Have you ever read an employee handbook and cringed (or didn't bother finishing it)? Unfortunately, those are the two reactions most employers have when they create their first employee handbook. If you have employees or are thinking of hiring, read on to learn when you need to have an employee handbook, what needs to be in it and how often to update it.
Please note: The information in this article is not and nor is it intended to be legal advice. I strongly recommend that you have a labor attorney review your employee handbook before issuing it to any employees.
The Department of Labor administers and enforces over 180 federal laws; the DOL's major laws are summarized here. Some of these laws only apply to businesses of a certain size, but other laws apply when an employer hires their first employee.
The DOL requires employers to inform employees about their rights. Many employers simply post workplace signs thinking that doing so meets the notification purpose, but this isn't the case. For example, employers covered under the Family Medical Leave Act are required to not only display an FMLA poster but also:
"... provide a general notice containing the same information that is in the poster in its employee handbook (or other written material about leave and benefits). If no handbook or written leave materials exist, the employer must distribute this general notice to new employees upon hire. Employers may meet this general notice requirement by either duplicating the general notice language found on the FMLA Poster or by using another format so long as the information provided includes, at a minimum, all the information contained in the FMLA Poster."
How can I notify my employees of their rights?
As an employer, you can simply display the required posters and hope for the best. You can also display posters and provide a copy of the notification poster to each employee during onboarding and hope for the best. If you do provide a copy of the notification poster, make sure you have each employee sign an acknowledgment of receipt.
However, the best practice as an employer is to have an employee handbook that not only notifies employees of their rights but also explains additional employment information including other company practices and policies.
At what point in my company's growth should I have an employee handbook?
You should draft an employee handbook prior to hiring your first employee. If you already have employees, you should draft and distribute your employee handbook as soon as possible.
What should I include in my employee handbook?
Each of the following categories should be included in your employee handbook or distributed separately at the same time that you distribute the handbook. Items distributed separately should also require a signed acknowledgment of receipt from each employee.
1. Most common and most often recommended employee handbook topics.
In general, HR professionals recommend (at a bare minimum) the inclusion of the following topics. I have added non-disclosure and conflict of interest statements and electronic data safety and security policy to this list of the most essential topics for bookkeeping or accounting practices.
- Equal employment, disability, and anti-discrimination policies
- Terms of employment, including the definitions of "at-will", exempt and non-exempt employees (if applicable)
- Compensation (including relevant time, attendance, and overtime policies as well as vacation, sick, and paid or unpaid leave policies)
- Employee benefits
- Workers' compensation policies
- Family Medical Leave Act (if applicable)
- Workplace safety and security policies
- Non-disclosure agreements and conflict of interest statements
- *Electronic Data Safety and Security Policy, including internet usage, use of data systems, social media, virus protection, backup procedures, etc.
- Anti-harassment and anti-discrimination policies, including how to file or report harassment, what the employer will do, and possible outcomes
- Code of conduct and disciplinary policies
- How to file or report other workplace complaints
- Employee acknowledgment of receipt statement and employee signature
*Data security is a critical topic for all accounting professionals because it is mandated by the FTC's Standards for Safeguarding Customer Information. Learn more about building implementing a data security plan and download our free workbook: Data Security Evaluation, Implementation and Documentation.
2. Other topics that may be highly relevant to your business and should also be included.
- Introduction to business and purpose of the handbook
- Office policies, such as inclement weather, personal appearance, smoking policies, recording of telephone calls, use of mobile devices in the office, etc. (as applicable)
- Meals and rest breaks (required if specified by state law, recommended for all others)
- Substance abuse and testing, including language regarding the legal use of marijuana (if applicable)
- Remote and/or hybrid work policies
- Business travel and expense reimbursement
- Intellectual property
- Conflict resolution (internal and external)
- Voluntary and involuntary termination policies, such as final paycheck and unused PTO and COBRA
If you have employees located in different states, you most likely will need sections specific to each location.
3. Labor law notifications.
The DOL provides a tool called the FirstStep Poster Advisor to help you determine which posters you are required to display and/or distribute to your employees. The tool walks you through a series of questions about the size and nature of your business and then provides a list of posters you need. At the top of the list, you will see the following statement, "Based on the information you provided in response to the questions in the Advisor, the following Federal laws which have poster requirements likely apply to your business or organization. Please note the Advisor does not identify all the poster requirements of other Federal agencies but it does include the poster required by the Equal Employment Opportunity Commission, if applicable."
To determine notifications required by your state (or each of the states where you employ workers), you can find state labor offices here.
Copies of each required notification can be incorporated directly into your handbook. This is particularly helpful if you have remote team members.
How often should I review and update my employee handbook?
At a minimum, you should review your employee handbook annually. Changes in labor law or operational or office policies will most likely require an update to your employee handbook. Policy changes that are expected to be temporary in nature (such as during the pandemic) may not need to be incorporated into your handbook; you may be better off issuing a separate policy.
Each revision of your handbook should be clearly marked. A helpful practice is to include the following information in the footer of each page:
- Company name
- Revised: Month Day, Year
- Page x of y
In addition, protect yourself from potentially inaccurate (or illegal) prior policies. Include a general statement on the acknowledgment page stating that this handbook version (referencing the date of publication or revision) supersedes any and all prior policies, practices, representations or statements.
How should I get started with my first employee handbook?
Take a deep breath and relax. There are many resources to help you!
Internet searches will deliver many free and "free" employee handbook templates. There are two things to keep in mind.
First, "free" may not always be free. You may be required to sign up for a trial (at no cost or a very low cost) and may be required to provide more information than you are willing to give.
Second, just because it is on the internet, doesn't mean it is true. As you search for templates, make sure that the language you are reading is suggested on more than one template. Look for templates provided by reputable companies or organizations. And, most importantly, have a labor lawyer review your handbook to avoid any potential errors or issues that could lead to risk.
The best resource you have might be your payroll provider. Many payroll providers offer additional HR services, including employee handbook drafts. these companies have their reputation on the line with their templates and have most likely done extensive due diligence on the language included.
As a final note, remember that the information in this article is not and nor is it intended to be legal advice. I strongly recommend that you have a labor attorney review your employee handbook before issuing it to any employees.