Updated February 17, 2021
Employee Handbooks in 2021: The Definitive Guide
Many business owners overlook the importance of a well-written employee handbook. A good handbook serves many purposes. Is your handbook a useful tool for your company? A strong employee handbook will:
- Set expectations for new hires
- Codify, organize, and update company policies
- Simplify onboarding
- Help new hires succeed
- Make training and enforcement easier
- Protect you from compliance violations
In this article, we take a deep dive into employee handbooks: what, why, and how. We’ve organized this guide into five sections:
- What Is An Employee Handbook?
- What Are You Legally Required To Include In Your Employee Handbook?
- Handbook Examples to Inspire You
- The Challenge of Keeping Handbooks Up-To-Date
- 20 Reasons You May Need To Update Your Employee Handbook
What is an Employee Handbook?
In this section, we explain the importance of a good employee handbook. Firstly, it’s essential for smooth operations. It should be the go-to authority for policies. Secondly, it’s critical for more than new hire training. It expresses formal policies. It is the first place to look for legal clarification, for instance. Thirdly, you can use it to showcase your company culture.
What Do I Need For an Employee Handbook?
Now that we’ve discussed its importance, what do you need to put in your handbook? Well, pretty much everything. After all, it’s a user’s manual for new employees, managers, and executives. If you are starting from scratch, expect to make several drafts. Take your time. Get input from everyone. A Human Resources Management System (HRMS) makes it easy. Most large companies cover the following in their employee handbook:
- Company policies
- Terms of employment
- Payroll deductions
- Paid Time Off (PTO)
- Business travel
- Conflict of interest
- COVID-19-related infection prevention measures
- Intellectual property
- Code of conduct
- Time and Attendance
- Dress code
- Mobile devices
- Social Media
An employee handbook should be a living document. Therefore, review it frequently. Update when needed. If a new law is passed, make it a priority. Proactive updates prevent problems. For instance, businesses that created a social media policy 20 years ago saved a lot of hassle. Similarly, companies that trained their hiring managers on illegal interview questions avoided lawsuits. In addition, those that addressed sexual harassment were ahead of the game.
What Are You Legally Required to Have in Your New Employee Handbook?
Now that we’ve discussed the ‘what,’ let’s discuss the ‘why.’ Why do you need a handbook? Does the law require it? Actually, the Federal Department of Labor does not require you to have a handbook, per se. However, they do require you to inform employees of their rights. As a result, some employers forego a handbook for workplace signs. During onboarding, they hand out a stack of papers. Smart employers have the required workplace signs plus a good employee handbook. How does an incomplete handbook cause problems? Consider this situation described on Reddit:
I didn’t know I was supposed to enroll before my three months for health insurance. I was never told this, I just assumed I couldn’t until my three months happened. I started poking around and found out I was supposed to do it beforehand apparently. Is there anything I can do? I really could use the health coverage. Reddit
State, Federal, Local, and Union Workplace Laws
Before you start writing a new handbook (or updating one), understand that many workplace laws are at play. If you have employees in more than one city or state, you will need location-specific sections, for example.
At-Will Employment Clause
‘At-will’ means either party can end the working relationship at any time. In all states except Montana, you assume this agreement by default. Therefore, if you have employees in Montana, make sure you spell this out.
Equal Employment and Anti-Harassment
The Equal Employee Opportunity Commission (EEOC) regulates this. Make sure you describe unacceptable behavior in detail. In addition, tell your employees what to do if they are subject to harassment or see it happen to a co-worker. Plus, outline what you will do if an employee claims harassment.
Federal Medical Leave Act (FMLA)
In addition to the FMLA poster, the information must be provided in written form. As a result, if an employee needs to take leave, they can see your handbook for detailed instructions.
Occupational Safety and Health Administration (OSHA)
To have a safe workplace, your employees need to know your safety policies. How do you do this? First, teach these in many different ways. Use in-person training. And the required posters so employees keep them top of mind during the day. Above all, present them in the handbook on day one. After all, you want your new hires to understand your commitment to safety.
Drug-Free Workplace Policies
The Drug-Free Workplace Act of 1988 ended in 2010. However, your state may have a similar program. Therefore, it’s a good idea to have a substance abuse policy whether or not you are required. If you do drug testing, for example, your policies must not discriminate. Bottom line, make sure you know the laws and state them in your handbook.
Final Paycheck and Unused PTO
End-of-employment issues may be subject to a federal or state law depending on where you live. Because of this, talk to your legal team. Some states, for example, require employers to pay out unused PTO.
Your handbook should outline what happens when an employee quits or is terminated. If you offer health benefits, former employees have the right to enroll in COBRA. (COBRA is an acronym for the federal Consolidated Omnibus Budget Reconciliation Act. Among other things, it provides continuing health coverage after separation. In practical usage, it refers to the benefits plan offered by the company under COBRA.) Former employees who apply for COBRA will need enrollment forms. Therefore, if you have an HRMS, include a link to these forms in your handbook.
