As HR experts we’ve created and updated dozens of employee handbooks for small businesses. And in doing so, one thing has become apparent to us: Every company should have an employee handbook.
And we’ll fill you in on a little secret. A great handbook only needs a handful of well-written policies to be effective. We think that when it comes to those absolutely necessary, well-written policies the magic number is ten.
However, when it comes to employee handbooks small companies fall into two common traps.
They either overcomplicate their handbook by including unnecessary information and legal jargon; or they go the opposite route and have no handbook at all.
If you fall into either of these groups, or if you just want your handbook to keep pace with new trends, then read on.
Here are the ten policies you must have in your employee handbook:
1. Disclaimer Language
A handbook’s disclaimer sets the rules for the handbook. Here you’ll disclaim that the handbook is informational in nature, that it does not create an employment contract, and that it does not alter any at-will relationship, and that questions should be directed to management. The disclaimer may be on the very first page of the handbook or it could be on an acknowledgement form that employees sign.
2. Employment at Will Policy
The idea of at will employment is that either the company or the employee can terminate employment at any time for any lawful reason. There are exceptions to at will employment that vary by state. For example, Montana allows for at will employment only during an employee’s probationary period, and after that an employee can only be terminated for “valid cause”. South Carolina requires companies post specific (and conspicuous) at will language on the first page of the company handbook – and employees must “sign off” on this language.
3. Equal Employment Opportunity Policy
While most small businesses satisfy EEO notice requirements via the notices and posters they distribute to employees upon hire, many companies also include an EEO policy in their handbook. While small businesses usually (hopefully?) do not intend to engage in unlawful discrimination, that doesn’t prevent unintentional discrimination or claims of discrimination. When it comes to deciding whether to include a policy like this in your handbook, remember that an ounce of prevention is worth a pound of cure. Companies should put a good EEO policy in place and adhere to the policy in practice.
4. Time Off Policy
As companies grow, the compliance and administrative requirements related to employee time off increases. Mandatory federal and state leave is separate from any time off that the company might provide to employees as a benefit. When crafting a time off policy, take time to think through the mechanics of how employees will take time off, and then turn that into your policy. For example, noting when time off accrues, whether leave can be rolled over, how time off can be used, what it can be used for, whether leave will be paid out upon termination, and what sort of notice is required are just some of the components of a written time off policy.
5. Benefits Policies and Procedures
We like to see very basic benefits information included in an employee handbook. This includes disclaimers around the company’s ability to change or modify benefits and possibly some information related to eligibility and/or the company’s benefits philosophy. However, we recommend against including benefits plan specifics in an employee handbook. Instead, this information can be included in a ‘benefits summary’ or ‘plan document’, as these documents are updated more regularly and can be reviewed for accuracy by insurance carriers and brokers.
6. Acceptable Computer/Software/Platform Usage
Another common issue we run into is employees who are violating acceptable use policies. This could include employees using work equipment for personal use, work software for personal use, or company platforms (e.g. social media) for purposes that the company did not intend. By putting this type of policy into place a company has greater control over disciplining an employee for violating the policy and fixing any problems that may have occurred. Two similar policies are those that tackle Social Media and (No) Expectation of Privacy.
7. Employment Classification Policy
This is another policy that can save business leaders from unnecessary headaches that may come from inquiring government agencies or confused employees. In this policy you’ll detail how your company classifies part-time versus full-time employees. You’ll also detail how you classify exempt vs. non-exempt employees. This policy can even include classification language related to interns, temporary employees, and/or seasonal employees (assuming you have them). You should never be issuing your employee handbook to any of your independent contractors.
8. Harassment and Discrimination Policies
A comprehensive Harassment and Discrimination Policy should be included in every employee handbook. This type of policy serves multiple functions. First, it defines what harassment and discrimination is. Next, it provides instructions for reporting harassment and discrimination. And finally, it addresses how the company will attempt to prevent or correct harassment and discrimination situations when notified of them. When this policy is included in a handbook it contributes to the affirmative defense that can protect companies from the liability associated with workplace harassment and discrimination.
9. Workplace Safety Policy
Your employees should be safe from illness and injury that they may experience on the job. It used to be that office place illness or injury primarily resulted from repetitive motion injuries, mechanical/equipment injuries, and slip and falls. More recently, workplace safety has expanded to include protecting employees from illnesses like COVID-19, physical harm from other employees, and emotional distress. While it’s impossible to protect employees against every known risk, it is important for companies to develop broad safety policies that allow for a quick and effective response.
10. Payroll Policy
The idea of payroll sounds easy: Pay people what they’re owed when they’re owed it. But administering payroll can be complex. Especially when you factor in federal and state government rolling out new laws, taxes, and procedural requirements. While you should always have standard payroll procedures for payroll, having a payroll policy is just as important. This policy should note when paydays are, it can encourage employees to review their paystubs, it can require notification of a relocation, and it can detail timesheet procedures.
BONUS: Employee Discipline/Corrective Action Policy
We recommend that small businesses include a flexible discipline policy in their employee handbook. This policy should list the specific behaviors or actions that violate the policy, and note that those behaviors or actions are subject to discipline up to and including termination. This gives the company the opportunity to investigate policy violations and then respond accordingly. It also helps employees understand what will and will not be tolerated.
These ten policies are a great starting point for small businesses. A strong employee handbook, along with a comprehensive offer letter, detailed job description(s), effective management, and clear company communications can separate the good companies from the great ones. Still not sure if your company needs an employee handbook? Contact us at firstname.lastname@example.org or on our contact page.