CHICAGO — One of the best tools owners and managers have to communicate what they expect from their staff—and what staff should expect from them—is to create an employee handbook. 

During a recent webinar conducted by Beth Milito, executive director of the National Federation of Independent Business (NFIB), she detailed steps to making an effective employee handbook, as well as the essential policies that should go into the document. 

“Take a look at your existing handbook, and look at some sample handbooks, as well,” Milito says. “There are a lot of sample handbooks that you can find on the web. 

“The big warning, however, is that you should never just download a handbook, put your business on the cover page and distribute that. The whole intent of the HR employee handbook is to make sure that is customized to your business.”

Milito notes that the Society for Human Resource Management (SHRM) has many model handbooks on its website, and some larger corporations have their handbooks online that can provide a template.

“Make an outline of policies you’d like to include,” she says, “and then draft the text for each policy. Read and proof it, and ideally have at least one other set of eyes take a look at the handbook. You may want to consider having an attorney or an outside HR expert review the handbook and bless it.”

So, what should go into an employee handbook? Milito suggests looking at 10 topics when first creating such a document to set expectations of what’s required of both the staff and the company.

1. Introduction — “The introduction is a welcome statement to new and existing employees,” Milito says. “It’s telling employees why it is you are issuing this handbook and offers some general information about the business.” 

Milito suggests including the following in this section:

• History of the Company — How the company got started and how it has grown. The company’s founder(s) and current executives can be introduced here. 
• Values — Provide the company’s core values and explain what each value means to the company and why it has been chosen as a core value.
• Mission statement — Help employees understand the company’s purpose by providing and explaining its mission.

2. At-Will Statement — “You want to follow the introduction with the employment at-will statement,” Milito says. “In all states except Montana, employment is at will. That means that in the absence of a written employment contract or a collective bargaining agreement—in other words, union business—either the employer or the employee may terminate employment for any reason that is not contrary to law.” 

Cases where it would not be legal, Milito says, are terminating someone because they are over 50, pregnant or in some other protected category. Montana’s “good cause” standard means that the employer must demonstrate a good cause for firing the employee.

“The other category that you may want to define at the start of the handbook in the introduction section, or under the Wage and Hour section, is a discussion or description of whether or not employees or are exempt or non-exempt,” Milito says. 

Exempt employees are not entitled to overtime pay and typically hold executive, administrative or professional positions. Non-exempt employees typically hold non-supervisory positions and are entitled to overtime pay for hours worked over 40 hours a week or as specified by state law.

Contractors are workers who do work for the company but are not part of the payroll. Milito uses the example of an IT or website designer who comes in occasionally, noting that they are not part of the exempt/non-exempt discussion. 

3. Equal Employment Opportunity Policy — The Equal Employment Opportunity Commission (EEOC) is the federal agency that oversees and enforces federal laws that make it illegal to discriminate against a job applicant or employee because of their protected status. 

Protected categories include race, color, religion, sex, age, disability, national origin, veteran status, citizenship, pregnancy, genetic information and all other categories protected by federal, state and local anti-discrimination laws.

“This is a very important legal policy that should be included in all employee handbooks,” Milito says. “It’s a reminder that employees in your business are protected from discrimination under all applicable federal, state and local anti-discrimination laws. 

“You also want to set forth procedures for reporting violations for EEO infractions. It’s a good place to list the contact for the person responsible at your company for EEO policy.” 

4. Policy Against Unlawful Harassment — “This, along with the at-will policy and the EEO policy, are the three must-have policies in every employee handbook,” Milito says. 

This section establishes the company’s policy against all forms of unlawful harassment, including sexual harassment.

This section, Milito says, should also outline the reporting procedure, along with the contact information for the individual at the business who will be taking the complaints.

“You hope that individuals are comfortable approaching his or her own manager about any issues,” she says, “but it’s always good to have an alternative person to whom employees can report harassment or unlawful workplace behavior, just in case the manager or direct supervisor is the individual who is engaging in the unlawful conduct.”

Having such a procedure or policy in place for reporting unlawful harassment, Milito says, will go a long way toward protecting the company from liability if a claim is made, and if the company addresses the harassment promptly.

5. Wage and Hour Policy — “Some states have laws that differ from the Fair Labor Standards Act (FLSA), which is the federal law that governs overtime and minimum wage and deciphers between the exempt and non-exempt employees,” Milito says. “But many states have laws that differ from the FLSA, so it’s important to remember that employers must follow both state and federal law. 

“And if the laws conflict, the employer must follow the higher standard. In other words, the law that gives the greatest benefit to the employees. For example, if a state has a minimum wage higher than the federal $7.25 an hour, and many states do, the employer must comply with the state minimum wage.”

“The U.S. Department of Labor (dol.gov) has a very good wage and hour website and a map that very easily lets you click on it to find out what the minimum wage is in your state,” she says. 