Time and Attendance
Remember, wage and hour laws are linked to employee timekeeping. As a result, knowing how to track hours is essential. Your handbook should explain how employees clock in for shifts. Include rules for meals and breaks, PTO, minimum wage, overtime, and fair workweek, for instance.
There may be a lot of documents floating around. Protect yourself from outdated or poorly-written policies that were created before current laws. State clearly that the handbook supersedes any other rules. This also gives you a measure of protection from informal or ‘assumed’ policies. Both of which could contradict official policies or law. At the very minimum, protect yourself by stating that the policies are subject to change.
Employee Acknowledgment and Agreement
HRMS with electronic signature simplify employee training. Employees can read the policies in digital form. Then sign that they understand and will follow them. Employees, managers, and admin staff can search the database quickly for any document. Electronic documents simplify reporting.
Employee Handbook Examples to Inspire You
Now that we’ve discussed the “have-to’s” let’s review some employee handbook examples. See how these HR departments made their employee handbook come alive. The Motley Fool Employee Handbook We take special pride in calling ourselves “Foolish” – with a capital F. Harkening back to Shakespeare. It is our calling card to be irreverent. To instruct and amuse. And to speak the truth. So our Core Values can be summarized simply as “Be Foolish.” Motley Fool Employee Handbook Tesla Employee Anti-Handbook “Anyone at Tesla can and should talk to anyone else according to what they think is the fastest way to solve a problem for the benefit of the whole company. You can talk with your manager. Uou can talk to your manager’s manager. You can talk directly to a VP in another department. You can talk to Elon–you can talk to anyone without anyone else’s permission.” Tesla Employee Anti-Handbook Trello Employee Handbook New hires at Trello are treated to a manual organized in a Trello board. Complete with charming pictures of adorable dogs and cats. You can see it here.
The Challenge of Keeping Handbooks Up-To-Date
It takes an ongoing effort to keep the employee handbook up-to-date. This is especially true for small companies without an HR director. Firstly, the person tasked doesn’t always have time to work out the nitty-gritty. In some companies, writing and updating the handbook is a dreaded task. As a result, no one is eager to take ownership and the buck gets passed around and around. Secondly, printing costs sink tight budgets. This is unfortunate. After all, small businesses need a good handbook as much as larger ones.
Problems With Outdated Employee Handbooks
In this section, we are going to talk about problems with outdated handbooks. An outdated handbook can do more harm than good. Especially if the policies aren’t legally compliant. An incomplete handbook causes confusion. Furthermore, it can be particularly problematic for new hires. Consider this example: What if a new employee assumes health benefits start immediately? Suppose your company has a 60-day waiting period. The employee ends their previous coverage before the new benefits become effective. Then the new hire has a major medical expense. You are going to have an angry employee with a mountain of medical bills. That’s no way to begin a new job. Here is a better scenario: The handbook clearly explains the waiting period. New hires are emailed a link to the employee handbook as soon as they accept the job offer. In the email, encourage the new hire to read the handbook soon. Especially the section about benefits policies. The new hire signs that they read it and agree to it.
Why You Might Need Multiple Handbook Versions
If you have workers in many states, you may need a separate compliance section for each state. Talk to your business attorney or state Department of Labor. For example, if you are based in California, you may need a separate section for workers in specific cities. California also passed a new anti-harassment training law in 2019. In addition, New York state expanded qualified leave beyond the federal law.
Your Handbook Represents Your Business
When your employee manual is outdated, it reflects poorly on your company. As a result, pretty soon everyone ignores it. Employees have to ask their manager or the HR staff every time they have a question. Incorrect information and informal policies spread through the workforce.
20 Reasons You May Need To Update Your Employee Handbook
In this chapter, we discuss 20 specific reasons you may need to update your staff manual.
Keeping your employee handbook up-to-date is not simply a matter of convenience. It is necessary for legal compliance. It’s important to remember it can and will be used as a legal document. You will be held to the standards you document. If you haven’t updated your handbook for coronavirus emergency sick leave and expanded FMLA, now’s the time.
2. Legalization of Marijuana
In addition, many states have legalized cannabis. Cannabis remains illegal at the federal level. As a result, there is confusion about what this means at the local level. If your state has legalized marijuana, it’s time to update your employee handbook. For example, this may affect your drug testing policies. Discovering THC in a drug test in a state that has legalized recreational pot use may not imply a crime. However, your business may align with federal laws.
3. Fair Scheduling, Overtime and FMLA Updates
Laws are changing all the time. For instance, recently there have been significant changes to laws related to scheduling. This includes overtime and paid time off (PTO). The best practice is to assign an HR manager to track changes in employment law. Talk to your attorney and payroll company for help in this area.
4. Changes in State Discrimination Laws
Over 20 states currently have special laws related to discrimination. Many state legislatures are considering new regulation. As our laws evolve, it’s important to maintain pace in your employee handbook. By the way, many companies have adopted a policy that’s stricter than the feds.
5. New Location
If your company has opened a new location, it’s time to update your employee handbook. Employees should be able to find the official address of your new location. You should also communicate purpose and function. So employees know which areas of your business are responsible for issues that come up. The handbook is the best place to list official addresses, site functions and contact information.
