How to Create a Employee Handbook - Tips for Small Business Owners

How to Create a Employee Handbook - Tips for Small Business Owners
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Handbook Vs. Policy & Procedure Manual

Your employee handbook is not your policy and procedure manual. Nor do all businesses need a policy and procedure manual. For smart small business management; however, a good, clean employee handbook is necessary.

A policy and procedure manual is usually full of information on each policy your business has and what the policy or procedure is for each. It’s more of a step-by-step guide of how to’s in case employees have operational questions. It can also be more of a training guide that is updated from time to time or revised entirely.

An employee handbook, on the other hand, is usually not revised unless a new labor law results from a government agency or your company changes or updates a rule contained within the employee handbook.

What Should Be In It?

By employing small business management techniques to write your employee handbook, you’ll have a great guide you can give to every employee you hire. Before you begin to write your employee handbook, make a list or table of contents. Even if you think something doesn’t apply to your business, you should cover it. The most popular topics are:

  • Welcome to new employees - This should be a brief statement on the history of the company and a welcome by the owner.
  • Orientation period - It’s important to note that the US Department of Labor does not recognize what is called a “probationary period.” Companies may use the word “orientation” or “getting to know period.” In this section talk about how long the orientation period will be for the employee; usually one to three months.
  • New hire requirements - Here you should list all documents new hires will be required to produce, or fill out, such a driver’s license, employment applications, W-4, and the completion of the I-9 (US employment eligibility form).
  • Work schedule - This should clearly explain the hours your business is open and what work schedules are assigned.
  • Employee’s wages - Explain the difference between hourly and salaried employees and explain overtime pay. In almost every state, an hourly employee who works over forty hours must be paid at time and one-half. Check with your local Department of Labor if you’re not sure.
  • Bereavement leave - Explain the company’s policy on bereavement leave. If your policy is only for certain family members and amount of time allowed off, list them clearly.
  • Jury duty & voting - By law, no employer may terminate any employee who is called to jury duty; so clearly explain that. You don’t have to pay the employee if they are called to jury duty unless they wish to use accrued sick, vacation or personal time. Employers must also allow employees to vote at any time of the day. While you can suggest they vote during off-hours, you can’t demand they do so.
  • Military leave - Employers are also not allowed to terminate any employee who is called to military service. Let them know their job is safe.
  • Dress code and appearance - Give a general description of how you want employees to dress and the type of conduct you want them to adhere to.
  • Holiday pay - Clearly list what holidays will be paid holidays.

Other Key Elements

  • Sick or personal time - State if your company has a sick or personal time policy and how they can earn it. If hours do or do not accrue, explain this.
  • Vacation pay - This section should outline how long an employee must work at your company in order to receive vacation pay and if it graduates in weeks off the longer they stay employed. To protect yourself, include a statement on whether vacation pay accrues or doesn’t accrue and why.
  • Hazardous conditions - You want every employee to feel safe and free of hazardous conditions. Give them the opportunity to leave the work site if they feel they are in danger. You should also write a separate safety manual.
  • Payroll deductions - Explain all the deductions you will take from employee’s paychecks including federal, state, social security, Medicare, state tax, local taxes, wage garnishments, uniforms, etc.
  • Company benefits - If your company offers health insurance, a retirement plan or dental plan, briefly state how long they must be employed to participate and direct them to the person in charge of handling company benefits.
  • Workman’s compensation insurance - Tell you employees you have workman’s compensation insurance and direct them to the labor law poster that describes what to do in an accident.
  • Employee performance evaluations - Let your employees know how you plan to evaluate their performance and at what intervals. Also state that a good employee performance evaluation doesn’t necessarily mean a raise in pay.
  • Warnings and disciplinary actions - List your employee warning and disciplinary action procedure. Check with other companies in your area similar in size to your to find out what they do for warnings and consequences. Networking can be extremely helpful here.
  • Sexual harassment and discrimination policy - All employee handbooks should include a sexual harassment policy and a discrimination policy. Most insurance company’s who hold your business liability insurance will insist you have these policies in written form.
  • Addendum - Leave room for future addendum’s to policies contained within the handbook and state the date the handbook was written or revised. If you do revise anything in your handbook, give it a new revision date.
  • Employee acknowledgment page - Include a page that says the employee was given a copy of the employee handbook on a certain date and have the employee sign the acknowledgment page. Keep a copy of the acknowledgment page in their employee file and give them a copy.
  • At Will Clause - Find out if your state is an at-will state meaning you may terminate an employee for any reason or they may quit for any reason. If you do have such a policy, make sure to include it.

Have it Reviewed

Before you give out your employee handbook, ask your liability insurance carrier to review it. Often, they will make suggestions, improvements or offer additional items to include that are specific to your type of business.

Ask your local Department of Labor to review your employee handbook to ensure you are in compliance with wording and other information.

Seek the advice of a labor law attorney or network with other companies. Most companies will offer to help you with your employee handbook at no charge if you can agree to network or throw business each other’s way; or are not in direct competition with the company.

Make sure to employee small business management skills to write your employee handbook and make sure you know what should be in it before you begin to write it. We’ve included a sample employee handbook in our Media Gallery.