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The Small Business Guide to Employee Handbooks

Dennis O’Keefe
Dennis O’Keefe

An employee handbook, or staff manual, outlines your company's policies, procedures and behavioral expectations that direct your team's actions.

An employee handbook, or staff manual, outlines your company's policies, procedures and behavioral expectations that direct your team's actions.  That's not all, though. 

  • Writing an employee handbook when you hire your first worker allows you to address potential problems and conflicts before they arise and ensures everyone on your team starts with the same information. 

  • Your staff manual tells your employees what you expect from them, what they can expect from you, and serves as a valuable reference they can use throughout their tenure with your company. 

  • Your handbook helps you explain your company's unique needs and procedures while also helping you comply with federal and state laws. 

  • Making your manual easy to navigate, understand and access can empower your employees to find their own answers to their questions.  

Why do you need an employee handbook? 

Creating a handbook after hiring your first worker helps ensure each future team member starts with the same information. There are several reasons you should consider writing a staff manual for your small business. 

1. Introduce your company culture to new hires.

New hires typically receive a handbook on or before their first day because it introduces a company and how it works. It often includes the business's story, mission statement, goals and values, so the newest team members start to connect with the company culture immediately. 

The manual will also serve as a valuable reference throughout the employee's tenure because they can find out what sets your business apart. 

2. Communicate what you expect from employees.

Your staff manual can provide your team with a clear understanding of their individual responsibilities as well as the company rules and policies. Workers learn guidelines about things like timekeeping and safety and know the consequences of their actions – whether that entails termination for breaking the rules or being promoted for exceeding expectations. 

3. Share what employees can expect from you.

Your handbook should not only tell your staff what you expect from them, but it covers what they can expect from you. Explain things like how often you'll pay your team and how you'll handle things like harassment and discrimination claims. This reassures team members that you strive to provide a positive, productive and safe workplace free from prejudice or harmful conduct. It also shows that your company tries to comply with federal and state labor laws

4. Create a fair environment.

Because your manual spells out expected behavior and lays out the consequences of improper conduct, your workers will know that everyone on your staff will receive similar treatment for similar actions. This can protect you from claims of favoritism and discrimination. 

5. Protect your company against employee claims.

If you ever do face a lawsuit from a current or former worker, you can share a copy of your handbook with your attorney or investigator. It will show that you practiced "reasonable care" toward your staff and that the current or former employee signed an acknowledgment that they read the manual, understood the included policies and had the opportunity to ask questions.  

6. Empower your employees.

Your handbook serves as a quick reference to your team, so they don't have to ask you every time they have a question. Your staff will know how to report workplace violations or ask for work-related assistance.  

What's included in an employee handbook? 

Every small business is different and has unique needs to address in its staff manual. But there are common elements many handbooks contain. These include:

  1. The introduction – Besides explaining the purpose of the handbook and stating that you have the right to change any policies and procedures at your discretion, the introduction can share your history, the company's mission statement and vision. 

  1. An at-will employment statement – Ensure your team understands that the staff manual is not a contract and does not guarantee employment. 

  1. Anti-harassment and anti-discrimination policies – The Equal Employment Opportunity Commission (EEOC) and Americans with Disabilities Act prohibit harassment and discrimination. Tell your staff how to report any violations and how you'll respond to complaints. This will decrease the need for your workers to turn to the EEOC or Department of Labor, which could trigger third-party investigations. 

  1. A non-disclosure agreement – Protect your trade secrets by clearly stating what can and cannot be shared outside the company. 

  1. A conflict of interest statement – Prohibit employees from having direct interests in businesses that compete with yours, sell to you or buy from you.  

  1. Pay information – Tell your team when you'll pay them and your legal obligations concerning overtime pay and tax withholdings. You may also share how raises and bonuses are determined and info about separation pay. 

  1. Benefits – Include info about all benefits offered, including who's eligible and how they can sign up. 

  1. Time and attendance policies– Make sure employees know when they're expected to work. You should also explain how to report time worked and unexpected absences.

  1. Time off policies– For each paid and unpaid time-off policy offered, include how much time off everyone receives, how to request time off and how you'll handle requests. 

  1. Holidays – You're not typically required to pay your team for office closures due to holidays, so prevent confusion by specifying paid and unpaid holidays. 

  1. Employee conduct – Include your code of conduct, dress code and disciplinary procedures.  

  1. Employment classifications – Define full-time, part-time, and temporary workers and exempt versus nonexempt staff when it comes to overtime. 

  1. Access to one's personnel file – Explain what's in each person's personnel file and how employees can access their file. 

  1. Safety and security – Explain how you're complying with Occupational Safety and Health Administration regulations to create a safe and healthy workplace. Share your emergency procedures, where to find your first-aid kits and fire extinguishers, and how to report injuries and accidents. 

  1. Computer and internet usage policies– Discuss appropriate use of company-owned computers and the internet during working hours, including how to secure information, particularly consumer data. 

  1. Drug and alcohol use policy – Tell workers that alcohol and drug use is not permitted on the premises and explain consequences for violations. 

  1. Smoking policy – If you allow smoking, explain where it's permitted. 

  1. Acknowledgments – Have personnel sign a statement that they read and understood the handbook. You may also have specific acknowledgments for your computer and internet usage policies and drug and alcohol use policies. 

5 tips for writing your first employee handbook 

Once you've decided that you need a staff manual and have an idea of what you'd like to include, it's time to write it. Here are five tips to make the process easier. 

1. Look at examples.

Writing a handbook can be difficult, but you don't have to reinvent the wheel. Instead, look at other companies like ValveNetflixTrello and Zappos for ideas. 

2. Make it easy to navigate.

Before writing your staff manual, create an outline to ensure you include everything that is critical. Then, use a table of contents, subheadings and bullet points to help answer questions quickly.  

You may even have a frequently asked questions section and answer things like: 

  • How long is my lunch break? 
  • Can I have my cell phone out at work? 
  • When is the schedule posted?
  • How do I request a shift change?
  • How do I ask for time off?
  • What is the dress code?
  • How do I report tips? 

3. Keep it simple.

Make sure your team can understand your policies by avoiding long, complicated words and technical jargon. Instead, use clear and concise language. 

4. Ask an attorney to review it.

After writing your handbook, ask an attorney who is an expert in employment law to review it and ensure that you're following all federal and state governments.  

5. Make it accessible.

Don't expect your employees to keep up with their original copy. Instead, use an online document sharing platform, so your staff always has the most up-to-date copy and can access it easily. 

Image Credit: fizkes / Getty Images
Dennis O’Keefe
Dennis O’Keefe Member
Dennis O’Keefe is the Product Director for Workful, a new cloud-based human resources and payroll employee management suite made for small businesses. Dennis has a rich history in the payroll, banking and small business management space, with a specific passion for helping small business owners streamline financial and record keeping processes so they can get back to what they’d rather be doing, growing their business.