As a small business owner, you need to inform your employees about your policies, procedures, and expectations . Your employees should also know their rights and protections under state and federal law.
This information should be consolidated into a written document, called an employee handbook. While employee handbooks are not required by law, they’re a simple and effective way to communicate this info.
In this article, we’ll explore:
- What is an employee handbook
- Are employee handbooks required by law
- What to include in your company policy
- How to create an effective employee handbook
Let’s get started.
What is an employee handbook?
When new employees join a company, they’re usually provided with a guide called an employee handbook or manual. An employee handbook contains valuable information about the company. This includes its mission statement, values, policies, and procedures.
It can also include employees’ rights, which employers are legally required to provide.
By providing an employee handbook, you can help your employees better understand your business and what’s expected of them. You’re also helping fulfill your legal obligations as an employer.
Are employee handbooks required by law?
It’s not legally required to provide an employee handbook. However, state and federal laws require you to provide employees information about paid time off (PTO), sick leave policies, workplace rights, and protections.
The Equal Employment Opportunity Commission (EEOC) and the Family and Medical Leave Act (FMLA) outline certain workplace rights and protections. You need to advise your new hires about this in your employee handbook.
Disclaimer: This article wasn’t written by a legal expert and shouldn’t be considered legal advice. We suggest you contact an employment lawyer or HR expert to answer any legal and compliance questions.
Why employee handbooks for small business are important
Employee handbooks help establish a consistent approach to your workplace policies. They prevent misunderstandings and conflicts, and can even improve employee retention.
It’s important to tailor your employee handbook to fit the specific needs and culture of your company. A one-size-fits-all approach won’t be effective.
Using a tool like Homebase HR Pro helps you build your employee handbook efficiently. Our certified HR experts can provide you with handbook examples and can even create a template that suits your business.
We’ll also send you labor law alerts, so you know when it’s time to update your policies.
What to include in your company employee handbook
When creating your employee handbook, you want to make sure you cover the essentials new hires need to know. It should include everything from your business values and culture to your policies and procedures. This helps your team members understand what’s expected of them.
Don’t forget to include information about their rights as employees. You’re legally required to communicate this.
Here’s a list of key sections you should include:
- Your mission statement and business backstory: This helps new hires understand your company’s goals and values.
- The purpose of the handbook: Explain why it’s important and how employees can use it in the future.
- An Equal Employment Opportunity statement: This shows that your business doesn’t discriminate based on race, religion, or gender identity.
- Your employees’ rights: This includes legal privileges under acts like the Fair Labor Standards Act and the Americans with Disabilities Act.
- Workers’ compensation policies: This should outline how employees can file a claim in case of a workplace injury.
- Workplace policies and procedures: This should cover things like roles and responsibilities, wages and compensation, PTO and sick days. Also include workplace safety protocols, and disciplinary and termination procedures.
- At-will employment: Let employees know if they’re agreeing to an at-will employment arrangement, they can be fired or quit at any time for any legal reason.
How to write your employee handbook: a step-by-step guide
As a business owner, you want to set your employees up for success. Part of that is providing them with a clearly-written and comprehensive employee handbook.
But where do you start? Here’s a six-step process to follow when creating your own employee handbook:
1. Describe your business and the purpose of the handbook
Introduce your business and explain why the handbook is important. Take the time to share a brief history of your company, your business philosophy, and the culture you’ve worked to create.
For example, let’s say you own a small chain of cafes. You can share the story of when and why you opened your first cafe, and how your business has grown and evolved since then.
Also let your new team know that the handbook isn’t just for onboarding and training. Explain that it also serves as a valuable resource they can use to find answers to any questions they may have about time off, policies and their rights.
2. Provide all legal information
Including information about paid time off, anti-discrimination policies, and workers’ compensation in your employee handbook isn’t just legally required. It also demonstrates your commitment to your employees.
Paid time off and sick leave policies vary by state, so make sure to include any state-specific laws that apply to your business. Also, if your business is covered under the Family and Medical Leave Act (FMLA), you’re required to offer 12 weeks of unpaid leave per calendar year to any employee who has a serious health condition or a family member with a serious health condition.
Homebase offers a team of HR Pros ready to help with all of your employee handbook questions.
Anti-discrimination policies should also be included in your handbook, along with any state-specific non-discrimination laws. This is not only legally required, but also helps create a safe and inclusive environment for your team.
