Regardless of where you are in the process of building your business, there are always challenges and considerations for you as a business owner. One set of unique challenges presents itself when you start to retain employees: setting staff standards. One of the appeals to a small business is informality. But, at what point do you, as the owner, need to consider formalizing employment expectations? Is it the first time you sign a paycheck? Is it after you hire your first full-time employee? Your tenth? What should be in writing and what shouldn’t? Can you just google “employee handbook” and put your business name on the first page and call it a day?
There is no magic number of employees or time-frame where an employee handbook is required per se. Some owners begin formulating one prior to hiring their first employee, while others decide never to have an official company handbook. As an employment defense attorney, I tend to advise my clients to begin implementing one sooner rather than later; that is, once they have at least a handful of employees beyond the occasional friend or family member that helps out.
Why is it important?
Keeping these considerations in mind, handbooks can be very helpful, as they are a good way to clearly and effectively communicate your company’s goals, policies, benefits and rules to your employees. They tend to portray a sense of organization and purpose – which is often important, especially for small (more informal) businesses. It can provide a sense of comfort to employees that may be nervous about joining a new at-home or small business where often a sense of job security may be lacking.
They can also be helpful for you as the employer to sit down and think about what policies you do want or to learn about what laws may apply to you. Ask yourself: What hours do you expect your employees to work? What hour restrictions apply? What do you want your “work week” to be considered for wage and hour purposes? How do you want employee complaints handled? How do you want your employees to ask for time off? What leave laws are applicable to you? When and how can your employees utilize the computers or company vehicles? Are there any safety rules or requirements?
Adhering to the Golden Rules
Handbooks can be very useful tools if they are drafted and utilized appropriately. A few cautions first: One golden rule when considering a handbook is NOT using a form / template or generic handbook. All businesses are unique, and all employee handbooks should be unique. The last thing you want is to “borrow” a template that contains laws / policies and other requirements that do not apply to you as an employer; be it because of the size of your company or your geographical location.
Another golden rule is to NOT have a handbook if you do not intend to use it or attempt to follow the policies contained within it. Most states do not consider an employee handbook – or the policies within it – to be an employment contract. However, some states do. Regardless of what jurisdiction your business is in, it is never a good idea to communicate false expectations, guidance or policies to your employees. The last thing you want to be stuck with is a lawsuit claiming breach of contract just because you passed out a handbook at the beginning of the employment relationship and never gave it a second thought. Companies are forever changing, and with it, so should the policies and ideas integral to the employment relationship. If you have a handbook, make sure you intend to follow it, are familiar with it, and change it as the needs of your business change.
Key Tips and Takeaways
If you decide that having a handbook is a good idea for your business, there are a few recommendations to ensure its effectiveness :
First, do not have a 200-page policy book. The whole purpose behind a company handbook is for it to be an effective means of communication to your employees. Nobody is going to read a 200-page dissertation. For a small company, I generally recommend keeping handbooks to no more than 30 to 35 pages, which is ample space to include important policies without losing your audience.
Second, include a welcome message and don’t limit the handbook to only negative policies / rules. This is a good opportunity to express your appreciation to your employees and welcome them to the team without making them feel like they have stepped into grade school again.
Third, have a statement that rules / policies contained within the handbook do not create a contract and they are subject to change pursuant to the needs of the business. You want to give yourself flexibility as a new business without giving false expectations.
Fourth, have an acknowledgement page for your employee to sign. This not only provides proof that your employee received the handbook but can also portray to your employees that it is important to you and the company.
Finally, make sure your policies within the handbook are legal. There are many laws, both state and federal, that apply to employers of all sizes, and some of them don’t make much business sense. You do not want to have an illegal practice explained in writing that you may have not known was illegal. So, while retaining an employment lawyer to formulate or review your handbook is not absolutely necessary, it may be a good idea to utilize this time period to find an employment attorney you like and feel comfortable with.
Conclusion
Putting together an employee handbook is an excellent time for you, as a new employer, to become familiar with employment laws that may apply to you that you otherwise may not know about. Plus, in my experience, the first thing an employee’s attorney typically asks for in the event of an employment claim or lawsuit is the employer handbook. Why not make sure your handbook is up to snuff legally? Some policies can even create legal defenses to claims.
At the end of the day, having an employment handbook is ultimately a business decision every employer should consider.