6. Offering a New Product or Service
Every employee should understand your product or service offering. When new products come out, add them to the product section of your employee manual. Also, list products or services that are no longer offered. Don’t simply remove them. Label them discontinued. Employees need an official method for product availability.
7. New Employee Types
You may define job roles and employee types to clarify benefits eligibility. You may be adding independent contractors, seasonal workers, temps or non-residents. Outline special considerations or exclusions where needed. For example, new independent contractors may be ineligible for a specific benefit.
8. Social Media Policies
Social media use continues to evolve as new platforms emerge. Some generations are using social media as their primary communication mode. Social media can be a powerful form of communication, promotion, and marketing. It can also be a drain on productivity. Thus, clarify your policy on personal and company use of social media. Be specific about the consequences for violations.
9. Increased Awareness of Sexual Harassment and Legal Implications
Awareness about workplace sexual harassment has been increasing in the past few years. Public cases, activism, and nightly news stories have everyone thinking about it. Now is a perfect time to update your employee handbook on sexual harassment policies. If not an update, perhaps a clarification. It can help employees better understand your policy. Employees will have questions after seeing news stories and hearing about dire consequences. Make sure your employee handbook is clear and concise about sexual harassment.
Employer retaliation now is the most frequently filed charge with the EEOC. Retaliation is when an employer punishes an employee for a protected action. For example, whistleblowing or filing a complaint. Review your policies. Assure your employees that they can raise issues. Explain procedures for reporting problems. If your handbook has instructions, you are less likely to get into a messy situation. This will help your staff address problems in a standardized way.
11. Interview Policy
Many states have banned salary history questions during interviews. Your management and hiring team needs to know this. Violation can land you in expensive litigation. It’s also a good time to think about employee engagement. It isn’t enough to update your employee handbook with new laws. You also need to make sure that employees are actually engaging with the content.
If your company recently started telecommuting, it’s time to update your handbook. There are many reasons to update. One of the main ones is your time and attendance rules. Telecommuting requires its own set of rules. Clarify when you expect remote employees to be at work. Outline time and attendance recording procedures. Similarly, update policies on breaks and flexible time.
13. Criminal Background Checks
There are new state laws on background checks. This is an area to keep an eye on, especially if you are doing criminal background checks routinely. Update your employee manual to include instructions, privacy policies, and acceptable practices. Make sure your managers are up to speed. If messed up, this can get you in hot water. In addition, talk with your legal advisor to learn how your state is handling them.
14. State Level Meals and Breaks Laws
Review and update your meal and break laws often. Failure to communicate these to your employees can result in fines. It’s an important area to keep in mind.
15. Legal Clarifications
If your company has ‘unwritten or ‘assumed’ policies, you are on thin legal ground. They aren’t policies in a legal sense and won’t be defensible. This will undermine the integrity of your entire employee handbook. Is there ambiguous language? Or implied circumstances? If so, you are opening the door to interpretation. Interpretation can go a million different ways. Take the time to review your employee handbook for ambiguous language. Update it to clarify your position. Leave no stone unturned (or unedited). When employees have a leveraging point, there is room for dispute.
16. Equal Policies
Your employee handbook should contain equitable policies. Specifically, those that define interactions between management, employees, and company. Review your employee handbook to make sure your policies are equitable. Similarly, make sure managers understand policies. You undermine your employee handbook if a manager shows favoritism. Therefore, review your handbook and revise any areas that are not clear. Above all, make sure all policies are equal and equitably enforced.
17. Cloud Access
Are you taking advantage of cloud access for your employee handbook? If not, this is a perfect time to start. Cloud-based staff handbooks are easy to access, and available always and anywhere. Plus, you can update them in real time as needed. It doesn’t get better than that. As a result, you won’t need to reprint it or hand out additional sections.
18. Job Role Identification
Your employees should always be able to review updated job roles. Each job role should include basic responsibilities and expectations. In a cloud-based system, you can give access as needed. That way, only employees with that role can see them.
19. Streamline Onboarding
Your employee handbook is the best way to set expectations. As discussed previously, cloud-based handbooks improve onboarding. Give new hires access to your manual immediately. Track reading progress in your HRMS.
20. Growth Milestones
You may have recently become subject to ‘large employer’ rules. These are federal in most cases and are primarily related to discrimination laws and the Affordable Care Act (ACA). It all depends on how many employees you have. Firstly, if you have at least one employee, you must provide equal pay for equal work to male and female employees. (You should do that anyway.) Secondly, if you have 15 to 19 employees, you are covered by the laws that prohibit discrimination. Based on race, color, religion, sex (including pregnancy, sexual orientation, or gender identity). Plus national origin, disability and genetic information (including family medical history). In addition, you are subject to the law that requires employers to provide equal pay for equal work.
WorkforceHUB for Employee Handbooks
- Improve Employee Engagement in 2021: See Trish Stromberg’s LinkedIn Article - February 25, 2021
- Create Career Paths in 7 Steps [or Lose Your Best Employees] - February 23, 2021
- How To Write And Update Your Employee Handbook For 2021 - February 17, 2021