I’m Quoted in CoBanker’s “How To Create an Employee Handbook”

An employee handbook compiles company policies, guidelines, expectations, procedures, and pertinent information in one living document that serves as a reference for employees. It is essential for consistent and fair practices, compliance with laws, transparent communication, supporting managers, and educating employees. Employers should strive to have a digital version of the employee handbook as well as printed copies for employees who may not have regular digital access.   

While an employee handbook is not legally required, it is recommended for all businesses, including startups and small businesses. Generally, an employee handbook is not a legally binding contract. However, an employee handbook can become legally binding if the wrong language is used or if disclaimers or acknowledgments are missing. When employers need legally binding agreements with employees, they should use separate written agreements and not include it the handbook. 

Here is what employers need to know to create a well-structured and effective employee handbook that provides clarity and guidance for employees while protecting the company. 

Employee Handbook Sections

The tone of an employee handbook should be professional, conversational, and a reflection of your company culture. New hires will be reading your handbook and forming immediate impressions of your company based on what they read.  

An employee handbook needs a well-organized structure with a table of contents and consistent formatting. When appropriate, explain the reasons behind a policy to help employees understand the purpose. Distribute the employee handbook to new hires as part of your onboarding process and ensure that updated handbooks are easily accessible to all employees. 

For employers that do have an employee handbook, there are federal, state, and local laws that mandate specific written policies that must be included on a variety of topics, including leave, final paychecks, breaks, and compliance with labor laws.

Welcome Statement

Your CEO or founder should write a warm, positive, and exciting welcome statement. Think of the message that you want to send to new employees, how you want to show employee support, and how to briefly incorporate company values. 

This will set the tone for your employee handbook and also convey your company culture. Provide a description of the contents and the purpose of the handbook. Conclude by sharing contact details for any questions.  

Company Information 

Write a document that provides an overview of your company. Explain your company’s mission, purpose, vision, goals, core values, culture, and history. Keep the history to a summary of key points, not an essay. Engagingly present the information using graphics and lists. 

Employment Policies

The following policies should be included in your handbook:

• Code of conduct: The rulebook that contains your behavioral standards is referred to as a code of conduct. The following policies may be part of the code of conduct or listed as separate policies: a dress code, an acceptable use policy that includes a social media policy, and a drug and alcohol policy. Remember to make sure that your dress code uses gender-neutral language. 
• Recordkeeping, confidentiality, and privacy: Explain your recordkeeping practices, confidentiality policy, and how you will protect privacy.
• Time and attendance: A comprehensive policy includes time and attendance software, shift scheduling, time and leave tracking, standard work hours, overtime hours, breaks, meals, absences, tardiness, flexible work options, holidays, inclement weather, and time theft prevention. 
• Compensation: Provide an overview of how pay is determined, payroll logistics, overtime, employment classification, earned wages access, raises, bonuses, incentives, expenses, and reimbursements.
• Benefits and perks: Give a summary of your benefits and perks, including eligibility. Instead of providing all the details here, direct employees to another location, such as your intranet, to read the complete benefits information. 
• Paid time off policy: Insert your complete PTO policy, which should cover all aspects of how employees accrue, manage, and utilize leave. Specifically address sick leave, bereavement, voting, and military leave in accordance with state laws.
• Family and Medical Leave Act (FMLA): Employers have many legal responsibilities for managing FMLA leave, including notices that must be provided to employees. 
• Accommodations: Explain the process for employees who need reasonable accommodations for disabilities.   
• Performance management: Provide a brief overview of your performance management system, training, promotions, and transfers. Explicitly explain the use of performance improvement plans (PIPs).  
• Offboarding: Incorporate your offboarding process and explain voluntary and involuntary terminations. Share your policy for final paychecks and paying out PTO in accordance with state laws. Mention your commitment to maintain a positive employee experience throughout the entire employee lifecycle.

Policies for Legal and Risk Management  

While an employee handbook is not required, it is extremely helpful for compiling all separate documents into one central location. There are federal, state, and local requirements that certain information be provided to employees in writing and included in the employee handbook for companies that have one. For companies that operate in multiple locations, you may need to include jurisdiction-specific appendices and distribute different versions based on location.

• Safety, security, and emergency procedures: Describe your procedures for protecting employees, clients, and data on a daily basis and during emergencies. This includes how you will prevent workplace violence and injuries. Inform employees about workers’ compensation for any workplace injuries. Explain building security, visitor protocols, parking, and any forms of employee monitoring that are used.  
• Nondiscrimination policies: Include an equal opportunity statement, and follow U.S. Equal Employment Opportunity Commission (EEOC) regulations and guidelines. Add your diversity, equity, and inclusion (DEI) policy.  
• Anti-harassment policy: Ensure that the policy clearly defines harassment, requires employees to report it, and explains the exact procedures for reporting harassment. 
• Reporting grievances and complaints: Every employer should have a procedure for handling employee complaints and reporting grievances.
• Conflict resolution: Outline your conflict resolution policy so workers know how disputes will be handled and resolved in a fair and professional manner.
• Disciplinary action policy: In order to handle disciplinary issues consistently, fairly, and legally, employers need a well-crafted disciplinary action policy. 
• Termination: Explain your commitment to terminating employees professionally and avoiding illegal reasons to fire employees.
• Nonsolicitation policy: Having this policy will help prevent your former workers from poaching your employees or clients. 
• Acknowledgment form: When employees sign to acknowledge that they have received and read the employee handbook, then they are unable to use ignorance as an excuse for not following policies. 

