3 Reasons for an Employee Handbook

There are many good reasons to establish a comprehensive employee handbook.

First off, there is the legal aspect, where it provides certain protection in case something goes wrong. Second, it’s an easy way to ascertain compliance with certain labor laws and regulations. Finally, it helps steer employees towards proper behavior and gives them a frame of reference when you aren’t present.

1. Legal Protection

Perhaps most obvious is the legal aspect, where clear guidelines can help protect your company against litigation if an employee acts counter to instructions. By providing a detailed list of things employees should not do, it becomes obvious to a court that the employee was not acting on behalf of your company when he explicitly broke the rules and caused damage to the customer. By contrast, if the guidelines are vague – or worse, verbal only– it becomes much harder for your company to prove its innocence.

If an employee causes harm to himself on the job, it is equally important to be able to show that there was a documented, safe procedure that the employee chose to ignore.

It is also important to spell out proper conduct between employees in no uncertain terms, making it clear the company has zero tolerance for inappropriate behavior. This can be especially important in the case of harassment lawsuits, when the plaintiff can drag your company into the mess by arguing that you did not do enough to discourage it.

2. Compliance With Labor Laws

There are federal and state labor laws that require certain information to be given in writing to your employees. Failure to comply may result in fines, penalties and lawsuits by employees who perceive themselves to be wronged.

The employee handbook should always include your company’s leave policies, such as family medical leave. Depending on your company’s size, there may be federal and state laws granting a certain amount of unpaid days off for severe illness, caring for an ill family member or the birth of a child. The federal law is up to 12 weeks in any given 12-month period, but the state laws vary.

Workers’ compensation is another mandatory inclusion in the handbook. While there is no federal requirement to include workers’ comp information in a handbook, many states demand that workers be provided this information in writing. Likewise, providing your employees written information about your company’s anti-discrimination policy is often mandatory.

It is also wise to check local and state laws what information you need to provide in writing to your employees regarding benefits, military leave, the rights of workers with disabilities, policies on breastfeeding, crime victim leave policy, and court cases and jury duty leave policies.

3. Employee Behavior

The handbook can work as a positive way to steer your employees towards desired behavior. By explaining the company’s core values and priorities, your employees have a framework for dealing with unexpected situations and customers. Even in a small company, there are times when you aren’t available to make on-the-spot decisions.

The employee handbook should also help your employees understand the structure of the company, such as how overtime pay is calculated, what taxes are withheld, work schedules, the performance review process, and bonus or profit-sharing systems.

In today’s increasingly wired world, it is also wise to include a section about digital conduct. This may include everything from email etiquette and uniform signatures to password security and your policy on using external media such as memory sticks with company equipment. Be especially careful if your employees have access to any type of customer data in order to prevent improper handling of personal information.

Include issues related to media relations. An employee who is quoted in the news is generally perceived to be speaking for the company, which is why the employee handbook should provide clear guidance in case of media inquiries.


This article was originally published on Investopedia.