Starting a business requires much of the owner, and as the business grows to add its first employees, consideration of an employee handbook may become necessary.
Some experts say the business needs to employ a certain number of individuals before a written guide of policies and procedures is necessary. Others say it should be one of the initial steps taken before any onboarding of employees occurs.
“I recommend to all types of employers and all sizes of employers they should have an employee handbook from the very beginning.” says Maggie Hanson, an attorney with Davis Brown Law Firm in West Des Moines.
She describes a handbook as a “playbook of what is expected of employees.”
An employee handbook is an important communication tool between the business and its employees, according to the U.S. Small Business Administration. A well-written handbook will describe both the employer’s legal obligations and the employees’ rights.
Numerous resources are available for business owners who choose to create a handbook. Here are five things to consider when deciding whether it’s the appropriate move or not for your business.
- Do I need an employee handbook?Jill LaBarre, director of human resources for Bearence Management Group in West Des Moines, says there is no law that requires a company to have an employee handbook. It’s more of a personal preference based on the size of the business and its culture, with some companies choosing not to have one because they don’t like the formality of such a document, she says.
“At some point, if you’re at a place in the business where you have policies you want documented, this is where you would do it,” LaBarre says. “It’s definitely a best practice. It’s probably safer to have one than not.”
Some state and federal laws may require that certain employment policies be available in written form; however, they do not require them to be in the form of a handbook.
Connie Voorhees, who creates employee handbooks for Bearence Management Group’s clients, recommends that businesses with at least 10 employees have an official handbook.
Small businesses typically don’t have an employee handbook because they may be exempt from some federal statutes; however, they are still at risk of potential legal action, law experts say.
LaBarre says a handbook protects a company when it comes to potential policy, management, employee relations or miscommunication issues because it ensures each instance is handled in the same way for consistency.
“Having policies to communicate that to your employees is the best practice, to be very open and transparent about how you operate and what your standard practices and procedures are,” LaBarre says. “It’s a really good guide and can mitigate legal risks.”
Hanson, the attorney with Davis Brown, agrees that a handbook can protect the business and business owner from legal claims that could include a wage dispute, wrongful termination, retaliation or discrimination claims from an employee or former employee.
“Your handbooks should provide some policy or statement against those practices,” she says.
An employee handbook also gives the employer a chance to set the tone and demonstrate the culture of the business, so employees know what kind of employment they’re entering, Hanson says.
- How do I create a handbook?Business owners can hire a human resources outsourcing or consulting company or an attorney to create or review a handbook for them. This can be necessary for smaller companies that may not employ their own human resources director.
Online templates are also available that an employer can use to draft a handbook. Professionals caution against solely relying on this route and to rather use resources available to draft and review the document for potential legal issues. For example, the Society of Human Resources has resources to help with handbook creation.
Hanson says the U.S. Department of Labor, Iowa Workforce Development and the U.S. Equal Employment Opportunity Commission all have information on their websites about the creation of employee handbooks and could be additional resources for an employer who wants to do the legwork him or herself.
“Regardless of whether you’re plugging in information into a website and printing out a handbook or getting recommendations (from online), … it’s always wise to have an attorney look over it afterward,” she says.
An attorney can ensure the handbook complies with the most recent employment laws, which sometimes change daily.
The National Federation of Independent Businesses also has created a model employee handbook for small businesses that is available on its website: www.nfib.com.
- What do I need to include in my handbook?A good handbook, according to the NFIB, will explain the purpose of the employee handbook as a resource that provides answers for the most frequently asked employee questions. It informs new employees about the company’s policies and is a declaration of the employer’s rights and expectations. It will specify that the handbook is not all-inclusive of all policies and offer an overview of the work environment. The handbook also should include a disclaimer that the company reserves the right to suspend, revoke, revise, terminate or change any of its policies at its discretion.
NFIB recommends an employer review all of its company’s policies and decide which ones are essential to the business and its operations before drafting a handbook. Those are the policies that should be included. For example, if a company does not offer health insurance to its employees, the handbook would not include this information.
Handbooks range in detail but can include information about dress code and employee ethics, payroll procedures, job postings, job transfers and relocation, union membership, probationary periods, employee records, open-door communications, anti-harassment policies, attendance and vacation or paid time, discipline and termination, how the company addresses the Americans with Disabilities Act and the Family and Medical Leave Act (if the company qualifies), safety policies and how they comply with the Occupational Safety and Health Administration’s laws, drug and alcohol usage, company and client confidentiality, use of technology and company devices, and even social media usage.
The handbook also can share important state and federal laws about employment in a clear and concise form that is more understandable to the employee. Some handbooks might be so detailed as to include reasons for the company’s existence, along with its history, strategy, mission and vision.
In some cases, it’s necessary to address an issue but to not be overly detailed and use terms such as “at the discretion of the supervisor,” especially in regards to policies that deal with discipline and termination, Hanson says.
The handbook also should include information that states the business is an Equal Employment Opportunity Employer to help provide a veil of protection against discrimination, Hanson recommends.
“The assumption then is that you don’t discriminate,” she explains.
There are a few other provisions that are essential. Employers need to make it clear that the handbook is not a contract for employment and that all employees are employed at-will and can be terminated at any time with or without cause, as allowed by Iowa law, Hanson says.
The U.S. Small Business Administration also recommends the handbook include information regarding the media should an employee receive a call from a reporter or another media inquiry.
If the business owner wants a handbook but has a more laid-back culture, human resource consultants suggest the tone of the guide be conversational and focus more on the organization as a group rather than management versus employees. Others suggest the handbook be as concise as possible and warn against superfluous rules that make the employee feel over-managed or that could diminish workplace morale.
Business owners should provide all employees with a copy of the handbook, which will include any policies required by law to be posted in the workplace, and then require them to sign a notice that they have received and read the handbook. The signature page should be kept with the employee’s personnel file. This will help protect the employer in court beyond simply posting a required communication on a bulletin board, which may or may not have been read by the employee.
- What can I expect to pay for a professional’s help?
The cost for consultation and creation of the handbook can vary greatly depending on the amount of detail included in the document, says Voorhees with Bearence Management Group.
Human resource experts say a business owner could expect to pay between $1,500 and $3,000 for custom development of a handbook, and $1,000 for review or to provide feedback of an existing document.
Handbooks vary depending on the type of business and the owner’s needs, as regulations can be widely different across industries, Hanson says. The creation of one from scratch would take an attorney a couple of hours and up to 15 hours to complete and cost between $300 and $2,000, she estimates.
If the business owner has done much of the initial legwork to create a draft document that is well put together and complete with the appropriate information, a review would cost about $500, Hanson says.
- Is there any follow-up that’s required?Once a company has a handbook in place, it’s important managers be consistent with implementing it and in expressing the business’ expectations of employees, human resource experts say.
A company’s handbook should undergo a periodic review. Hanson recommends it be reviewed every year if the business owner can afford it, but at the minimum, every couple of years.
After a review, the handbook needs to note the date in which the policies were revised and notify employees of any changes.
The cost for review will become cheaper over time if the same attorney reviews it as fewer and fewer revisions are necessary, Hanson says.
“Employment laws are very specific and very technical, and there are tons of them,” Hanson says. ♦