What Policies Should You Include in an Employee Handbook?
An employee handbook may seem unnecessary when you have a small team. But it really isn’t.
Though you’re not required by law to have an employee handbook, recording key policies can protect your business. Plus, it gives your full-time staff and part-time employees the clarity they need on important employment and workplace policies, such as your expectations for employee behavior, how vacation time is handled, and whether remote work is permitted or not.
What is an employee handbook?
An employee handbook—or employee manual—is an important living document for your business that outlines your organization’s policies, history, and culture for current and future employees. Although creating an employee handbook may be the last thing on your mind when you’re trying to grow your business, human resources (HR) experts agree that it’s best practice to start a handbook before you hire your first employee, as it defines your expectations for them and helps protect you legally.
What policies are you legally required to include in an employee handbook?
Employee handbooks aren’t a legal requirement in the US, so if you decide to create one for your business, you have a lot of wiggle room in choosing what company policies to include in this document.
There is one caveat, however. Most employers will be legally required to include the following policies in their employee manual if they choose to have one. This establishes appropriate workplace expectations and ensures employees understand the rights afforded to them by federal, state, and local workplace and employment laws.
Let’s take a look at them now.
Equal Employment Opportunity policy
Several federal and state laws make it illegal for employers to discriminate against employees and job applicants based on certain protected characteristics, including:
- Age
- Race
- Color
- Religion
- Sex
- National origin
- Disability
- Genetic information
Together, these laws are known as Equal Employment Opportunity (EEO) laws. Many of these laws require businesses to include an anti-discrimination policy in their employee handbooks to demonstrate their compliance with EEO policies.
However, even if you’re not required to have one, it’s highly recommended to do so to show your dedication to protecting your employees and maintaining a diverse, inclusive, and fair work environment.
In your nondiscrimination policy, affirm your company’s commitment to nondiscrimination and equal opportunity in its employment practices. This section should also offer guidance on how employees can report any discrimination concerns and outline what steps your business will take in response.
Anti-harassment policy
In addition to the nondiscrimination policy described above, more and more jurisdictions are requiring employers to maintain policies on preventing harassment and bullying in the workplace.
Even if you’re not required to have it, having this policy in your handbook signals that you’re committed to your employees’ workplace safety.
Generally, you want to make sure your employee handbook policy offers:
- Clear definitions of harassment and bullying
- Examples of unacceptable behavior
- Procedures for reporting and addressing potential wrongdoings
- Confirmation that employees who report concerns or participate in investigations are safe from retaliation or other punishment
Note that you may need to include specific information in your anti-harassment policy, depending on state or local law.
Leave and time off policy
This section should provide all the information an employee needs to know about your company’s holiday, vacation, and paid time off (PTO) policies.
You’ll also need to disclose details about federal and state-mandated leave benefits—including sick leave, jury duty leave, parental leave, bereavement leave, and crime victim leave—as some of these laws require you to have a written policy in your employee handbook.
For each of these leave policies, make sure to include the following information:
- Eligibility requirements
- Leave usage requirements and accrual methods
- Notice or request procedures
- Whether leave is paid or unpaid
- How benefits are handled during extended leave periods
- Your obligations as an employer
Because many states and localities have laws that supersede or expand federal leave mandates, check to make sure that every leave requirement that may apply to your workforce is included in your employee manual.
How to Set up the Right PTO Policy for Your Business
Information on other required employee benefits
Some employee benefits are mandated at the state level, including health insurance, disability insurance, unemployment insurance, workers’ compensation, and retirement plans. So, whether you’re required to offer these benefits (and include the associated policies in your handbook) will be determined by your state and business size.
Each section should outline details such as which workers are eligible for the benefits, when benefits kick in, and how to access or sign up for them.
Reasonable Accommodations Policy
Several laws—including the Americans with Disabilities Act (ADA), Pregnant Workers Fairness Act, and Title VII of the Civil Rights Act—require employers to provide reasonable accommodations to qualified employees and job applicants with disabilities, pregnancies, or sincerely-held religious beliefs.
These laws require businesses that meet the criteria of these laws to provide reasonable accommodations to qualifying employees or job applicants who make an accommodation request. Some of these laws also require companies to have a policy in their handbook that lays out the details of this employer obligation and the accommodation request procedure.
Note that this isn’t an exhaustive list of legally required handbook policies. You may need to include additional sections based on your jurisdiction and the number of employees in your business.
What else should be included in an employee handbook?
In addition to the mandatory policies mentioned above, here are nine other policies you’ll typically find in an effective employee handbook.
Onboarding policy
One of the top motivations for businesses to create an employee handbook is to train new hires. So kick things off by laying out the basics that every employee should know before shimmying through the front door.
The employee onboarding section may include your:
- At-will employment clause
- Conflict of interest statement
- Confidentiality agreement
- Definitions of employment classifications (such as full-time, part-time, exempt, or non-exempt)
- Hiring process, onboarding process, and probationary period
- Other general details, such as directions to the office, team structure, and key contact info
A quick reminder about at-will employment
If there isn’t an agreement clearly stated in your employee handbook, then this type of employment is assumed in all states besides the Treasure State (also known as Montana).
