Just how important is an employee handbook? It wouldn’t be an exaggeration to say that, actual employees aside, it may be the most important part of your organization. Handbooks help manage your employees and keep your business compliant with the ever-growing list of employment rules and regulations.
But simply having an employee handbook is not enough. An out-of-date employee handbook, or one missing key elements, is just as bad as having none at all. So what should be included in an employee handbook? Check yours against the below list of 17 must-have items to see how it stacks up.
An out-of-date employee handbook, or one missing key elements, is just as bad as having none at all.
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Must-Have Items For Every Employee Handbook
1. Notice and disclaimer / Acknowledgement of Receipt
A notice and disclaimer indicates the handbook is not a contract of employment and that the handbook is subject to change. Many employers put this notice at the end, but we prefer to include it at the front of handbooks, where it is more prevalent, because we want employees to see and sign it immediately.
Note: This section should always be reviewed by an attorney to make sure the contents will hold up in court if necessary.
2. Employment at-will policy
Most states, Massachusetts included, have an at-will work policy, which means that companies and employees can separate from one another at any time. If your state is the same, state it in your handbook so you get the protection this policy affords.
3. Equal opportunity statement and anti-harassment statement
These two statements are usually put together in a handbook, and they speak to your company’s stance against employee harassment and discrimination.
4. Work authorization
Work authorization involves the I-9 form. It is important to include because all employees must be legally eligible to work in the United States in order for you to employ them. We suggest including it at the beginning of your handbook to make employees aware of the necessity of completing the document.
5. Policy on employment classification
This policy statement is your opportunity to help your employees understand the differences in classification, specifically the delineation between full-time and part-time/exempt and non-exempt employees. It also clarifies the Fair Labor Standards Act (FLSA) regulations for paying overtime.
There’s a lot you need to know about classifying your employees the right way based on the Fair Labor Standards Act (FLSA). Get all the information in this guide.
Use this section to clarify your company’s position on overtime pay for employees who qualify. The federal overtime provisions are contained in the Fair Labor Standards Act (FLSA). Unless exempt, employees covered by the FLSA must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay. There is no limit in the FLSA on the number of hours employees aged 16 and older may work in any workweek, and it doesn’t require overtime pay for work on Saturdays, Sundays, holidays, or regular days of rest, unless overtime is worked on such days.
7. Leaves of absence
If you have more than 50 employees, you must have a clearly defined FMLA leave-of-absence policy. In our experience working with employers, it is much better to create this policy in an environment where you don’t have external factors influencing your decisions.
8. Parental leave
This section in your handbook should spell out your policy on parental leave. For Massachusetts employers, this is a must-do; other states have similar requirements for parental leave statements as well.
9. Workplace violence and workplace safety
These two items should state your zero-tolerance policy for both violence and unsafe activities in the workplace. Your workplace safety policy may not be as in-depth as your policy on workplace violence, but it should encourage safe behavior. It should also include language about reporting unsafe conditions and potential hazards, and information about where employees can report accidents, etc.
10. Conflict of interest
The conflict of interest policy protects your company from employees who inappropriately act on the employer’s behalf. Conflicts of interest occur when an individual’s personal interests could compromise his or her judgment, decisions, or actions in the workplace. Examples of conflicts of interest may include employees who work for a company but are talking to a vendor about joining the vendor’s company at a future date; purchasing company stock based on insider information; or signing a non-compete agreement before starting their job at a company.
11. Code of conduct
This item outlines processes that ensure orderly operations and provide the best possible work environment for your employees. You can see a template code of conduct on the SHRM website.
12. Unemployment compensation
This policy informs employees that, should they be terminated, they may be eligible for benefits. In a separation of employment, unemployment insurance is available to the formerly employed individual which allows them to collect unemployment. This section also states the company will legally defend its case if there was a known violation of a company policy.
13. Payroll deductions
This item spells out each of the deductions the company withholds, including federal, state, and local taxes and other things, including voluntary deductions for benefits.
14. Direct deposit
If direct deposit is available at your company, explain it in this section. Clarify any limitations for availability of direct deposit and explain how employees can make changes if desired.
15. Holidays and other time off
If you pay employees for holidays or other time off, you should define the criteria for eligibility in a policy.
16. Health and welfare benefits and insurance
Explain your company’s benefits and insurance offerings in detail, touching on all the following areas (if offered):
Medical insurance: This type of insurance is likely a no-brainer—it’s one of four major types of benefits most employers offer. It covers things including hospital and doctor visits, surgeries, and prescriptions. Employers usually cover a portion of this premium.
Flexible Spending Account (FSA): An FSA (also known as a flexible spending arrangement) is a special account employees put money into that they use to pay for certain out-of-pocket health care costs. Employees don’t pay taxes on this money, which means they save an amount equal to the taxes they would have paid on the money you set aside. As an employer, you may make contributions to an FSA but you aren’t required to. The amount employees elect must be used in that plan year.
Health Savings Account (HSA): Sometimes referred to in the same conversation as an FSA, an HSA is a savings account that lets employees set aside money on a pre-tax basis to pay for qualified medical expenses. Using untaxed dollars in an HSA to pay for deductibles, copayments, coinsurance, and some other expenses can lower overall health care costs. An HSA can be used only if employees have a qualified High Deductible Health Plan (HDHP). HSA funds roll over year to year if employees don’t spend them. An HSA may earn interest, which is not taxable.
Life insurance: A life insurance policy is a contract with an insurance company. In exchange for premium payments, the insurance company provides a lump-sum payment, known as a death benefit, to beneficiaries upon the insured’s death.
Dental, vision, and disability insurance.
This section should also include information about qualifying events, open enrollment time, and enrollment qualifications.
17. Employee assistance
SHRM defines an employee assistance program as “a work-based intervention program designed to identify and assist employees in resolving personal problems (e.g., marital, financial or emotional problems; family issues; substance/alcohol abuse) that may be adversely affecting the employee’s performance.” If your company offers an employee assistance program, describe it fully here.
Write it down—then follow the policies set forth.
Think you’re finished? These 17 things won’t make your employee handbook complete! To make it more effective, your employee handbook should be a living document that is used, questioned, and reviewed on a regular basis. Only once your organization sees the handbook as an HR bedrock will it be useful, so be as comprehensive as possible—and then get everyone on the team reading your handbook!
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