Why You Should Create an Employee Handbook

Use an employee handbook to communicate workplace policies.

If you have more than a few employees , it's a good idea to create an employee handbook that clearly explains your workplace policies. The benefits of having an employee handbook are many: Every employee receives the same information about the rules of the workplace; your employees will know what you expect from them (and what they can expect from you); and you'll buy yourself valuable legal protection if an employee later challenges you in court.

Below, we explain the types of policies your handbook should include. For step-by-step instructions, policy language, and forms you can use to generate your own handbook, get Create Your Own Employee Handbook: A Legal & Practical Guide, by Amy DelPo and Lisa Guerin (Nolo).

What Goes in an Employee Handbook

Here are topics to consider including in an employee handbook.

Introduction. Begin the handbook by describing your company's history and business philosophy.

Hours. State the normal working hours for full-time employees, rules for part-time employees, and how overtime compensation can be authorized for those entitled to it.

Pay and salaries. Be clear on how you set pay and salaries and how you raise them. Also explain any bonus programs.

Benefits. Explain the rules relating to benefits, including vacation pay, sick pay, unpaid leave, and so on. For programs run by an outside provider, such as health benefits, other insurance benefits, and retirement benefits, refer employees to the official plan documents that explain the rules. .

Drug and alcohol abuse. Many businesses have a policy prohibiting employees from using drugs or alcohol in the workplace. Some require drug testing; some offer to help employees deal with substance abuse through counseling or employee assistance programs. Include this information in your handbook.

Harassment. Use your handbook to remind employees that sexual and other types of harassment are illegal and violate your policies. Let them know that you will not tolerate unwelcome sexual comments or conduct and that you will treat any complaints of harassment seriously. Specify how and to whom an employee can complain of harassment, what procedures you will follow to investigate complaints, and what actions will be taken against harassers. For more information on sexual harassment, see Preventing Sexual Harassment in the Workplace.

Attendance. Emphasize the importance of good attendance and showing up on time. Explain that numerous unexplained absences or repeated tardiness can be a basis for disciplinary action or even firing.

Discipline. Explain the types of conduct can get employees in trouble -- for example, theft, violence, repeated performance problems, or fighting. Be sure to let your employees know that this is not an exclusive list and that you always reserve the right to decide to discipline or fire an employee.

Employee safety. State that employee safety is a major concern of your business and that employees are expected to follow safety rules and report any potentially dangerous conditions.

Smoking. Most businesses need a written policy for on-the-job smoking; in fact, some states require employers to have a written smoking policy. Because many cities and some states now prohibit or restrict workplace smoking, you will have to check local ordinances to be sure your policy is legal.

Complaints. Let employees know what procedures they should follow to make and resolve complaints. Designate several people in the company to receive employee complaints, and state that there will be no retaliation against any employee for filing a complaint. Having -- and enforcing -- a written complaint procedure can help shield your business from liability if an employee later sues for illegal harassment or discrimination.

Electronic communications. Include your company policies on use of email, the Internet, social networking sites, blogs, and so on. Because you may have to read employee communications (for example, if one employee accuses another of sending harassing email), your policy must tell employees that their communications may be read and are not private. If you monitor employee communications, say so. (For sample policies and all the guidance you need to choose the right rules for your workplace, pick up a copy of Smart Policies for Workplace Technologies, by Lisa Guerin (Nolo).

Workplace civility. State that employees at all levels of the company are expected to treat each other with respect and that the success of the business depends on cooperation and teamwork among all employees.

Conduct not covered by the handbook. You cannot write an employee handbook that will cover every possible workplace situation. It's best to make this clear to your employees by saying so in the handbook. Otherwise, your employees may argue that any action you take outside of what's explicitly set forth in the handbook is unfair.

Don't Create Obligations That Will Haunt You Later

Some courts -- and employees -- interpret the language in employee handbooks to create binding obligations on employers. You should avoid any unconditional promises in your employee handbook unless you are willing to face lawsuits by former employees trying to enforce those promises later. Here are some of the most common trouble spots.

Promises of continued employment. Unless you want to create an employment contract that obligates your employee to work for you for a period of time (and limits your right to fire the employee for the same period), don't put language in your handbook that promises employees a job as long as they follow your rules. A court might interpret this as a contract of employment that prevents you from firing employees without good cause.

To avoid this result, state in your employee handbook that your company reserves the right to terminate employment for reasons not stated in the handbook or for no reason at all. Even though you may never have to rely on this language, at least your employees will know where they stand.

To learn about employment contracts, including how they can be created through employee handbooks or other statements by an employer, see Firing Employees With Employment Contracts.

Rigid progressive discipline policies. Most employers follow some form of progressive discipline for performance problems or misconduct (attendance problems, difficulties getting along with coworkers, or missing deadlines, for example). You may choose to start with a verbal warning, followed by a written warning for a second offense, followed by a probationary period or suspension, then termination for subsequent problems. Whatever system you implement, make sure to keep your options open.

Don't obligate yourself to follow a particular disciplinary pattern for every employee in every circumstance; otherwise, you may find it difficult to fire an employee for truly egregious behavior.

To learn more about good disciplinary practices, see Nolo's articles What Is Progressive Discipline for Employees? and Using Progressive Discipline for Employees.

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