Workers’ compensation is a type of insurance that employers pay for to protect their employees in case of a work-related injury or illness. In your handbook, be sure to clearly outline the workers’ compensation policies as outlined by state and federal laws, as well as how your employees can file a claim if needed.
3. Establish clear guidelines on compensation, work hours, and time off
Let’s dive into the most important part of the employee handbook – the section that employees will likely reference often.
Time tracking, attendance, and time off
You’ll need to explain to your employees, whether they’re full-time or part-time, how you track their time. And also how many hours you expect them to work per shift and per week.
You should also outline your overtime policy. This includes which employees are exempt and non-exempt from overtime.
It’s also important to discuss your attendance guidelines and policies about tardiness. Outline how many unexplained absences are allowed before disciplinary action or termination occurs.
You should also provide details about your time off policy. Ensure that your employees know how to submit a request. If your sick leave and vacation time policies are different, be sure to break down the process for each type.
Homebase offers live HR guidance so you never have to feel lost or confused about compliance issues. We’ll even notify you when laws change at the state or federal level, so you can be sure you’re always following regulations.
Compensation
This section should describe how your pay structure works for each type of employee. If you offer bonuses, explain how team members can earn them and how you distribute them.
Make sure staff know that taxes will be deducted based on federal and state rates, as well as any other applicable deductions like for health insurance or 401(k)s. Don’t forget to include a payroll calendar, so employees know when they’ll get paid and how often.
Employee benefits
If you offer benefits like health insurance or pension funds, be sure to explain which employees are eligible for them and how to enroll.
Your part-time employees may not qualify for a benefits package, so make sure to provide a list of the necessary documents for enrollment.
If your business offers benefits, you should mention them. Benefits include a flexible work schedule or stipends for childcare. They also include education access, wellness programs, a health savings account (HSA) or flexible savings account (FSA).
Other benefits include student loan assistance, dedicated time off for volunteer work, career development opportunities, and employee discounts and rewards.
Safety practices and protocols
Every business has its own unique safety concerns. Regardless, there are some general practices you should include in your safety guide. First, it’s important to have clear drug and alcohol policies in place to keep your workplace safe.
Even if you operate in a state where recreational drugs are legal, make it clear that employees are not allowed to use them while on the job.
Your safety guide should also explain how employees can maintain a safe work environment. Also, how to comply with Occupational Safety and Health Administration (OSHA) standards.
This may require additional training or certifications. So, make sure your employees have access to the resources they need to complete these requirements.
It’s also important to have a clear policy against harassment, including sexual, verbal, and bullying. Define what harassment looks like and the consequences for violating the policy.
Additionally, the law requires employers to establish a harassment complaint process. Make sure your employees know how to report harassment and provide them with a step-by-step protocol to follow.
Also consider adding information about any anti-harassment training requirements in your state. If your state requires it, include how to complete those programs.
5. Establish workplace expectations
It’s important to clearly outline your expectations for employee behavior while they’re on the job. Your handbook should cover policies and procedures related to work schedules.
It should also include punctuality, dress code, breaks, and workplace behavior, such as language use, team collaboration, and customer service.
Be sure to explain the reasoning behind your policies and link them to your company values. This will help create the type of company culture you want.
Your handbook should also detail the disciplinary process for employees who don’t follow policies. Use clear, straightforward language to describe how the disciplinary process works. Also include how many warnings employees will receive before termination becomes an option.
It’s okay to use common example situations to illustrate how your disciplinary process work. But avoid providing too much detail or referring to real-life incidents. Being too specific may create unintentional loopholes that employees could exploit.
For instance, if you mention that it’s illegal to work off the clock, your restaurant staff may misunderstand. This can cause them to stay clocked in at the workplace after their shift ends. This makes them rack up overtime hours without notifying you or their manager.
6. Provide a disclaimer that policies may change
Once your new team member has gone through your employee handbook, have them sign a form acknowledging that they understand.
Don’t forget to add a disclaimer clarifying that the handbook is not a binding employment contract. It’s simply a guide that provides information about your company policies.
It’s also crucial to include that company policies may be subject to change in the future. Mention that there may be rules that apply to conduct or actions not explicitly mentioned in the current handbook.
This helps you maintain some level of control and flexibility in case unforeseen situations come up.
Remember: This is not legal advice. If you have questions about your particular situation, please consult a lawyer, CPA, or other appropriate professional advisor or agency.
