Part 1: Does My Organization Need an Employee Handbook?

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If you run a small, but growing, operation, you may wonder whether you have gotten large enough to start thinking about an employee handbook. Actually, if you have even one employee, you need at least some policies to govern behavior and make expectations clear. For some organizations, this looks like a full-blown employee handbook, with a table of contents and appendices. For smaller or simpler organizations, it may be a handful of important policies that everyone agrees the company needs. In this three-part series, we’ll explore why most organizations need at least a few key written policies for HR matters, what those policies are, and how your business can get up to speed and have an employee handbook that functions for you.

Part One explores why most businesses need at least some form of an employee handbook—and why downloading a sample off the web and doing a “find and replace” with your company’s name is not the best way to set organizational policy.

Why Do I Need an Employee Handbook?

An employee handbook, as we’ll refer to it throughout, is simply the place where the written policies of the organization live, whether that is a printed “book” or an electronic file. So why do you need to have written policies?

If your business is operating on unwritten policies and unspoken assumptions about work requirements and office procedure, you are putting your organization at a disadvantage. Unwritten rules often lead to misunderstandings, unmet expectations, and may even lead to increased liability for the organization. A written policy eliminates guess work.

Here is a simple example. Suppose you have to let an employee go because of budget cuts. The employee argues, however, that you had promised to keep her on for the entire year. Without a written policy confirming the at-will employment relationship and stating it can only be altered in writing, you may be left defending your actions or even fighting a wrongful termination lawsuit.

Practically, written policies also help employees know exactly what is expected. Most employees want to meet expectations and do a good job. When you provide clear policies that they can reference, they will know if they are measuring up. In addition, you have provided them with instruction on where to take complaints and how to negotiate conflict. This makes it easier for employees to do their jobs, meet expectations, and resolve conflict. If the policies are tailored to the organization and useable, they will be helpful.

Why Can't I Just Take an Employee Handbook Off the Internet?

It is tempting to cut costs for the business and get an employee handbook from the internet. This is a classic example of short-term gain for potential long-term loss.

Though we know this intellectually, it bears repeating that not everything on the internet is accurate. Nor is every employee policy or handbook you find going to be high-quality or legally sound. When you go trolling the internet for free employee handbook samples, it is hard to know if what you are getting is any good. You don’t know whether the employee handbook was created by a lawyer, or a good lawyer (not always the same). You may not know if the sample is five years old, or if it contains policies that courts have since found to be invalid. Most importantly, even really good examples might not work well for your unique employment environment.

An employee handbook off the internet leads to lack of customization and even serious inconsistencies. A “one-size fits all” approach does not work well for employee handbooks. There are several reasons why. Laws vary from state to state, and even from city to city. To be sure, there are some national employment laws, like the Fair Labor Standards Act (FLSA), or Title VII of the Civil Rights Act of 1964. These laws attempt to form national standards and should, in theory, apply the same regardless of whether you are in Denver or Detroit. But even these laws may have different application depending on where you are located. Take Title VII for example. The Seventh Circuit Court of Appeals, the federal appellate court that covers Illinois, Indiana, and Wisconsin, has interpreted Title VII to cover sexual orientation discrimination. This is not the case for most of the rest of the country. So an employer in Chicago might have different responsibilities under Title VII than an employer in Colorado Springs, even though it is the same federal law. Even with federal laws that apply coast to coast, the handbooks may need to be different.

And not all federal laws apply to every organization, nor do they apply to all organizations in the same way. For example, many federal employment laws have employee minimum thresholds before they kick in. For example, Title VII might not apply if you have less than 15 employees. Plus, some organizations will have special rules that apply to them. Religious organizations are a good example, as Title VII has special exemptions for certain faith-based groups. But other industries have exceptions from certain wage and labor laws that should also be explored. Or there might be additional requirements in some fields or for certain kinds of work. All these nuances may impact your “off the shelf” employee handbook.

We already mentioned the difference that courts can make in the application of federal law. But state and local laws are another reason that simply “plugging and playing” a handbook that was developed with Wyoming law in mind, for example, might not work for your Colorado small business. Here is a simple example: even though the FLSA requires federal minimum wage, Colorado’s state minimum wage might also apply and would be higher. Simply saying you comply with FLSA is not enough. Here is another example. Your organization might not have to comply with Title VII because you have too few employees. But since state and local laws have their own thresholds, you might have to comply with the Colorado equivalent, the Colorado Anti-Discrimination Act, which covers more employers and may cover more employees due to the broader suspect classifications it lists. And as an employer, you’re not going to want to meet all the requirements of a really stringent state where you are not located.

You also should consider the size of the organization and what policies are needed or even feasible. Simply adapting a larger organization’s employee handbook might end up subjecting the organization to more burdens than are actually required. Take the Family and Medical Leave Act (FMLA) for example. Many small businesses do not have to comply with this law because it generally only applies to public sector companies with at least 50 employees located within a 75-mile radius. But take a larger organization’s employee handbook off the shelf (which includes a policy on FMLA leave), and you may have just made the FMLA part of your organizational policy and created a brand-new expensive obligation for yourself. A large employee handbook could be overkill for a tiny organization. A tiny handbook might not cover all the issues faced by a large organization (such as more developed benefits or PTO).

Finally, if you have an employee handbook that doesn’t work for you, whether too large, too small, hard to follow, or containing the wrong policies, it could be more of a liability than it is a help. It will simply sit on the shelf. When this happens, it can be evidence used against you in litigation.

It should be clear by now that no standard employee handbook will work for all organizations. True, there are several categories of policies that most employers will find useful. But it is important to understand why. In the next post in this series, we’ll explore topics employers should consider addressing in written policy, and why they may be important to include in your organization’s handbook.