Do I Need an Employee Handbook?

The short answer is yes, if you want to stay out of trouble. Even though there is no law that requires a business to have an employee handbook, there are federal and state laws that a business must follow related to the employment of people, and the only way to prove that you are following these laws is by documenting them in an employee handbook.

Along with proving federal and state law compliance, an employee handbook also is essential as a centralized resource for company policies, procedures, guidelines, and employee FAQs. As well, employers that are required to be OSHA compliant, must document their OSHA cooperation in their employee handbook.

Without an employee handbook, any company is at risk for liabilities like lawsuits, wrongful termination, discrimination claims, etc. In a nutshell, a properly written and updated employee handbook is a very effective risk management tool. In fact, an employee handbook is the first line of defense against employee claims of wrongdoing by your company or someone in your company.

It is no secret that defending an employment lawsuit can be very costly. It is estimated that defense of a lawsuit including discovery and a motion for summary judgement can cost an employer up to $125,000.  And that is before it goes to trial. Regardless of company size, that hurts.

Boiling it down, these are the top reasons as to why your company needs an employee handbook, regardless of industry, complexity, or size.

  • It will help defend your company from employee lawsuits. Violations here can be anything employee related including overtime compensation, discrimination, harassment, etc. Because the employee handbook is the literal “manual” for your business and will be the first thing your attorney will be asking for if you are sued. If you do not have one, an opposing attorney will attack that deficiency and your job of proving you did the right thing will be extremely difficult.
  • It will create guidelines on consistent employee treatment. If it is not documented, it is up for interpretation by your people. That can be a big problem.
  • It creates accountability by clearly stating expectations for all levels of the organization. This can include dress code, measurables, work days/hours, vacation policies, performance reviews, compensation rules, etc. There should be no mystery regarding expectations with anyone in your organization.
  • It is a central resource for employee rights. Basically, you are placing everything an employee needs to know in one place, giving you more time to work on your business.
  • It proves that you are complying with all federal and state rules and regulations. It should be noted that if you operate in multiple states, you must recognize the rules and regulations of each state. It should also be noted that these rules and regulations change frequently and must be updated, at least, annually to maintain currency.

One final point – the employee handbook does not constitute a binding contract between an employer and employee. All employee handbooks should include a disclaimer that it is not a contract and employment is “at will.”

To sum it all up, a well-written and updated employee handbook will not only give you peace of mind, but will absolutely protect you saving time, money, and resources. If you do not have one, get one. If you have one make sure it is audited and updated. You will absolutely sleep better at night. In our experience, 80 percent of companies we help have poorly written and outdated employee handbooks or they just do not have one and are at risk.

Go to this link for more information about employee handbooks:

If you have any questions about your employee handbook and would like to talk to one of our Employee Handbook Specialists, please click this link and ask about our NWFA Member Discount.

This article was provided by Tesseon, a 30 year old, highly rated payroll and human resource services company. Tesseon is proud to be the preferred payroll and HR partner to the NWFA.

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