Disclaimers

While including disclaimers is necessary, employers should understand that courts may not accept all of them, especially if other content in the handbook contradicts them. Employers should consult with an employment attorney in their jurisdiction. The following legal disclaimers are often included in an employee handbook:

• The employee handbook is not a contract of employment.
• A statement of at-will employment (except in Montana).
• The employer has the right to modify or deviate from any provision in the handbook at any time.
• This version supersedes previous versions.
• The handbook is intended to cover most situations, not all. It is not designed to address every application or exception. 
• The employer may skip certain steps in a progressive discipline policy.
• Employees should contact HR with any questions.

Employee Handbook Templates 

Employers can create their own employee handbook by using HR software or customizing a free or paid template. Employers may purchase and customize the SHRM Employee Handbook Builder with an annual subscription, which includes updates on federal, state, and city laws. Adobe Express has free, customizable employee handbook templates. 

It is advisable to only use templates as examples or starting points. A template needs to be thoroughly personalized to your business. The handbook must be tailored to the states where you operate, your employees, and your business operations. Overreliance on a template can leave you with a handbook that does not reflect the realities of your daily operations, increasing your company’s exposure to legal risks. Working with an employment attorney to create and update your handbook will help mitigate these risks.

Best Practices Recommended by Experts

We spoke with two seasoned experts to obtain their recommendations on employee handbook best practices: a human resources (HR) expert and an employment attorney. Angela Blum-Finlay, CEO and founder of Windward Human Capital Management LLC, wrote an insightful article about policies versus guidelines and told us how to apply it for an employee handbook.  

“A 60-page handbook that governs every decision a manager makes isn’t really protecting your company. It is telling you that you have a trust issue with your managers and employees,” said  Blum-Finlay. “Reserve true policies for what we know is non-negotiable, like legal compliance, code of conduct, confidentiality, and other policies clearly needed from a legal and risk perspective.”  

Guidelines provide managers with the flexibility to effectively lead. “Everything else, like how you manage flexible work schedules or communication expectations, works better as a guideline that gives managers the expectations and allows them to manage accordingly within the guidelines,” explained Blum-Finlay. “When handbooks get over-engineered, and policies are created to take over leadership judgment, your managers stop leading and start following scripts.”

Charles Krugel, a management-side labor and employment lawyer who regularly writes and reviews employee handbooks and company policies, told us his recommendations:  

• Handbooks should be written in plain English and simply organized. 
• Legalese, jargon and run-on sentences should be avoided. 
• The language used should reflect the company’s culture. 
• More specifically, if the company is trying to create a collegial and open environment, the handbook should be friendly and easy to understand. 
• It should also provide as much detail as necessary to understand the company’s intended message. (Krugel)

“Regarding the use of legalese, verbiage like ‘hereinafter,’ ‘wheretofore,’ and ‘party’ should be avoided because it’s awkward sounding and difficult for non-attorneys to understand,” emphasized Krugel. “However, that doesn’t mean that a handbook shouldn’t contain legal disclaimers like stating that the handbook doesn’t create a contract, and if applicable, employment is at-will. The legal disclaimers are essential because third-party bureaucrats like judges and investigators value those as limiting the rights of both the employer and their employee.” 

Employee Handbook Mistakes To Avoid

Employers must carefully avoid these elements when crafting or updating an employee handbook:

• Legal jargon: Use clear and simple language that will be easy for all employees to understand, not legal jargon. Provide definitions for any term that may be unfamiliar to some employees. 
• Vague or contradictory language: Policies should be consistent and use specific, clear language. Avoid vague wording and contradictions with other policies.  
• Text-heavy: Make the text easy to skim by using headings, graphics, blank spaces, and lists. A text-heavy policy will be difficult for employees to read, understand, and follow. 
• Not customizing the handbook: An employee handbook needs to be specific and customized to your business. Do not use a generic template or copy policies without tailoring it to your needs, industry, workforce, company size, and location. A template should serve only as a starting point or guide.
• Policies that are too broad, rigid, or outdated: Policies should be designed in a manner that facilitates employees being able to easily follow them in most situations. If policies are outdated, rigid, too broad, overly detailed, or not followed, they will result in employee confusion.
• Prohibiting employee discussions of employment terms and conditions: Frantz Ward explains that under Section 7 of the National Labor Relations Act (NLRA), employers cannot prohibit employees from discussing wages or other terms and conditions of employment, including on social media, and should advise employees to include a disclaimer stating that their opinions do not represent the company’s views. 
• Language that accidentally creates a contract: Avoid words such as will, shall, must, promise, guarantee, absolute, permanent, and probationary period. Ensure that you do include a statement of at-will employment and state that the handbook is not an employment contract. 
• Not re-evaluating the handbook: Employers must periodically review their handbooks and update them to reflect changes, company growth, and new laws. The handbook should contain a statement of an employer’s right to make changes at any time. 
• Not having it legally reviewed: Your handbook and any updates should be reviewed by an employment attorney who practices in your state. Companies that fail to have their employee handbooks legally reviewed will increase their risk of legal liability.

While a human resources professional should own the employee handbook, collaboration is necessary with the leadership team and an employment attorney. Managers and employees can provide feedback to help optimize the handbook. Employees need ongoing reminders and training on the content contained in employee handbooks.

An employee handbook should be provided in formats that are easily accessible to all employees. Employers need to review and update their handbooks at least once per year or whenever there are significant changes. When changes are made, clearly communicate what has changed, provide employees with updated copies of the handbook, and get employee acknowledgment signatures.