"I’m Somebody Now!"* The New Employee Handbook is Here
December is starting to feel like “I Have A New Company Month” here at PrepOverCoffee. I can’t help where inspiration strikes, or what I happen to be thinking about when the time comes to write a weekly post. Today I will focus on one of the most overwhelming, and sometimes mismanaged, areas of a new business - - the creation of an employee handbook. But it’s not just a challenge for new companies. Even mature organizations are struggling with bringing staff back from remote locations, overseeing massive layoffs, and dealing with novel challenges like pandemics and long-range impacts to health. As a result, employee handbooks are re-emerging as an area of focus after temporarily languishing outside the attention of overworked HR departments everywhere.
What are some practical parameters to consider in your approach? And what are the most common questions I hear?
Why should I have an employee handbook?
An employee handbook establishes the accepted rules and practices of the company, sets expectations for both the employer and the employee about how certain (sometimes delicate) situations will be handled, defines policies about how various programs work to ensure the consistent application of those programs, and allows a company to educate employees about acceptable and nonacceptable behaviors. An employee handbook is a critical part of onboarding new employees, and can even be a tool in establishing the culture of an organization. Finally, a well-written employee handbook can be a risk mitigation tool and offers an important element of an employer’s defense against employment-related litigation, including claims made through the Equal Employment Opportunity Commission or a state agency.
Does the law require me to have an employee handbook?
No, failing to have an employee handbook is not illegal. However, without one, most organizations will face increased risk of bad behavior, litigation, and lack of engagement from employees that do not have needed information about programs and resources.
There are also several states that have certain requirements relating to publishing key policies to employees even if there is no formal employee handbook.
Finally, most Employment Practices Liability insurance policies (remember all those insurance needs your new business will have?) require a handbook in order to obtain and maintain coverage.
How do I determine what content my handbook should include?
Employee handbooks should be crafted with applicable federal and state laws in mind, as well as the goals and approach of the company itself. Applicable laws are different depending on how many employees a company has, the type of employer they are, and sometimes even how much revenue the company makes. Wonder how your knowledge stacks up related to applicable employment law, take a fun quiz here.
Who are we anyway?
For example, some companies include their mission statement or a brief description of their organization’s philosophy in the employee handbook. Others may focus on key cultural attributes that are important to them. And others include the history of the company, which for new companies is probably less of a priority.
Critical sections to consider memorializing, even if not required by law:
Equal Employment Opportunity statement
At will employment
Anti-discrimination policy
Anti-retaliation policy
Prohibition of sexual harassment policy
Leave policies: including but not limited to, Military Service, Jury Duty, and Family Medical Leave Act (FMLA) (especially if your policies are different than what may be required under applicable laws)
Workplace safety information and mental health resources like Employee Assistance Programs (EAPs)
Other suggested topics include, but are certainly not limited to:
Compensation and benefit summaries
Paid time off, sick leave, vacation, working hours, and other time policies
Social media policies
Use of computer and other technology (including bring your own device or BYOD)
Code of conduct expectations (dress, smoking, substance use, weapons, etc)
Data privacy
Confidentiality and nondisclosure expectations
Expense reporting
Lessons learned from the trenches of busy HR people (also known as common pitfalls)
How often should I update it?
In a perfect world, your handbook will be updated any time a relevant portion changes, either because your policy has changed, the law has changed, a program has changed, or relevant reference information has changed. At minimum, you should ensure that your company has a responsible person and backup assigned for reviews, and those reviews should occur at least annually.
For new companies, I often advise keeping a simple schedule or checklist of all of the repeatable management items (including reporting/filing deadlines like annual reports, critical business document updates, employee coaching/feedback, insurance reporting and application deadlines, health plan reviews/open enrollment, employee handbook updates, audits of required docs like I-9s, etc.) to ensure these important steps don’t get lost in the shuffle of growing the business.
How do I know employees understand the handbook?
The first step is to write the handbook in a manner designed to be understood by the audience. For most business documents, a good rule of thumb is to aim for a 7th or 8th grade reading level. Microsoft Word provides this information for you, and if you are not using Word, there are other tools available to assess the readability of a document.