Here’s an example of a sample at-will clause you can use as a model:
“Keep in mind that [your company] is an at-will employer. This means that either party can end the relationship at any point for any reason, with or without notice.”
Employee code of conduct
Even the most free-flowing organization has boundaries. Your code of conduct section should spell out the “10 Commandments” for life as a member of your team. If there’s anything that’s frowned upon, this section should cover it. For example, you may want to explain your organization’s:
- Professional ethics
- Attendance and punctuality expectations
- Dress code policy
- Substance-free workplace policy
- Disciplinary procedures
- Stance on workplace relationships
Workplace environment policy
What’s life like at the office? This section of your employee handbook answers this question, so it explains how, when, and where employees are expected to get things done. You’ll want to include hot topics like:
- Work hours and schedule
- Lunch and break periods
- Remote or hybrid work policies
- Use of company equipment, technology, and data
- Workplace safety and violence prevention policies
- Emergency procedures
- Process for lodging formal complaints
Communication policy
How do team members interact with each other? How should they communicate with customers, vendors, and other partners? Some of this may seem like common sense, but it can still be helpful to spell it all out in your employee manual.
First, set out clear expectations for your organization’s internal communications. For example, is Slack or email your company’s preferred communication method? Can employees wait until the next workday to respond to after-hours communications?
Also consider how the external communications of your employees might reflect back on your company. Address topics like what your organization considers confidential information, what can and cannot be shared by employees on their social media accounts, and how to raise concerns about questionable conduct.
Compensation and performance evaluations
Not to downplay other critical employment policies, but the following sections are the ones your employees will likely flip back to frequently.
Here’s a look at the policies you’ll want your employee manual to cover:
- Timekeeping and pay, including your payroll schedule and the number of pay periods
- Paycheck deductions
- Salary, incentives, raises, and bonuses
- Overtime eligibility
- Performance reviews
- Promotions and transfers
- Travel and expense reimbursement policy
Voluntary employee benefits
Woohoo! Here’s where you list out any additional perks or benefits you offer your team and explain how they match up with the company values you celebrate. When someone’s finished reading this section, they should feel knowledgeable and well taken care of.
Some common examples of voluntary benefits include:
- Stock options
- Scheduling flexibility
- Life insurance
- Pet insurance
- Mental health support
- Childcare support
- Tuition reimbursement
- Professional development opportunities
Similar to the other employee benefits we touched on earlier in this blog post, you’ll want to discuss the details of each additional benefit you offer, including employee eligibility criteria and usage rules.
Termination policy
It happens: Sometimes you just need to part ways. This section of your employee handbook should explain what happens when someone quits the company or gets terminated.
Explain the offboarding basics, such as:
- Resignation or termination protocol
- When employees receive their final paycheck
- How exit interviews and the return of company property works
- How Consolidated Omnibus Budget Reconciliation Act (COBRA) benefits work if someone is laid off or fired
- Any other post-employment obligations an employee may have, such as nondisclosure or noncompete agreements
Your company’s mission statement and story
And last, don’t forget to share who you are and why you’re here! (Okay, this isn’t really a policy, but it’s still important.)
From your original vision to how your company came into being, your company’s story is the underlying foundation that inspires people to show up and do amazing things every single day. Bring new employees into the fold by sharing your mission statement and core values with them.
Consider sharing details such as:
- What is your company, and what does it do?
- Why does the work you do matter?
- Why should others care, too?
- What values are most important to your company’s identity?
Your employee handbook isn’t just a helpful reference document; it captures your company culture, values, and personality.
Give every policy careful consideration and take the time to make your employee handbook shine.
Employee handbook FAQs
Are employee handbooks legally required for small businesses?
Employee handbooks are not legally required by law. However, having one is highly recommended by HR professionals to set expectations for employees and ensure that small businesses comply with federal, state, and local workplace and labor laws.
What happens if an employee handbook is outdated or noncompliant?
Having an outdated or noncompliant employee handbook could open up a small business to lawsuits, fines, audits, and other consequences. Inconsistent or contradictory information in an outdated handbook can result in confusing, unfair, or discriminatory workplace practices—which can make your policies difficult to enforce in legal disputes.
How often should an employee handbook be updated?
The laws that affect your business will change over time as your company grows. Your business itself will inevitably evolve, too. Your employee handbook should be regularly updated to reflect these changes.
Set aside some time at least once a year to review your handbook and see if any sections need to be revised. If changes are made, make sure to notify your employees so they are aware and can review the updates.
Who should review an employee handbook before it is distributed to employees?
Before you distribute an employee handbook to employees, you should have it reviewed by several parties. First and foremost, you must have it reviewed by an employment attorney to ensure it complies with the workplace and employment laws of your jurisdiction.
You should also get business leaders, managers, and the HR team to review this document to confirm that the policies make sense, approach the topics respectfully, and can be implemented consistently throughout the organization.
Should an employee handbook be customized for different states or remote employees?
If you have employees working from home or in different states, you should consider customizing your employee handbook to address these respective working conditions.
Since these work arrangements often result in employees having different paid leave, wage, and other work-related laws applied to them, inserting state- and remote work-specific addenda to your handbook can help reduce confusion, minimize your legal liability, and ensure these workers have the information they need to succeed in your company.
