Employee Handbook Prep 101

Employment Handbooks for Small Businesses (less than 50 Employees)

An employment handbook – if done right, provides a small businesswith legal protections and can be used to demonstrate legal compliance. Without an employment handbook, a small business misses legal protections and opens itself to liability and legal expenses (even for frivolous claims) that far exceed the time and costs associated with ensuring a well-drafted employment handbook is in place. A well-drafted handbook means the handbook is current with laws and legal protections, which constantly evolve with new laws and court decisions.


Employee handbook

Are Employment Handbooks Legally Required for Small Businesses?

There may not be a law that expressly states that a small business (or large business for that matter) is legally required to have an employment handbook, but without an employment handbook – there may be a presumption that your company is not in legal compliance. And, worst yet, your small business is missing out on legal protections and the right to enforce your lawful rights and expectations with regard to employees.

So, the better question is the following: Is your small company in a much better position (legal or business) with an employment handbook? Yes…if done right!

Here’s a simple example. If a disgruntled employee threatens to sue your small business for being wrongfully terminated – having employment handbook policy expectations in place and showing the employee failed to meet such written handbook expectations – can stop a potential lawsuit in its tracks. Beyond the legal issues, an employment handbook also helps employees understand your company expectations and policies, which is a great tool for a better workforce.

What’s Addressed in the Employment Handbook?

It depends on your business. Generally speaking, an employment handbook summarizes employment rules, policies, and expectations of the small business and addresses many legal compliance matters, which can vary for each small business depending on the size of the business, nature of the business, and nature of the workforce. Although there are too many policies, terms, and laws to cover in this article, common handbook policies address:

  • Employment Laws –
    • Discrimination, Harassment, Retaliation Laws
    • Disability Discrimination/Accommodations: Americans with Disabilities Act (ADA)
    • Wage & Hour – Fair Labor Standards Act (FLSA)
    • Overtime and Minimum Wages
    • Background Check Laws
    • Drug-Testing Laws
    • Whistle-Blower Laws
    • Pregnancy and Family Medical Leave Laws
    • Military Leave Laws
    • Guns in the Workplace
  • Compensation – how often employees are paid, overtime exempt or non-exempt, the method of payment, and how holiday/sick/vacation pay is computed.
  • Social Media – who, when, where, how permitted or not permitted?
  • Benefits – description of employment benefits available, when those benefits are available, and costs and contribution matters.
  • Attendance – attendance policies, including how and when to report attendance issues.
  • Vacation, Sick, and Personal Time Off – eligibility, use, accrual, exhaustion, payment upon termination for unused paid time off.
  • Misconduct – discipline and discretion to terminate employees based on lawful business discretion.
  • Drug Testing – conditions and procedures for drug testing, including marijuana and legal drugs.
  • Harassment – policies and procedures for reporting prohibited or unlawful conduct.
  • Violence – policy regarding violence in the workplace, and procedures for reporting dangerous conduct should be explained.
  • Termination – reasons, process, and procedures for termination? When do benefits cease? When will the employee receive his/her final paycheck? Return of business property? Resignation notice? Job reference checks?
  • At-Will Employment – ensuring that employees are considered at-will, not an employment contract of specified duration with unintended limitations on termination.
  • Complaint Resolution and Reporting – who, what, when, how are complaints addressed.

When and How Should an Employment Handbook Be Provided to an Employee?

An employee handbook should be provided at the time of hire and an acknowledgement of the new employee receiving the employment handbook should be recorded and retained. An employment law training is another good time to provide employees with the handbook and to review the employment handbook. In addition, handbooks should be provided upon request by an employee and upon making changes or updating the employment handbook. Regardless of when your small business provides the employee handbook, make sure that the employee signs a form acknowledging receipt of the handbook.

Preparing an employment handbook is relatively straightforward and inexpensive. LegalStandard.com’s experienced attorneys can help you prepare a customized employment handbook for $900.00. Additionally, LegalStandard.com’s review of an existing employment handbook starts at $295.00.