Employee Handbook, Hiring Employees

Seven Provisions that Should be Included in Your Employee Handbook

February 19, 2019February 19, 2019
Seven Provisions that Should be Included in Your Employee Handbook

Does your business have an employee handbook? Well, you need one. Contrary to its extraneous, drab reputation, the employee handbook is an important tool for both employees and employers.   As a new worker, the employee handbook will introduce you to the company, its policies, operations, and procedures.  Conversely for employers, the handbook establishes the essential rules and regulations that all workers must be cognizant of.  

It’s pivotal that the book is written clearly and concisely.  Additionally, it’s imperative that it contains all of the necessary information and components; missing or absent provisions can result in legal consequences for employers.  So exactly what information should be included in your employee handbook?   

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Provisions that are Required by Law

In the U.S., employers are generally not required to possess an employee handbook.  However, while the handbook isn’t obligatory, there are certain rights and policies that by-law must be communicated to workers in-writing.  The handbook is an ideal method for communicating such rights.  This is one reason that maintaining a concise and coherent handbook is widely considered “best-practice” among business owners.  

Likewise, a well-written book acts as a security net if/when legal action is taken against the company or owner(s).  The handbook provides legal evidence that core rules, rights, and businesses practices were communicated to the employee, in-writing, upon employment.   Handbooks should contain a place for the employee to sign, verifying that they read and understood the contents of the book.  This signed confirmation can go a long way in a court of law.  

7 Provisions that Should be Included in Your Employee Handbook 

That being said, what makes a handbook well-written, complete, and legally sound?   Although handbooks vary widely depending on the type of business and kind of employment being offered, there are a few provisions that should always be included.

1. Acknowledgment of Receipt  

First and foremost, you’ll need a section where the employee can acknowledge receipt of the book (usually via signature).  Likewise, the acknowledgment should include a statement that declares the reader not only read, but understood the content of the handbook. 

2. Explanation of the Book & At-Will Status 

Though it is often-times overlooked, it’s important to clearly explain that the handbook is just that: a book, and not a contract.  New employees may be under the impression that their signing of the handbook is in-fact a contractual agreement regarding their employment.   A section of the handbook should clarify any ambiguity surrounding the book’s purpose. You'll also want to make clear that the employment relationship is at-will.

3. Federal and State Regulations

By-law, some rights and policies must be conveyed in-writing to new workers upon beginning their employment.  Although these provisions need-not be communicated through the handbook, the book is a great medium to get these points across.  This includes equal-employment and non-discrimination policies, workers compensation rules, and family or medical-leave laws (which may vary by state).

4. Benefits

Employee benefits may be worthwhile to include in your handbook as well.  Because the particulars regarding benefits can change frequently, this information should be kept at a general level: which workers are eligible, at what time they can enroll in benefits, and who can be included on the coverages (such as a spouse or children). 

5. Employment Classification Policy

Most American employees are categorized as either exempt or non-exempt under the Federal Labor Standards Act (FLSA).  This classification has important implications in terms of overtime pay and employee protections, and thus should be mentioned in the handbook.  Importantly, the specific classification for each worker is not needed, but an explanation of the business’s classification policy should be defined.

6. Pay, Paid-Time Off, and Overtime Policies

Clearly explaining the company’s financial policies is important to employees and employers alike.  Many legal disputes arise from financial disagreements between workers and employers.  The handbook should include how the employee will be paid, when the employee will be paid, overtime regulations, and how many (if any) hours are offered as paid time off.

7. Leave Policies

Without getting into too much detail, the handbook should list what types of leave are offered, which employees are eligible, and how a worker can apply for such leave.   Some leave is mandated by the state or federal government, and should also be included in the handbook.

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In conclusion, there are a number of provisions that a well-written employee handbook should include.  While the handbook isn’t required by law, successful business-owners typically consider employee handbooks best-practice.   This is for a couple reasons.  First, an effective handbook will introduce the employee to the operations of the company, while establishing the rules and policies that must be followed.  

Second, the employee handbook largely acts as a security net when legal action is taken against the company.  When signed, the book is evidence that the employee was informed of the rules and policies upon their new employment.

Importantly, the handbook should always be reviewed by an attorney to ensure the contents are complete and the language is clear.  Perhaps the most valuable aspect of the book—for employers at least—is the security it provides when the company is forced into a legal situation.  For that reason, a legal professional should examine the book before it’s used for administrative purposes.  

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