Nov. 3, 2021

This paid piece is sponsored by Eide Bailly LLP.

A version of this article previously appeared on EideBailly.com

By Lauri Dahlberg, PHR, SHRM-CP

Maybe you own your own business? Or you serve on a nonprofit board? Either way, having an employee handbook is critical to protecting the interests of your business or the organization you devote time to.

From FLSA violations and harassment claims to wrongful terminations and on-the-job injuries because of employer negligence, there are numerous reasons your organization may face an employee lawsuit.

Aside from the time that goes into the defense and the damage to an organization’s reputation, the average cost to defend against employee lawsuits runs into the six-figure range – including lawyer fees and settlement costs – and 25 percent of cases that go to trial result in a judgment for $500,000 or more.

The first line of defense in protecting your organization from litigation is an employee handbook.

What is an employee handbook?

Employee handbooks are intended to protect both employers and employees. These handbooks should be easy to read and understand; include policies, procedures and benefit programs; and outline general expectations of the organization; as well as the organization’s compliance with state and federal employment laws.

 Do I need an employee handbook?

If your organization has more than one employee, it is subject to federal employment laws, which means you need an employee handbook. It’s imperative for growing organizations to pay close attention to their headcount because additional federal employment laws start to come into play at 11, 15, 20, 50 and 100 employees. You should review your employee handbook annually to make sure you are staying in compliance with changing state and federal laws, such as minimum wage, overtime rules and paid-leave laws. A comprehensive review and update should be done every other year at a minimum. 

What should be included in an employee handbook?

The following eight sections should be included in your organization’s employee handbook.

• Introduction
  The introduction should familiarize new employees with your organization’s history, culture, mission and values.
• Compliance
  The compliance section of the employee handbook includes your organization’s policies on Equal Employment Opportunity, commitments to diversity, the Americans With Disabilities Act, and harassment and discrimination procedures. If you live in an at-will employment state, the compliance will include your at-will employment clause.
• Conflicts of interest and confidentiality
  The conflicts of interest and confidentiality section identifies expectations on employee handling of relationships and information crucial to your business’ success.
• Employment relationship
  The employment relationship section defines the general information related to employee classification, workweek/hours, privacy, job descriptions, hiring, pay, overtime, pay deductions and personnel file access. Each area provides critical information employees need regarding employment details that affect them.
• Workplace safety
  The workplace safety section provides expectations related to safety, a drug- and alcohol-free workplace, a smoke-free workplace, workplace violence and how to handle inclement weather. The expectation should be set that workplace safety is the responsibility of everyone within the organization.
• Workplace guidelines
  Your workplace guidelines section should convey your organization’s basic operating procedures, such as attendance, performance evaluations, outside employment, telecommuting, dress code, release of business records, social media use, solicitation and use of bulletin boards. Policies on the use of company equipment and electronic communication, such as email, computers and company property, also should be included in this section. This is also the section that lays out your organization’s disciplinary action process and the handling of grievances.
• Time off and leaves of absence
  One of the most utilized sections of the employee handbook, this section details the different types of time away from work that your organization offers. Information on how much PTO –  or vacation and/or sick time – employees can accrue and what happens to that accrual falls into this section, as does your organization’s holiday observance. In addition, parental leave, FMLA, short-term disability and long-term disability policies should be included here. It’s especially important to pay attention to state and federal laws when it comes to sick leave –  paid or unpaid – jury duty or witness duty, voting and military leave. Personal leave of absence and unpaid leave of absence policies will reside here if your organization chooses to apply them.
• Benefits
  Because of the frequency of benefit changes, this section should serve as only a brief overview. Outline eligibility requirements that employees must meet to be eligible for benefits, and provide a list of benefits that you offer. The details of your benefit packages should go in a separate benefit guide that can be easily updated annually.

Adopting illegal policies or practices, routinely deviating from policies, inconsistently applying policies and implementing vague policies can get you into hot water in an employee lawsuit.

Employee handbook signed acknowledgement

As an employer, it is your responsibility to ensure employees have received, reviewed and acknowledged your policies as provided in the handbook. Every employee handbook should have an acknowledgement form, and every employee should have a signed and dated handbook acknowledgement in their personnel file.

Dive Deeper: Visit EideBailly.com to read more about preparing an employee handbook.