Employee Handbook Essentials

Let’s face it: running a business is a complicated endeavor. Owners and managers must not only be talented and familiar with their field, but they must also deal with the challenging and intricate issues of employee relations. Training and dealing with new hires, keeping experienced employees happy, and streamlining day-to-day operations are issues owners may not have prepared themselves for, but in which they must quickly become experts. Many business owners have turned to the employee handbook as a solution to these problems.

In addition to providing a convenient reference for company policies, as well as ongoing training for new hires and long-time employees alike, your new handbook could protect you from potentially devastating lawsuits (which cost small businesses over $105 billion a year). If you don’t already have an employee handbook, now is the time to get started; as well as lowering the risk of being sued, day-to-day operations will be much smoother because of the extra training you’ve provided.

Barring local laws that might be in place where your business is located, an employee handbook is not likely a legal requirement; however, any business with more than a handful of employees would do itself a favor by providing the following information to all employees:


1. Specific job descriptions

Every employee has a right to know exactly what his or her job entails so as to avoid confusion. This section might include the specific duties of each employee, normal working hours, as well as overtime policies (e.g., will some employees be expected to work mandatory overtime?).

2. Compensation and benefits

Your company’s information on insurance, bonuses, and other compensation plans should be included also. Employees should be aware of what deductions will be made for taxes (state and federal), as well as any voluntary deductions for benefit programs specific to your company.

3. Leave: paid and unpaid

Family medical leave (FML), annual paid leave (APL), and other policies for time off should be clearly stated. Employees should be aware of how quickly they will accrue APL, and also the procedure for requesting time off when desired. These policies will be heavily affected by state and local law, so be sure that the handbook is updated regularly to comply with any legal changes.

4. Privacy policies

Many businesses may handle personal client information that is protected by national privacy laws; the Health Insurance Portability and Accountability Act (HIPAA) is one such law that could impose massive fines on your business for the misuse of information. Employees must be knowledgeable about appropriate and inappropriate use of privileged information, as just one breach could cost thousands of dollars in fines.

5. Employee contracts

Privacy is just as important when it comes to trade secrets and other proprietary information. Many businesses protect themselves by having employees sign non-disclosure agreements (NDAs) or other conflict-of-interest contracts. Such agreements protect you from having a former employee use information gained during his or her employment to compete against you. The employee handbook should make clear exactly what each employee’s privacy obligations are.

6. Antidiscrimination and harassment policies

Every employer must comply with all equal opportunity laws. Since employee misconduct, harassment, and discrimination leave you open to legal action, the handbook should include detailed information about conduct that will not be tolerated.

7. General standards of conduct

If, as an employer, you want your workers to comply with a dress code, put it in the book. Whether you are going for formal, casual, or somewhere in between, your coworkers will appreciate being aware of what is expected of them. Also, set policies about breaks, personal phone calls, Internet usage, and other downtime. If you don’t, pretty soon even your best employees will be spending half of the day checking their Facebook walls!

8. Firing policies

This part is unlikely to be pleasant for any involved, so make sure you have some firm policies in place. Even in an at-will employment relationship (meaning that both employer and employee are free to terminate the relationship at any time), being uncertain about your policies can lead to trouble. For example, if you suspend or fire an employee for misconduct, but the company policy states that he or she should have first received a simple warning, you may be seeing that employee back in your office very soon — this time with a lawyer!

9. Safety!!

Can there be too many exclamation points on this one? Honestly, almost any workplace is certain to have some sort of inherent hazard. Teach your employees how to handle all tasks safely, and make sure that everyone follows these standardized procedures as they are set out in your handbook. An avoidable workplace injury could easily devastate a business.


Remember, your employee handbook can only protect you from lawsuits if you actually stick to your policies; so, once you’ve got something down on paper, make sure that you and your managers are familiar with the policies and that they are easily available to all employees. Do this, and you are sure to have the upper hand no matter what happens — it’s well worth the effort!

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