costs.
Call KLH Advisors for questions about your employee handbook or to assist you in drafting an employee handbook for the first time.
