Employee Handbooks In 2020: The Definitive Guide

Many small business owners overlook the importance of a comprehensive, well-written employee handbook. A good employee handbook serves many purposes. Is your handbook a useful tool for everyone at your organization?

A strong employee handbook will:

  • Establish expectations for employees
  • Codify, organize, and update company policies
  • Simplify onboarding
  • Help employees succeed
  • Make training and enforcement easier for managers
  • Reduce the administrative burden on Human Resources
  • Protect your company 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:

  1. What Is An Employee Handbook?
  2. What Are You Legally Required To Include In Your Employee Handbook?
  3. The Challenge of Keeping Handbooks Up-To-Date
  4. 20 Reasons You May Need To Update Your Employee Handbook
  5. How Your Employee Handbook Can Prevent Problems With FMLA

What is an Employee Handbook?

A good employee handbook is essential for smooth business operations. Especially for successful employee relations. It should be the go-to authority for policies and expectations. But it can only help your company if it’s carefully planned, written, and updated as needed.

The employee handbook is critical for more reasons than simple communication. It documents formal policies and is the first place to look for legal clarification. Its value cannot be overstated.

Some companies view their handbook as a way to showcase their company culture. Your handbook can be creative and engaging while containing all the necessary information.

What Do I Need For an Employee Handbook?

Well, pretty much everything. It’s a user’s manual for employees, managers, and executives.

Are you a new business owner starting from scratch? Expect to make several drafts. Take your time. Get input from everyone. An HRMS makes it much easier.

Most large companies cover the following in their employee handbook:

  • Company policies
  • Compensation/benefits
  • Terms of employment
  • Payroll deductions
  • Discipline
  • Paid Time Off (PTO)
  • Business travel
  • Overtime
  • Nondiscrimination
  • Conflict of interest
  • COVID-19 related infection prevention measures
  • Intellectual property
  • Retaliation
  • Telecommuting
  • Code of conduct
  • Time and Attendance
  • Ethics
  • Dress code
  • Safety
  • Mobile devices
  • Social Media
  • Cannabis

Motley Fool, a provider of financial advice and stock recommendations based in Alexandria, Va., turned its manual into an interactive website. It’s open to the public and ‘doubles as a great piece of employer branding,’ – Laurie Sargent (Quoted in SHRM Online)

An employee handbook should be a living document. It should evolve with your company. This doesn’t apply solely to the compliance issues. As your company grows and diversifies, the handbook should reflect the changes.

Review it frequently. Then update it as required. If a new employment law is passed, make it a priority.

Proactive updates prevent problems. Businesses that created a social media policy 15 years ago saved a lot of hassle. Companies that trained their hiring managers on illegal interview questions avoided lawsuits. Frequent handbook review will safeguard you in the case of an employee legal challenge.

What Are You Legally Required to Have in Your Employee Handbook?

The Federal Department of Labor does not require you to have a handbook, per se, but they do require you to inform employees of their rights. Some employers forego a handbook for mandated workplace signs. During onboarding, they hand out a stack of paper notifications they are required to provide in written form. Smart employers have the required workplace signs plus a thorough, clearly-written employee handbook.

Look beyond the bare minimum requirements. Use your handbook to help you comply with all the laws that affect you. Effective communication is necessary for business success and legal protection.

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 an existing one), it’s important to understand that many workplace laws are at play here. If you have employees in more than one city or state, you will need location-specific sections of your handbook. Create a core document with information that applies to all staff. Have separate sections where local or state laws (or collective bargaining agreements) differ from federal provisions.

At-Will Employment Clause

Employment deemed ‘at-will’ means either party can terminate the working relationship at any time. In all states except Montana, this working agreement is assumed by default. If you have employees in Montana, make sure you spell this out.

Equal Employment and Anti-Harassment

The EEOC outlines how to establish these policies. Make sure you describe unacceptable behavior in detail. Instruct your employees on what to do if they are subject to harassment or observe a violation. Plus, outline what you will do if presented with a claim.

