Your business can enhance communication with its employees, help ensure compliance with the law, and possibly even avoid legal problems, by creating an employee handbook.
updated December 5, 2023 · 4min read
An employee handbook can be a useful tool to let employees know the benefits of working for your company and what is expected of them, as well as protecting your business from lawsuits and other claims relating to employees.
The more people a business employs, the more challenges there are in communicating with its employees. A well-written employee handbook can help with this communication by ensuring that necessary comprehensive information is given to all employees in a consistent manner.
An employee handbook can outline employee benefits, let workers know what is expected of them, and facilitate better communication with managers. It also demonstrates the company's desire for good relations with its employees and provides a source for employees to quickly get answers if questions arise.
One important part of running a business with employees is being aware of laws that relate to being an employer. For example, you will need to comply with laws regarding such things as tax withholding, workers compensation, unemployment compensation, minimum wage, overtime pay, nondiscrimination, sexual harassment, and accommodating employees with disabilities. State or federal law also may require that employees be given leave for such things as jury duty, court appearances, voting, and military service.
There are numerous federal and state laws that may affect the employer-employee relationship. Their applicability to your company may depend upon such factors as the nature of your business activities, and the number of employees you have. For example, the federal Family and Medical Leave Act (FMLA) applies to companies with at least 50 employees.
Such laws may require that legal notices be placed in conspicuous places in the workplace, in which case it is not necessary to duplicate the information in the employee handbook. However, you may wish to do so in order to provide your employees with a single place to look for all necessary employment information.
In addition to an employee handbook, you also may want to enter into a formal employee agreement with some, or all, of your employees. This may be necessary if you wish to have the employee legally bound to confidentiality, nondisclosure, noncompete, and ownership of intellectual property requirements.
Some companies use a single, comprehensive employee agreement. Other business may use separate employment, confidentiality, nondisclosure, and noncompete agreements.
Employee handbooks vary in length, design, and detail. However, essentials for an employee handbook include statements that:
Other subjects commonly covered in employee handbooks include:
Any of these, or other, subjects can be covered comprehensively in the handbook, or can be summarized in the handbook and covered in more detail in a separate document. For example, the handbook may simply indicate that the employee will have an annual performance review, with the criteria and procedures for review being contained in the particular employee's employment contract or in some other document.
It is also standard practice to have the employee sign an employee handbook acknowledgement form at the time a copy of the handbook is given to the employee. This will prevent the employee from later claiming they were not aware of the handbook, in the event disciplinary action becomes necessary.
There is always the risk that a court may determine that the employee handbook is binding, and penalize the company for not following the policies and procedures outlined in the handbook.
For example, a court might decide that you were wrong to fire an employee if the handbook says that a written warming is the result of a first-time violation. Especially if a detailed and progressive employee discipline policy is to be described, it would be wise to have an attorney review your handbook.
Creating, and periodically modifying, an employee handbook can be a time-consuming process. Such time and effort may not be practical for a small company with only a few employees. However, creating an employee handbook can be an important part of your company's plan to hire and retain good employees. Even if you only have a few employees now, a basic employee handbook can be created, and then expanded as your workforce grows.
by Edward A. Haman, Esq.
Edward A. Haman is a freelance writer, who is the author of numerous self-help legal books. He has practiced law in H...
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