In addition to creating a simple to understand document, additional training is a great way to ensure that employees understand the concepts in the handbook. Training can be done through video, in person, or through powerpoints and other supplemental documents. This training is also something that you can provide in the event you need to defend yourself during an employment claim.
A handbook should be readily available to all employees
I know that you will be surprised to learn that I miss the days of printed handbooks, especially from someone who still loves typewriters. But the simplicity of a printed handbook and a clear physical exchange and review with the employee, who often signed a form contemporaneously acknowledging the review (that was then put in a thing called a file cabinet), was a magical time.
With the onset of digital handbooks presented through an intranet, portal, or other electronic means, employers had the opportunity to stop printing cumbersome handbooks and having to deal with reprints when content changed. But, as our favorite business muse, Spiderman, says “with great power comes great responsibility.” By enabling the electronic delivery of handbooks, a new problem was introduced….version management. Cue the ominous dun dun dunn sound effect. Companies that deliver their handbooks via technology are well served to include some sort of logging functionality that illustrates when each version was released, open and acknowledgement data, if the policies are delivered separately a “zipped” version of the complete handbook package, and a historical record that indicates the exact version of the handbook and/or individual policies that were in place at a given time since litigation and claims can lag well behind the current version published on your intranet.
Should employees be required to acknowledge the handbook?
Yes and in a manner which allows you to demonstrate that all employees at least know where it is.
Depending on your technology capabilities, this might be an electronic acknowledgement that is tracked in a contact management system, a return email with preset content, a signed and scanned form, a digital signature and returned pdf, or a simple, old fashioned acknowledgement signed with this thing we used to call a pen. The Society for Human Resource Management (SHRM) has a great sample here, regardless of the manner you collect it.
Common Gotcha #1: The growing company and the introduction of new requirements based on size
As we’ve learned already here, the number of employees you have often determines the laws that you must comply with. One of the biggest “gotchas” as companies grow is not realizing they have passed a certain threshold and new laws apply. These thresholds are often 15, 20, 50 or 100 employees.
Common Gotcha #2: Specific content for multi-state employers
We are all guilty of being very focused on the state we are working in. For companies that operate in multiple locations, there are often state specific requirements (including written policies) that can be vastly different and have to be complied with related to employees in those states, even if you have just a few. Remember the first time you heard Tupac sing through that distorted microphone “Californ-i-a”? He wasn’t just talking about partying, as California is one of the most onerous states for employment requirements. As is New York. (And, you thought I’d forgotten to include some earworms for your early morning enjoyment!)
The second challenge related to state specific content ties back to version management. Your company will need to decide if you would prefer to have a different version of the handbook that only contains the content applicable to each state (easier for the employee to understand, does not create an opportunity to “expand” the rights offered to employees), or whether you would prefer to list all the nuances in a single handbook (easier to keep current, update, and manage).
There really is not much of a conclusion here, other than, it is always my advice to have a quality employee handbook (even if it isn’t required by law) that employees acknowledge receiving. Once you have one, take a moment to consider how you are managing it on an ongoing basis and ensure that you don’t lose sight of keeping it current with all the other critical tasks you face.
And take heart, it’s not just you….this stuff is complicated and overwhelming if you don’t do it all the time. Thus, here are some additional “easy to understand” compliance resources for your reference:
The Department of Labor Small Business
The Department of Labor Summary of Major Laws
Equal Employment Opportunity Commission Summary of Laws Enforced
Small Business Administration, Stay Legally Compliant (this is also great for building your first business repeatable process checklist, as is Basic Business Operations by Citigroup)
*Substack, with all of its great features, does not let me footnote or link in the title. If you weren’t around in the 1970s, you probably won’t “get” the title. But, enjoy this clip from The Jerk, which I saw in the theater with my dad in 1979. I probably only understood about 1/4 of it (I was 7 after all), but I always thought this part was hilarious….and yes, I love phone books too!