Federal Medical Leave Act (FMLA)

In addition to the FMLA poster, the information must be provided in written form. If an employee needs to take leave, they can consult your handbook for detailed instructions on how to fulfill their responsibilities under the law. This can help prevent problems and ensure that everyone is communicating. Be aware that some states have FMLA provisions that provide more leave than the federal law.

We address FMLA in greater detail in the final section of this article.

Occupational Safety and Health Administration (OSHA)

To maintain a safe work environment, your employees need to know your safety protocols. These should be taught and reinforced in many different ways. Your employee handbook won’t be the only place they are found. Most likely, your employees will receive in-person training and you should have the obligatory OSHA or state safety posters. By presenting them in the handbook on day one, you emphasize their importance. You want your employees to understand your commitment to a safe workplace.

Drug-Free Workplace Policies

The Drug-Free Workplace Act of 1988 was discontinued in 2010. However, your state may have a similar program in effect. It’s a good idea to have a substance abuse policy whether or not you are required by law. If you do drug testing, your policies have anti-discrimination implications. Make sure you know the laws and state them clearly 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. Consult your employment counsel on formulating and documenting your outboarding policies.

COBRA Notifications

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 which provided continuing health coverage protections. In practical usage, it refers to the benefits plan offered by the company under COBRA.) Former employees who apply for COBRA will need to complete enrollment forms. If you have an HRMS, you can include a link to these forms in your handbook.

Time and Attendance Policies

Knowing how to track hours is basic and essential. In addition, wage and hour laws are inextricably connected to employee timekeeping. Your handbook should explain how employees clock in for shifts (for hourly workers). Also include your policies regarding meals and breaks, PTO, minimum wage, overtime, and fair workweek.

General Disclaimers

There may be a lot of documents floating around your company. Protect yourself from outdated or poorly-written policies that were created before current laws. State clearly that the handbook supersedes any other policies. This also gives you a measure of protection from informal or ‘assumed’ policies, both of which could contradict official policies or employment law. In addition, protect yourself by stating that the policies are subject to change.

Employee Acknowledgment and Agreement

HRMS with electronic signature simplify employee acknowledgment. Employees can read the policies in digital form and signify their understanding and agreement to abide by them. The confirmation document should be included in each employee’s file. Employees, managers, and admin staff can search the database quickly for any document they need to access. Electronic document management simplifies compliance and reporting.

The Challenge of Keeping Handbooks Up-To-Date

It takes a conscious, ongoing effort to keep the employee handbook up-to-date. This is especially true for small companies without a dedicated HR director. The person tasked with handbook maintenance doesn’t always have time to work out the nitty-gritty of policies.

In some companies, writing and updating the handbook is a dreaded task. Some HR teams have a running joke about managing the handbook. No one is eager to take ownership and the buck gets passed around and around.

Editing and printing expenses can be crippling for tight budgets. This is unfortunate because small businesses need a good handbook as much as larger organizations.

Problems With Outdated Employee Handbooks

An outdated handbook can do more harm than good. Especially if the policies aren’t legally compliant. An incomplete handbook causes confusion. It can be particularly problematic for new hires.

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 provides a signature acknowledging that they read it, agree to it, and understand that they will be bound by it.

Why You Might Need Multiple Handbook Versions

If you employ workers in multiple states, you may need a separate compliance section for each state. Talk to your business attorney or state Department of Labor. If you are based in California, you may need a separate section for workers in specific cities. California has new anti-harassment training regulations for 2019 as well.

Your Handbook Represents Your Business

When content is outdated, it reflects poorly on your company. 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

1. Regulatory Compliance

Keeping your employee handbook up-to-date is not simply a matter of convenience. It is necessary for legal compliance. Whatever you choose to include in your employee handbook, it’s important to remember it can and will be used as a legal document. You will be held to the standards you document, so make sure your employee handbook is legally compliant. If you haven’t updated your handbook for new emergency paid sick leave and expanded FMLA, now’s the time.

2. Legalization of Marijuana Use

Many states have legalized the use of cannabis. Cannabis remains illegal at the federal level, and there is some confusion about what this means at the local level. If your state has legalized marijuana, it’s time to update your employee handbook.

Legalization usually means updating 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 be aligned with federal laws. You may also have safety concerns that require specific periods for metabolization. This is a policy that will need to be updated in your employee manual to clarify your company policy.

3. Fair Scheduling, Overtime and FMLA Updates

Laws are changing all the time. Recently there have been significant changes to laws related to scheduling, overtime, and paid time off (PTO).

Federal guidelines have changed in the tax law, and local state laws are continuously in flux. It can be a nightmare to keep track of all the changes, but your employee handbook needs to reflect the latest changes. If it doesn’t, you risk undermining the authority of your employee handbook.

The best practice is to assign an HR manager to track changes in employment law, and to incorporate them into the employee handbook as necessary. Consult 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 to accommodate previously unrecognized factions of our society, it’s important to maintain pace in your employee handbook.

Many companies have taken the initiative and adopted a discrimination policy that exceeds legal minimums.

Check to make sure your employee handbook is up-to-date on discrimination law. Consider options to exceed legal precedent. Areas to consider include race, sexual orientation, religion and married status. Political affiliation has become an area to consider as well.

5. New Location

If your company has opened a new location, it’s time to update your employee handbook.

The simple matter of communicating the details of your new location is enough. 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 employee handbook is the best place to communicate 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.

Identify products or services that are no longer offered. Don’t simply remove them. Label them discontinued so that employees have an official method for discerning product availability.

Product or service listings shouldn’t be too lengthy. There are plenty of places for employees to learn more about products. Your employee manual should provide a brief overview at a minimum.

7. Hiring Additional Employee Classifications

Your employee manual might outline the kinds of employees the company employs. You may define job roles and employee types to clarify benefits eligibility.

You may be adding independent contractors, seasonal workers, temporary work permit holders, and non-residents. If your company is hiring additional employee types, it’s time to update your employee manual.

Outline special considerations or exclusions where appropriate to clarify benefits. 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. New generations of employees are using social media as their primary mode of communication.

Employers realize that social media can be an effective form of communication, promotion, and marketing. We also know it can be a drain on productivity.

Clarify your policy regarding personal and company use of social media. Update often as new platforms emerge and become popular. 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 the implications.

Now is a perfect time to update your employee handbook on sexual harassment policies. If not an update, perhaps a further clarification to 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.

10. Retaliation

Employer retaliation now is the most frequently filed charge with the Equal Employment Opportunity Commission.

Retaliation is when an employer punishes an employee for an action that is protected. Examples can include whistleblowing or filing a complaint about discrimination.

Review your policies regarding retaliation protections. Assure your employees that they can safely raise issues. Outline procedures for reporting problems.

If your handbook has instructions for reporting problems, you are less likely to get into a messy compliance situation. This will help your management staff address problems in a prescribed way. This will protect you from the legal consequences of retaliation.

11. Interview Policy

Many states and cities have banned salary history questions during the interview process. These regulations need to be communicated to management and your hiring team. Violation of these new laws can land you in an expensive litigation that can be easily avoided by updating your employee handbook.

It’s also a good opportunity to think about employee engagement with your employee handbook. 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 and learning the policy.

12. Telecommuting

If your company recently started allowing telecommuting it’s time to update your employee handbook. There are myriad reasons to update when you allow telecommuting. One of the bigger ones is time and attendance policy.

Telecommuting requires its own set of rules and regulations. Clarify when you expect remote employees to be at work. Outline time and attendance recording procedures. Update policies on breaks and flexible time. The clearer you can be about telecommuting policy, the more productive your out-of-office employees will be.

13. Criminal Background Checks

There are new state laws regarding criminal background checks. Some states are still in flux when it comes to regulating what employers can ask and do before hiring a new employee.

This is an area to keep an eye on, especially if you are performing criminal background checks as a routine. Update your employee manuals to include instructions, privacy policies, and acceptable practices. Make sure your managers are up to speed; this one has some legal implications that can get you in hot water.

Check with your legal advisor to learn how your state is handling criminal background checks.

14. State Level Meals and Breaks Laws

Laws are always changing and it’s good policy to review and update your meal and break laws often. State and federal laws can differ in these areas and you’ll want to make a regular routine of updating your employee manual to reflect any new changes.

Failure to communicate a common understanding of these laws to your employees can result in fines and expensive litigation. It’s an important area to keep in mind.

15. Legal Clarifications

If your company has confusing ‘unwritten or ‘assumed’ policies, you are on thin legal ground.

If you have unwritten policies, they aren’t policies in a legal sense and won’t be defensible. This will undermine the integrity of your entire employee handbook and places you on precarious footing.

Whenever there is ambiguous language or implied circumstances, you are opening the door to interpretation. Interpretation can go a million different ways and pretty soon you are not on the same page.

Take the time to review your employee handbook for ambiguous language. Update it to clarify your position and leave no stone unedited. When employees have a leveraging point, there is room for dispute.

16. Equitable Policies

Your employee handbook should contain equitable policies that define interactions between management, employees, and company.

Review your employee handbook to make sure your policies are equitable. Make sure managers understand policies and the processes to manage them.

You undermine your employee handbook if a manager shows favoritism. Review your employee handbook and revise any areas that are not clear about how to apply consequences. Make sure all policies are equitable 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 update your employee handbook.

Cloud-based employee handbooks are easy to access, available always and anywhere, and updated in real time. It doesn’t get better than that.

No more reprints or handing out supplemental sections. Updates are immediately available to all employees. Announce updates and make reading them a requirement.

You’ll be able to track engagement; when your employees read a new section the software can confirm it. In this way, you can track employee engagement and verify understanding of policy.

If your employees don’t use the employee handbook because it is hard to access, you need a cloud-based HR portal. It’s an easy, affordable solution that makes handbook management more efficient and more effective.

18. Job Role Identification

Your employee should have updated job roles listed. Each job role should include basic responsibilities and expectations. Job roles can be assigned to specific employees in a cloud-based system so that only employees with that job role can see its requirements.

Keep this section short and to the point. Identifying job roles in the employee handbook allows each employee to better understand the various job roles in the company.

Articulate job roles and clarify relationships. Update this section often to include new job roles and retire unused ones.

19. Streamline Onboarding

Onboarding is ineffective if employees are unsure of employer expectations. Your employee handbook is the best way to communicate expectations.

As discussed previously cloud-based employee handbooks make onboarding more efficient. Provide new hires access to your employee handbook immediately. Reading progress can be tracked by section. Onboarding with new policies and procedures can be confirmed by the system.

Some employers incorporate quizzes to help assure comprehension. Onboarding has never been easier than with cloud-based employee handbooks.

20. Growth

Your company may have grown enough that ‘large employer’ mandates apply. These mandates are federal in most cases and are primarily related to discrimination laws and the Affordable Care Act (ACA).

Federal employment anti-discrimination laws may apply to your company if you have grown recently. Growth will mandate that you make updates to your discrimination and benefits policies.

It all depends on how many employees your business has:

If you have at least one employee: You are covered by the law that requires employers to provide equal pay for equal work to male and female employees.

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), national origin, disability and genetic information (including family medical history). You are also covered by the law that requires employers to provide equal pay for equal work.

If you have 20 or more employees: You are covered by the laws that prohibit discrimination based on race, color, religion, sex (including pregnancy), national origin, age (40 or older), disability and genetic information (including family medical history). You are also covered by the law that requires employers to provide equal pay for equal work.

Your Employee Handbook and FMLA Compliance

Let’s discuss FMLA. It’s a complex law and can be a compliance minefield for employers.

The Family and Medical Leave Act (FMLA) was signed into law in 1993. Its primary purpose is to ensure that employees can hold their jobs through qualified medical or family leave.

FMLA is an important part of our national work infrastructure and gives employees peace of mind.

FMLA provides employees with a remarkable benefit, but there are conditions. It’s important to educate your employees on the features and benefits of FMLA. It is also important to communicate eligibility requirements and company policy and procedures.

Let’s review a handful of the problems your company could experience related to FMLA:

Company FMLA Policy

One of the biggest mistakes a company can make is in not having a company policy for FMLA procedure. Companies have several options for FMLA adoption. Some options are better than others depending on your type of company.

Having a company policy in place allows you to manage the terms of FMLA. An established company policy allows everyone to be on the same page with expectations.
Your employee handbook is where this policy should be established.

Leave Alternatives

In some cases, employers can offer light-duty work instead of FMLA leave.
Light-duty work can be a viable alternative to full leave. If an employee can’t perform regular work but is willing to take on light-duty, there could be a win-win. The employee continues to work where they can, and the employer keeps the staffing resources.
As an employer, you can offer this alternative to your employees. However, if an employee prefers the time off for a qualifying condition, the employer must honor the FMLA request.

This is a policy that can be outlined in your employee handbook. Be sure to clarify what kinds of jobs will qualify as light-duty. Clarify, too, that this practice is optional, and that employees have a right to take the time off under FMLA.

Official Reporting

It’s important for managers to know that they must report FMLA leave immediately. If leave is unreported for any period of time, it may actually delay the beginning of the leave.

This kind of mistake can extend the time an employee is away from work and creates additional liability for the company.

Inform your managers that FMLA leave must be reported immediately. Communicate this to your employees also, as a matter of policy and procedure.

Your employee handbook should have a section dedicated to your reporting policy. This will help to ensure reporting gets done in a timely manner. This is a common problem that can be avoided with a simple entry in your employee handbook.

More importantly, you need to be able to confirm that your managers have read the policy. Do this with a document management system that tracks employee engagement.

Wrong Coverage

Another common mistake with FMLA is when employers allow unqualified leave. If unqualified leave is granted under FMLA, and then a qualified leave is rejected because time has been used, the employer could face penalties. When employees understand the qualifications, they are less likely to make requests that don’t comply.

FMLA Leave Time Tracking

Many companies fail to accurately record FMLA leave time. In these cases, a dispute can develop over qualifications. Tracking time off is critical in meeting compliance requirements.

Make sure your employee handbook includes policy and procedures for managers and employees. Add policies that require proper reporting and recording of dates and times. Add these sections of your employee handbook to your required reading and track employee engagement. Make sure your employees are reading the handbook.


Make sure your employee handbook discusses FMLA abuse. A statement regarding company policy regarding abuse and subsequent penalties can be a strong deterrent. Make sure, too, that if abuse does occur, that appropriate action is taken.

Nothing caused a mutiny as fast as lax corporate action. If an employee feels they got away with some kind of abuse, rest assured others will try. Consistent treatment regarding abuse will strengthen your standing in case of a legal dispute.

WorkforceHUB For Employee Handbooks

SwipeClock’s WorkforceHUB allows you to publish your employee handbook in a secure online portal and track employee engagement. Employees can read handbook updates online and complete engagement requirements as they do. It ensures employers that the content was absorbed and all employees have agreed to follow the policies.

By Liz Strikwerda and Cary Snowden

Content strategist and corporate blogger (2000+ posts). Her work has been featured on G2's Learning Hub, Human Resources Today, CloserIQ, Better Buys and over 500 business websites. She plays bluegrass mandolin and enjoys hiking in the red rock wilderness of southern Utah. Connect with me on LinkedIn
Liz Strikwerda