Employee Handbooks
Employee handbooks can set expectations and establish office culture. However, we have seen too many that are poorly drafted, confusing, overly wordy, inapplicable, or simply not followed. A bad or inapplicable employee handbook can do more harm than good. So how do you make your handbook work for you? Read on for our suggested best practices.
Not a Contract
An employee handbook is a formal, written set of company policies and procedures for all employees. An employee handbook is not a contract, and you don’t want it to be one. Making a handbook seem like a contract can hold you to terms that you didn’t mean to make legally binding. Anything that you want to be contractually binding should go in a signed employee agreement.
When are Handbooks Necessary?
A handbook helps employees understand what you expect of them. If your company’s policies are all listed in one place, employees will know where to find the answers to any questions. This promotes employee happiness and can make running the business easier.
A handbook is also a great place to provide employees with legally required information. For instance, it can include the leave required by Illinois (and/or Chicago) law and outline the anti-harassment, anti-discrimination, and equal opportunity employment policies that the law requires employers to have in place.
As with anything concerning laws and policies, it is extremely important for an attorney to review your employee handbook to ensure all policies are in keeping with the law. Beware that handbooks are often lengthy documents requiring precise language – they usually require a significant amount of time to review.
*Be careful* We strongly advise against getting a handbook from a friend at another company or a random Google search, switching out the company name for your own, and calling it good. Unfortunately, we have seen this happen a lot. It usually does more harm than good. For example, another business may have more than fifty (50) employees and therefore include Family and Medical Leave Act (FMLA) procedures. Including FMLA procedures in your handbook could require your business to follow these procedures, even if you’d normally be exempt.
What Information Should a Handbook Include?
Here, we detail a list of common handbook terms and what they should contain. Most of them are optional, but some are highly recommended for legal reasons, so we’ve emphasized those with an asterisk.
Introduction
Welcome your employees, give a brief history of the company and discuss the company’s goals/values. This section establishes the company’s culture from the get-go and invites the employee to continue reading.
At-Will Employment*
It’s important to be very clear that the handbook is not a contract and that the employment is “at-will.” You should include a statement to this effect in the introduction section and explain that the handbook is simply an overview and set of guidelines for employees. If employees believe they are signing a contract, their at-will status could be in jeopardy (see our article on “At-Will” Employment for information on this “implied contract” exemption).
Equal Employment Opportunity
State that the company is an “Equal Opportunity Employer” and does not discriminate in hiring or employment on the basis of race, color, religion, sex, age, national origin, marital status, sexual orientation, disability or on any other basis prohibited by applicable federal, state or local law.
Human Resources*
Who is the company’s HR contact? How can employees access their personnel files? Include the answers to those questions here.
Office Environment
This section covers any company-specific policy regarding office environment and culture, such as company ethics, parties, company property, dress code, etc. Think of how you want to present the company to new employees and describe what it’s like to work there, and include such details in this section.
Discrimination and Harassment*
These are very important sections in employee handbooks. Employers should:
- Include a statement that the company prohibits discrimination and harassment and assert its commitment to keeping the workplace free from discrimination and harassment;
- Include detailed definitions of what constitutes discrimination and harassment; and
- Lay out a reporting and investigation procedure for anyone who believes they have been discriminated against or harassed or may have witnessed such behavior. Sexual harassment specifically should be addressed.
Also include an explanation of the Americans with Disabilities Act and applicable accommodations for disabled employees. See our Harassment and Discrimination article for a more in-depth discussion about these topics.
Substances
Lay out any substance abuse policies in this section. This can include drug use policies (such as a “drug-free workplace”), drug tests, alcohol and cannabis policies (Can employees indulge at work-sponsored events? What if someone shows up to work visibly hungover?), etc. Employers can also include resources for substance abuse assistance and procedures to report if an employee is struggling with an addiction.
Safety*
The length and detail of this section will vary depending on the business. At a minimum, you should list all the applicable workplace safety rules, a procedure to report safety issues, worker’s compensation information, emergency information (Where is the first aid kit? What emergency information does the company need for every employee?), and policies regarding office keys and passwords to email, computers, etc.
Confidentiality
Define what information is confidential and the employee’s obligation to keep it confidential.
Privacy and Security*
In this section, address anything related to privacy and security. For example: whether work emails and computers are monitored, whether the building or certain files need to remain locked, and how employees can report if they are feeling unsafe for any reason.
Work and Compensation
This section will probably be of greatest interest to your employees, so be extra diligent in ensuring the accuracy of the policies here. This section could address such areas as: work hours, lunch and other breaks, attendance and punctuality, overtime rules, bonuses and performance reviews, pay schedule, pay corrections and where to report them, reimbursable expenses (and a reporting procedure, if applicable), and any other compensation benefits (such as commission).
Leaves of Absence/Time Off/Vacation/ Other Benefits*
Be extremely careful when drafting these sections and review and update them often. The government has very strict requirements related to time off, these requirements change often, and they vary a lot by business size and location. See our article on Sick Time, Time Off, and Leaves for more information.
Time Off*: What is the company’s paid time off policy? What about sick days? Does the company offer other types of leave, such as bereavement leave, medical leave, parental leave, etc.? List the company’s observed holidays here as well. These policies are strictly governed by local, state, and federal law, so an attorney’s review will be especially helpful here.
Vacation: Illinois law does not require private employers to provide paid or unpaid vacation days to employees, but many companies offer paid days off as a benefit to employees. We often recommend that employers make vacation time accrue because employers have to pay former employees for unused vacation time.
Recommendation: Vacation Day Accrual
Employers must pay a former employee for any unused vacation time. Consider what this means if a new employee quits one week into a new job. How much does the employer owe if the employee was given two (2) weeks of vacation? How much if, instead, that employee received 3.333 hours of vacation time per pay period?
Have a handbook or want one? Let’s take a look!
Sick Leave: See our article on Sick Time, Time Off, and Leaves for an overview of required sick time and leaves for employees. Chicago, along with a few other cities in Cook County, requires employers to provide sick leave to employees.
Other Benefits
If the company offers healthcare or retirement plans, describe them here.
*What NOT to Include*
In most cases, we recommend that small businesses do NOT include disciplinary procedures in their handbooks. Doing so offers little to no benefit and can trap an employer into certain actions and prevent them from firing a bad employee. Disciplinary procedures may be helpful for larger businesses with management structures and formal HR departments in place.
In general, avoid contractual language that promises or guarantees benefits or procedures. Also, do not prohibit discussing salaries or conditions of employment. Under the National Labor Relations Act (NLRA), employees must be allowed to congregate and discuss their working conditions for mutual aid, even on social media. They are given legal protection from employer retaliation.
Implementing the Handbook
Employee receipt: Have employees sign an acknowledgment that they received this handbook, have read it, and understand its contents. It’s also a good idea to reinforce that the handbook is not a contract (yes, again).
Once the handbook is signed by the employee, keep a copy for the company’s records and give a copy to the employee, either hard copy, email, or digitally, for their reference.
Follow it: Follow the procedures as laid out in the handbook. This is surprisingly difficult! Another reason why short and sweet is best.
Make sure to stay on top of any updates in the law (minimum wage, sick leave, etc.) and update the handbook accordingly. At a minimum, it’s a good idea to review and update your handbook every 2-3 years, depending on how often laws and company policy change.
There are, of course, many other policies and procedures you can put in place at your business. We at G & G Law wanted to outline the most used and most important policies here. If you’d like additional information regarding what to include in your employee handbooks that fits best for your business, please reach out and we’ll be happy to help!
Related: