How to Write and Update Your Employee Handbook For 2021 + Templates
Updated September 12, 2021
Employee Handbooks in 2021: The Definitive Guide
Many business owners overlook the importance of a well-written employee handbook. A good handbook serves many purposes. Is your handbook a useful tool for your company? A strong employee handbook will:
- Set expectations for new hires
- Codify, organize, and update company policies
- Simplify onboarding
- Help new hires succeed
- Make training and enforcement easier
- Protect you from compliance violations
In this article, we take a deep dive into employee handbooks: what, why, and how.
Employee Handbook Templates
If you came to this article to download the handbook templates, here they are:
We’ve organized this guide into five sections:
- What Is An Employee Handbook?
- Are You Legally Required to Have an Employee Handbook?
- Handbook Examples to Inspire You
- The Challenge of Keeping Handbooks Up-To-Date
- 20 Reasons You May Need To Update Your Employee Handbook
What is an Employee Handbook?
Firstly, it’s essential for smooth operations. It should be the go-to authority for policies. Secondly, it’s critical for new hire training. As such, it should be the first place to look for legal clarification. Thirdly, you can use it to showcase your company culture.
What Do I Need For an Employee Handbook?
What do you need to put in your handbook? Well, pretty much everything. After all, it’s a user’s manual for new employees, managers, and executives. If you are starting from scratch, expect to make several drafts. Take your time. Get input from everyone. Start with your mission statement.
A Human Resources Management System (HRMS) makes it easy. Most large companies cover the following in their employee handbook:
- Company policies
- Terms of employment
- Payroll deductions
- Paid Time Off (PTO)
- Business travel
- Conflict of interest
- COVID-19-related infection prevention measures
- Intellectual property
- Code of conduct
- Time and attendance
- Dress code
- Mobile devices
- Social Media
An employee handbook should be a living document. For this reason, you should make proactive updates. For example, businesses that created a social media policy 20 years ago saved a lot of hassle. Similarly, those that trained hiring managers on legal interview questions avoided lawsuits. In addition, those that addressed sexual harassment were ahead of the game.
What Are You Legally Required to Have in Your New Employee Handbook?
Now that we’ve discussed the ‘what,’ let’s discuss the ‘why.’ Why do you need a handbook? Does the law require it? Actually, the federal Department of Labor does not require you to have a handbook, per se. However, they do require you to inform employees of their rights. As a result, some employers forego a handbook for workplace signs. Because of this, during onboarding, they hand out a stack of papers.
Conversely, smart employers have workplace signs plus a good employee handbook.
How does an incomplete handbook cause problems? Consider what happened to a new employee as described on Reddit:
I didn’t know I was supposed to enroll before my three months for health insurance. And I was never told this and just assumed I couldn’t until my three months happened. Then 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
Know State, Federal, Local, and Union Workplace Regulations
Before you start writing a new handbook (or updating one), know that many workplace laws are at play. If you have employees in more than one city or state, you will need location-specific sections, for example.
Topics to Include in Your Employee Handbook
At-Will Employment Clause
‘At-will’ means either party can end the working relationship at any time. In all states except Montana, this agreement is the default relationship. Therefore, if you have employees in Montana, make sure you spell this out.
Equal Employment and Anti-Harassment
The Equal Employment Opportunity Commission (EEOC) regulates this. Make sure you describe unacceptable behavior in detail. In addition, tell your employees what to do if they are subject to harassment or see it happen to a co-worker. Plus, outline what you will do if an employee claims harassment.
Family Medical Leave Act (FMLA)
In addition to the FMLA poster, you must provide this in written form. That way, if an employee needs to take paid or unpaid leave, they can see your handbook for detailed instructions. In addition, you may need to add changes due to protected COVID-related leave.
Occupational Safety and Health Administration (OSHA)
To have a safe workplace, your employees need to know your safety policies. How do you do this? Use in-person training plus posters so employees keep them top of mind. Above all, present them in the handbook on day one. After all, you want your new hires to understand your commitment to safety.
The pandemic has certainly affected all businesses and their work environment. You have probably created policies concerning social distancing, staggered work schedules, vaccinations, and symptom checking.
Drug-Free Workplace Policies
It’s a good idea to have a substance abuse policy whether or not you are required. If you do drug testing, for example, your policies must not discriminate. Bottom line, make sure you know the laws and state them in your handbook. That said, there is also the issue of cannabis. Cannabis remains illegal at the federal level. As a result, there is confusion about what this means at the local level. If your state has legalized marijuana, it’s time to update your employee handbook. For example, this may affect your 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 align with federal laws.
Final Paycheck and Unused PTO
End-of-employment issues may be subject to a state law depending on where you live. Because of this, talk to your legal counsel. Some states, for example, require employers to pay out unused PTO and vacation time.
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. Among other things, it provides continuing health coverage after separation. In practical usage, it refers to the benefits plan offered by the company under COBRA.) Former employees who apply for COBRA will need enrollment forms. Therefore, if you have an HRMS, include a link to these forms in your handbook.
Time and Attendance
Remember, wage and hour laws are linked to how well you track employee’s time. As a result, knowing how to track hours is essential. Your handbook should explain how employees clock in for shifts. Include rules for meals and breaks, PTO, minimum wage, overtime, and fair workweek, for instance.
There may be a lot of documents floating around. Protect yourself from outdated or poorly-written policies that were created before current guidelines. State clearly that the handbook supersedes any other rules. This also gives you a measure of protection from informal or ‘assumed’ policies. Both of which could contradict official policies or law. At the very minimum, protect yourself by stating that the policies are subject to change.
New Hire Acknowledgment and Agreement
HR systems with electronic signature make this easy. Newly hired employees can read the policies from an internet connected device then sign that they understand and will follow them.
Employee Handbook Examples to Inspire You
Now that we’ve discussed the ‘have-to’s’ let’s review some employee handbook examples. See how these HR departments made their employee handbook come alive.
The Motley Fool Employee Handbook We take special pride in calling ourselves “Foolish” – with a capital F. Harkening back to Shakespeare. It is our calling card to be irreverent. To instruct and amuse. And to speak the truth. So our Core Values can be summarized simply as “Be Foolish.” Motley Fool Employee Handbook
Tesla Employee Anti-Handbook “Anyone at Tesla can and should talk to anyone else according to what they think is the fastest way to solve a problem for the benefit of the whole company. Talk with your manager. And you can talk to your manager’s manager. You can talk directly to a VP in another department. You can talk to Elon–you can talk to anyone without anyone else’s permission.” Tesla Employee Anti-Handbook
Trello Employee Handbook New hires at Trello are treated to a manual organized in a Trello board. Complete with charming pictures of adorable dogs and cats. You can see it here.
The Challenge of Keeping Handbooks Up-to-Date
Certainly, it takes an ongoing effort to keep the employee handbook up-to-date. This is especially true for small companies without an HR director. Firstly, the person tasked doesn’t always have time to work out the details. In some companies, writing and updating the handbook is a dreaded task. As a result, no one is eager to take ownership and the buck gets passed around. Secondly, printing costs sink tight budgets. This is unfortunate. After all, small businesses need a good handbook as much as larger ones.
Problems With Outdated Employee Handbooks
Most importantly, know that an outdated handbook can do more harm than good. Especially if the policies aren’t compliant. In addition, it causes confusion. Furthermore, it can be particularly problematic for new hires.
Consider this example: Suppose you have a 60-day waiting period for benefits. What if a new employee assumes health benefits start immediately? Because of this, they end their previous coverage before they are eligible. Then they have 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: New hires are emailed a link to the employee handbook as soon as they accept the job offer. The email states explicitly that the new hire must read the handbook ASAP. The handbook clearly explains the waiting period. The new hire signs their acknowledgment. You could also reiterate the waiting period in the email for good measure.
Why You Might Need Multiple Handbook Versions
If you have workers in many states, you may need a separate compliance section for each state. Talk to your business attorney or state Department of Labor. For example, if you are based in California, you may need a separate section for workers in specific cities. In addition, New York state expanded qualified leave beyond the federal law.
Your Handbook Represents Your Business
When your employee manual is outdated, it reflects poorly on your company. And as employees discover that it’s incorrect, pretty soon everyone ignores it. Employees have to ask their manager or the HR staff every time they have a question. Unfortunately, incorrect information and informal policies can spread through the workforce.
20 Reasons You May Need To Update Your Employee Handbook
In this chapter, we discuss 20 specific reasons you may need to update your staff manual.
Certainly, keeping your employee handbook up-to-date is not simply a matter of convenience. It is necessary for legal compliance. It’s important to remember it can and will be used as a legal document. If an employee brings a case against your company, you may be held to the standards in your handbook.
For more information on small business compliance, see 2021 HR Compliance Checklist.
2. Legalization of Marijuana
As mentioned in section two, many states have legalized cannabis. If your state is one of them, it’s time to create a policy with legal guidance.
3. Fair Scheduling, Overtime and FMLA Updates
Laws are changing all the time. For instance, stable scheduling and PTO payout laws are popping up. The best practice is to assign an HR manager to track changes in employment law. Talk to your attorney, payroll company or state DOL for help as well.
4. Changes in State Discrimination Laws
Federal anti-discrimination laws have been around for a while. Be aware, however, many states have additional laws related to discrimination. As laws evolve, it’s important to maintain pace in your handbook. By the way, many companies have adopted discrimination policies that are stricter than the feds.