“DOL also has a map where you can click on your state to determine whether or not you have meal and/or rest break laws in your state, which can be a helpful resource.”

6. Attendance and Remote Work Policy — “This is a documented set or rules that puts fourth clear and consistent expectations for employees,” Milito says. “This can be difficult in businesses of all sizes, not just small businesses, to consistently enforce these policies. 

“Make sure you are putting in place a realistic policy and one that you yourself will be able to follow. If many of your employees have families or young children, for example, they’re likely going to be juggling emergencies. If they are caregivers and you institute a zero-tolerance attendance policy, which was big 15 or 20 years ago, that’s just not realistic.”

To combat the pandemic, many companies allowed workers, if possible, to work remotely. This is something, Milito says, that needs to be discussed in the handbook. 

“I recently saw a survey that found one and four employees said they would quit their job if they couldn’t work remotely, at least some of the time,” she says. 

One of the greatest concerns for companies in shifting to remote work is making sure productivity stays high, Milito says, and there’s no negative impact on day-to-day operation. Your remote work policy should explain employee expectations while working from home, covering items such as working hours, availability for in-person meetings, communication and equipment.

When it comes to attendance and punctuality policies, Milito says, “sometimes it’s good to explain why you’re requiring employees to do this.” 

A sample in a handbook could read “Absenteeism and tardiness put a burden on your co-workers. In rare instances where you cannot avoid being late to work, or if you are unable to work as scheduled, you must notify your supervisor as soon as possible.”

“This gives some flexibility because, again, life happens,” Milito says, “and I think a policy that gives employers a bit of wiggle room and takes account of the fact that employees have lives outside of the business is reasonable. You don’t want to have a ‘one-strike’ policy because that sets employees up for failure and you might lose some good workers.”

7. Leave and Time Off Policy — This section, Milito says, should cover rules and procedures regarding time-off benefits, including vacation, holidays, sick leave, leaves of absence or medical leaves, and leave required by law (such as voting leave, family leave, and domestic violence leave).

“This has gotten so much trickier over the last 10 years or so because of the increasing number of state paid sick leave laws,” Milito says. “Check your local and state laws because you can really be tripped up here. Generally, states do not require any sort of vacation benefits for employees, but most employers do offer this benefit. 

“And more and more employers are moving from vacation and sick leave policies to one comprehensive paid time-off bucket.”

Time-off policies are very important to employees, Milito notes, so make this section as simple and clear as possible.

8. Discipline Policy — “This is an area where I say vaguer is better,” Milito says. “Less is more. Many employers go through the three stages, starting with a verbal warning, escalating to written warnings for second violations, and then termination. 

“If there’s misconduct—you catch an employee stealing, or there’s a physical altercation on the premises—you’re just going to want to fire the person on the spot.”

When it comes to defining the policy in the employee handbook, Milito believes that it should contain three core elements—definitions of the types of behaviors that are unacceptable, along with examples; an explanation of the consequences of those behaviors, and the process by which the consequences will escalate to termination; and contact information for questions, issues or concerns. 

9. Health and Safety Policy — “Many companies and businesses actually have separate health and safety handbooks or policies,” Milito says, “and depending on your industry, it might be required. 

“But in the employee handbook, it’s good to have a section that, at a very high level, describes safety and emergency procedures, and most importantly requires employees to report work-related injuries immediately.”

Milito also points out that some regulations under the Occupational Safety and Health Act (OSH Act) require employers to have specific policies and programs in place if certain workplace hazards exist (such as a hazard communication program if certain chemicals are present in the workplace).

10. Privacy — “This is a very big deal in the age of cellphone and computer usage at the workplace,” Milito says. “If you plan to enforce a privacy policy, and many businesses do, ensure that you’re very explicit about the company’s expectations.”

Details in the privacy policy portion of the handbook may include the employee’s right to inspect and copy their employee records, drug and alcohol testing policies, the company’s rights to search company property, cellphone use expectations and limits, and policies about the use of computers and electronic equipment while at work and how that might reduce a reasonable expectation of privacy.

“Also,” she says, “be aware that privacy laws vary from state to state. There are more states enacting privacy laws that give employees some rights. This is an area that you do want to make sure you’re not stepping afoul of any privacy laws in your state.”

“You want to make sure that employees acknowledge receipt of the handbook,” Milito says, noting that the employees agree they have received it, as well as they understand they are employed at-will by the company, and that the company may revise the handbook at any time.

“It’s very easy nowadays to make employee handbooks accessible online and via mobile devices,” she adds. “So, if you have a new employee starting, you can print out a copy and give it to them on their first day. For existing employees, you can just put it online and then have everybody sign an acknowledgement, which can also be done electronically. 

“Just make sure you keep the acknowledgement forms.”