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Do You Need an Employee Handbook?

Skye Schooley
Skye Schooley

Learn what an employee handbook is and why your company needs one.

  • An employee handbook outlines your company's policies, procedures and expectations.
  • Although an employee handbook is not legally required, every business should have one because, in certain instances, it can reduce liability.
  • Every employee should have an updated copy of your employee handbook that clearly lists company policies and your complaint procedure. 

A good employee handbook provides your team with company guidelines, policies, procedures and employee expectations. Employee handbooks are not legally necessary, but every business should have one to mitigate legal ramifications. Consult with a labor and employment lawyer to create an employee handbook that is legally compliant and tailored to your company.  

"When implemented and enforced effectively and consistently, the corporate policies contained in a company's employee handbook help demonstrate that a company is operating ethically and proactively for the benefit and safety of its employees, its shareholders, and the public," said Starr Harry, client advocate and HR advisor at G&A Partners

What is an employee handbook?

An employee handbook, not to be confused with a policy manual, is a guide for employees to reference company information, policies, procedures and expectations. Although it is especially useful for onboarding new employees, the handbook should always be accessible to every employee. 

According to Keven Steinberg, labor and employment lawyer at Steinberg Law, a company employee handbook not only provides clear information for employees to reference, it also acts to minimize and deter potential legal liability.  

"The handbook should set forth a protocol of zero tolerance, and outline a complaint procedure where all employees feel comfortable lodging complaints, if necessary, and freely and voluntarily participating in independent privileged investigations," said Steinberg. 

A company handbook should list clear guidelines that are consistently enforced to ensure that your company remains legally compliant with rules and regulations. It's also designed to act as a supportive document if you find yourself in legal trouble. 

"While a company's policies are by no means a guarantee that a regulatory agency will never file suit against the company or that a disgruntled former employee will never file a wrongful termination claim, they do provide a layer of protection in the event that something does happen," said Harry. 

Why do you need an employee handbook?

There are no state or federal laws that specifically require you to have an employee handbook, and in fact, many startups and small businesses choose not to have one. However, there are laws regarding certain workplace information that you must inform your employees about, and creating an employee handbook is a good way of ensuring that you cover all pertinent information. 

Experts recommend every business create an employee handbook, even if they only have one employee. Steinberg said an up-to-date employee handbook can help employers navigate numerous legal minefields.  

"With well-set-out policies for work periods, meal and rest breaks, overtime, anti-discrimination, anti-harassment, and confidentiality, just to name a few, the business and employer will not only be setting an example of best practices but also setting up a structure to help insulate it from legal liability, as long as the business, employer and employees follow the policies and procedures," said Steinberg. 

In addition to legal protection, an employee handbook is a great way to outline your company culture and get everybody on the same page. When employees have a clear idea of what is expected from them, there is a lower likelihood of problems developing that could have otherwise been avoided. 

What should be included in an employee handbook?

An employee handbook is typically 10 to 20 pages long; it outlines basic information, including expectations for employees and company policies and procedures. It should be detailed enough that your employees understand what is expected of them but not so lengthy that they are too overwhelmed to read it. You can use an employee handbook template to start your handbook, but you should customize it to fit your organization. 

The level of detail will depend on your company, but in general, your employee handbook should cover the following topics: 

  • Company culture: The company's history, vision, mission statement, etc.

  • Company policies: Code of conduct, employment contract, terms of employment, hours, dress code, harassment and discrimination, disciplinary action, rights, resignation, termination, etc.

  • Employee benefits: Paid time off, sick leave, compensation, holidays, workers' compensation, professional development, etc. 

Since your employee handbook should be tailored to address the needs of your business, consult with a lawyer when writing your employee handbook. Choose a lawyer who is familiar with your industry as well as labor and employment law. Your employee handbook is a living document and should be updated regularly.   

"Due to constantly changing and evolving labor and employment laws, it is critical that a labor and employment lawyer (not a general practitioner) review your handbook at least once a year and preferably twice a year," said Steinberg. "It is also important for the labor and employment lawyer to review the handbook for language, conflicting or confusing language, or possible legal issues, and to revise it as needed and regularly." 

Should all employees get a copy of the handbook?

Yes, everyone in your organization should get a copy of your employee handbook. Ideally, your company's employee handbook is broad enough to be applicable to every employee, regardless of the job description. Everyone needs to have access to your employee handbook, including new hires, long-term employees, part-time workers, full-time personnel, entry-level staff, upper management, internal members, outside salespeople and everyone in between. 

By providing each member of your organization with a copy of your employee handbook, you can ensure that everyone has access to the same policies and guidelines. However, simply having an employee handbook is not enough. "Make sure all current employees know about the handbook and that it is available to them, and … make sure the employee signs a confirmation that they have read, reviewed, and understand all policies and procedures," said Steinberg. 

You can keep a copy of this verification in each employee's personnel file and update it every time you update your handbook. Additionally, as an employer, you must fully understand and comply with the employee handbook as well.   

"It is critical that the employer comply precisely with their own handbook, and take the appropriate and published action, if necessary," Steinberg said. "If an employer fails to follow its own rules or the handbook, it can be legally catastrophic."  

How does having an employee handbook help your small business? 

One significant advantage of having a handbook is that it can help ensure your business is legally compliant with operational procedures. If you clearly outline your company's policies and procedures, and consistently enforce them, you are less likely to run into legal liabilities down the line.  

Having an employee handbook not only helps you, the employer, it also helps your team. Harry said it is a supportive document for your employees to refer to in order to avoid conflict. 

"By clearly defining expectations for employee conduct, the employee handbook can offer the fallback an employee might need if a customer, co-worker or vendor pressures them to push the envelope," said Harry. "Few would argue with an employee who says, 'I wish I could do that for you, but if I go against the company's policy, I could lose my job.'" 

Employees want to be treated fairly. Outlining a guideline that is applicable to all employees demonstrates that you hold everyone to the same standard, which helps build a positive employee outlook and overall company culture. 

"Having the same rules for all employees makes running the business easier," said Steinberg. "Written policies show employees that your business wants to be fair. That intent goes a long way toward good morale, in general, and in dealing with individual employees who are discontented."

Skye Schooley
Skye Schooley,
business.com Writer
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Skye Schooley is an Arizona native, based in New York City. She received a business communication degree from Arizona State University and spent a few years traveling internationally, before finally settling down in the greater New York City area. She currently writes for business.com and Business News Daily, primarily contributing articles about business technology and the workplace, and reviewing categories such as remote PC access software, collection agencies, background check services, web hosting, reputation management services, cloud storage, and website design software and services.