5. New Location
If your company has opened a new location, it’s time to update your employee handbook. Employees should be able to find the official address of your new location. You should also communicate purpose and function. The handbook is the best place to list 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. Also, list products or services that are no longer offered. Don’t simply remove them. Label them discontinued. Employees need an official method for product availability.
7. New Employee Types
Define job roles and employee types to clarify benefits eligibility requirements. You may have full-time employees (exempt and non-exempt), part-time employees, independent contractors, seasonal workers, temps or non-residents. Also, outline special considerations or exclusions where needed.
8. Social Media Policies
Social media use continues to evolve as new platforms emerge. For your business, it can be a powerful form of communication, promotion, and marketing. It can also be a drain on productivity. Thus, clarify your policy on personal and company use of social media. Be specific about the consequences for violations. If you have a policy restricting what employees can post on their own time, make sure it doesn’t violate free speech rights.
9. Increased Awareness of Sexual Harassment and Legal Implications
Awareness about workplace sexual harassment has been increasing. Public cases, activism, and news stories have everyone thinking about it. Now is a perfect time to update your employee handbook on sexual harassment policies. Be clear and concise about what constitutes harassment and the associated disciplinary action.
Employer retaliation is the most frequently filed charge with the EEOC. Retaliation is when an employer punishes an employee for a protected action. For example, whistleblowing or filing a complaint. First off, don’t break the law by retaliating and make sure managers understand this. Assure your employees that they can raise issues and explain how to report problems without wrongful termination. If your handbook has instructions, you are less likely to get into a messy situation.
11. Interview Policy
Because many states have banned salary history questions during interviews, your recruiting team needs to know this. Violation can land you in expensive litigation.
12. Remote Working
Millions of employees started working from home last year due to lockdown orders. Telecommuting requires its own set of rules. For example, clarify when you expect remote employees to be available. Outline time and attendance recording procedures. Similarly, update policies on breaks and flexible time.
Bonus: Two Free Ebooks on Remote Working!
For guidance on managing remote teams, get our free ebook How to Master Remote Workforce Management: The Essential Guide for Resilient Businesses. Plus, for guidance on how remote working affects your company culture, get Remote Corporate Culture.
13. Criminal Background Checks
There are new state laws on background checks. This is an area to keep an eye on, especially if you are doing criminal background checks routinely. Include instructions, consent, privacy policies, and acceptable practices. In addition, make sure your managers are up to speed.
14. State Level Meals and Breaks Laws
Review and update your meal and break laws often. Make sure hourly employees clock out for unpaid breaks. If they don’t, their 40-hour week could creep into overtime without their manager knowing it. That would put you at risk of an overtime violation
15. Legal Clarifications
If your company has ‘unwritten or ‘assumed’ policies, you are on thin legal ground. They aren’t policies in a legal sense and won’t be defensible. This will undermine the integrity of your handbook. Is there ambiguous language? Or implied circumstances? If so, you are opening the door to interpretation because it can go a million different ways. Therefore, the time to review your employee handbook for ambiguous language. Leave no stone unturned (or unedited). When employees have a leveraging point, there is room for dispute.
16. Equal Policies
Your employee handbook should contain equitable policies. Specifically, those that define interactions between management, employees, and company. Make sure your policies are equitable and, just as importantly, that everyone follows them. Indeed, if a manager shows favoritism it undermines the handbook.
17. Cloud Access
Are you taking advantage of cloud access for your employee handbook? If not, this is a perfect time to start. Cloud-based staff handbooks are easy to access, and available with any mobile device. Plus, you can update them in real time as needed. It doesn’t get better than that. In addition, you won’t need to reprint your handbook or hand out additional sections.
18. Job Role Identification
Your employees should always be able to review updated job roles. Each job role should include responsibilities and expectations. In a cloud-based system, you can give access as needed. That way, only employees with that role can see them.
19. Streamline Onboarding
Your employee handbook is the best way to set expectations. As discussed previously, cloud-based handbooks improve onboarding. Give new hires access to your manual immediately. Track reading progress in your HRMS.
20. Growth Milestones
If you have added employees, you may now be subject to ‘large employer’ rules. It all depends on how many employees you have. Firstly, if you have at least one employee, you must provide equal pay for equal work to male and female employees. (You should do that anyway.) Secondly, 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). Plus national origin, disability and genetic information (including family medical history). You can read about more compliance milestones here.
WorkforceHub for Employee Handbooks
In conclusion, we want to introduce you to WorkforceHub. WorkforceHub is a comprehensive HR solution specifically built for and tailored to small businesses. WorkforceHub is a complete HR solution which includes employee handbook management. For more information, schedule a demo today.
Simplify HR management today.
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