Your employee handbook is an important document. A well crafted handbook gives legal protection and effective communication for your organization. Ideally, it help employees understand company policies, promotes solid company-employee communication, and sets a consistent standard of expectations. However, a poorly crafted handbook can have serious legal ramifications.
In many employment lawsuits, your handbook will be a key piece of evidence that can either protect your company or provide ammunition for the employee (or former employee) who is suing you. With stakes this high, it’s quite important for your handbook to be thorough, up to date, legally compliant, understandable, and readily available to all employees. It’s also wise to make employees sign a form stating they received and reviewed the employee handbook, so that they cannot later claim during a lawsuit that they were unaware of a particular policy.
In this short guide, we’ll explore more of what your handbook should legally include and look at examples of common legal mistakes employers make with their employee handbook.
What Legally Needs To Be in an Employee Handbook?
An employee handbook must include several legally required elements to stay in compliance with federal, state, and local laws, and to protect both you and your employees. These elements serve to clarify workplace expectations, employee rights, and the legal framework governing the employment relationship. Your employee handbook should include:
At-Will Employment Statement
The handbook should explicitly state the nature of the employment relationship, typically that employment is “at-will.” This means either the employer or the employee can terminate the employment at any time, with or without cause or notice, unless otherwise specified by contract or law. Clearly defining this relationship helps prevent misunderstandings and potential legal claims related to wrongful termination.
Equal Employment Opportunity (EEO) Policy
A comprehensive EEO should affirm your company’s commitment to providing equal employment opportunities to all employees and applicants without discrimination based on protected characteristics such as race, color, religion, sex, national origin, age, disability, or any other status protected by law. This policy demonstrates compliance with federal laws enforced by agencies like the Equal Employment Opportunity Commission (EEOC) and helps foster an inclusive workplace culture.
Anti-Harassment and Anti-Discrimination Policies
These policies should clearly prohibit harassment, discrimination, and retaliation in the workplace. They should define unacceptable behaviors, provide examples, and explain the procedures for reporting incidents. Including information on how complaints will be investigated and the protections afforded to complainants also helps meet legal standards and protect your employees.
Wage and Hour Policies
Your handbook needs to address compliance with wage and hour laws, including the Fair Labor Standards Act (FLSA). This includes detailing employee classifications (exempt vs. non-exempt), overtime eligibility and compensation, pay schedules, and timekeeping requirements. Clearly explaining these policies helps prevent wage disputes and makes sure your employees understand how they will be compensated.
Leave Policies
Legally required leave policies should be outlined, like those relating to the Family and Medical Leave Act (FMLA), medical leave, sick time, and any state-specific leave laws. Your handbook should explain eligibility, the process for requesting leave, employee rights during leave, and the company’s obligations. Including information on paid time off (PTO), bereavement, family leave, and other benefits related to time away from work is also important. Be sure to clarify how employees accrue paid time off, including the accrual process and any rollover policies, and specify the need to provide notice when requesting time off to ensure smooth scheduling and compliance.
Workplace Safety and Health Policies
Employers must include policies that comply with the Occupational Safety and Health Administration (OSHA) regulations and any applicable state safety laws. This includes outlining safety procedures, reporting accidents or unsafe conditions, and the company’s commitment to providing a safe work environment. It is essential to include dress code and remote work policies, tailored to the specific needs of different workplaces, to ensure clarity and compliance with current work arrangements.
Benefits
Clearly outline employee benefits, company benefits, and the full range of what the company offers, such as health insurance, retirement plans, wellness programs, and flexible scheduling. Distinguish between employee benefits (direct perks for employees), company benefits (broader organizational offerings), and the overall package the company offers to attract and retain staff. Make sure these benefits are relevant, easily accessible, and clearly described so employees understand what is available to them.
Department-Specific Policies and Responsibilities
Include department-specific policies and clarify the responsibilities for each department. Outlining these helps ensure that employees understand their roles, duties, and expectations within the organization, and supports interdepartmental cooperation and clarity.
Discipline and Termination Procedures
This section should explain the expectations for employee conduct, the process for addressing violations, and the circumstances under which termination may occur. Clear guidance helps set expectations and reduces legal risks related to wrongful termination claims.
Technology Use and Confidentiality Policies
Policies regarding the use of company technology, including computers, email, internet, and social media, should be clearly stated. Your handbook should specify that company devices and communications are the property of the employer and outline acceptable use, monitoring, and privacy expectations. Confidentiality policies protecting sensitive company information and intellectual property should also be included.
Legal Compliance
Be sure to include all required policies and address legal liability by determining which practices are essential for your organization. Regularly review and update your handbook to ensure all content remains relevant and compliant with current laws and regulations.
Acknowledgment of Receipt and Agreement
In order for your handbook to be enforceable, it should include an acknowledgment form that your employees sign, confirming they have received, read, and understood the handbook. This form should also reiterate that the handbook is not a contract and that policies are subject to change. Ensure employees have access to the entire document and understand their responsibilities as outlined in the handbook.
Including these legally required components in your employee handbook keeps you compliant and helps create a clear, consistent, and fair workplace environment.
This employee handbook blog is provided for informational purposes only and does not constitute legal advice. It may not include all requirements applicable to your specific state or locality. Employers should consult with legal counsel or qualified HR professionals to make sure your handbook complies with all relevant federal, state, and local laws and addresses the unique needs of your organization.
What Are Common Legal Mistakes Made in an Employee Handbook?
Many employers inadvertently include errors in their handbook that can open your business up to liability. Here’s a few common legal pitfalls to avoid:
- Not Keeping up with Changing Laws and Requirements
Laws change constantly and your five year old handbook could open you up to liability. It’s extremely important to regularly review and update your employee handbook to stay compliant with new and changing federal, state, and local laws. Most companies and small businesses should schedule a regular handbook update to make sure the entire document is reviewed for accuracy and compliance. You’ll also want to build in a process to notify employees of all handbook updates, whether by distributing updated versions or informing them if the handbook is available online. For significant legal changes, consider having employees sign an acknowledgment form confirming their awareness of the revised policies. Including a clear disclaimer that the handbook is subject to change at any time is also a best practice to maintain legal compliance. - Holding Contradictory Policies
Without careful review, your handbook can easily contain policies that contradict each other. For example, you’ve made sure your handbook is explicit about the at-will employment relationship, but you didn’t realize that your probation policy undermines it, since it makes it sound like employment is guaranteed for at least as long as the probationary period. You should also check your progressive discipline policy, which may not clarify that an employee may be terminated at any time. - Neglecting Legal ReviewBecause employee handbooks are so important, it’s best practice to have legal counsel review yours periodically to help keep your company out of legal trouble. Companies should ensure their handbook was properly created and is regularly updated, which is especially critical for small businesses that may lack dedicated HR resources. A thorough legal review makes sure that your handbook complies with all applicable federal, state, and local employment laws and regulations, reducing the risk of costly lawsuits or penalties.Legal experts can identify ambiguous language, outdated policies, or any provisions that might inadvertently create legal liabilities. Additionally, as laws evolve, regular legal reviews help update your handbook to reflect current requirements, like changes in wage and hour laws, anti-discrimination statutes, or leave policies. Partnering with legal counsel also provides peace of mind that your handbook clearly communicates company policies while protecting your business interests.
Go Beyond Employee Handbooks with Gregory & Appel
Creating a solid, compliant employee handbook is just the beginning. What really counts is putting those policies into action every day, whether that’s running performance reviews or keeping your workplace safe and fair.
At Gregory & Appel, we’re here to help you go beyond the handbook. From designing employee benefit plans that really work to crafting smart risk management strategies, we show up to help your business succeed.
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This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.
These HR Insights are published in partnership with Zywave, and are not intended to be exhaustive, nor should any discussion or opinions be construed as professional advice. © 2011, 2019 Zywave, Inc. All rights reserved.