These often-neglected business tools can reduce management headaches and create a more productive and harmonious workplace. Here’s what you need to know about them.

If you do not already have an employee handbook for your business, now is a good time to develop one—to introduce at the beginning of the new year. Employee handbooks can help businesses of all sizes run more smoothly, orient new employees quickly and reduce your risk of costly legal battles. They should outline workplace policies and employee responsibilities, describe specific jobs, communicate your company’s mission, state expectations and define benefits, all of which will result in a more productive organization and a more profitable business.

Another benefit of a well-written employee handbook is reduced legal risk. Suppose, for example, one of your customers is harmed by an employee impaired by alcohol or drugs. Having a record of an anti-drug policy can help mitigate liability. “If you get sued, the first question an attorney will ask is, ‘Did you have a policy covering this?’” says Bob Gregg, co-chair of the Employment Practice Law Group at Boardman Clark, Madison, Wis.


An employee handbook is not a “one size fits all” document. Every company has its own requirements, and only an attorney can tell you what you should include (and omit) to be in compliance with the law. Nevertheless, there are some topics common to many handbooks. For a rundown, see the sidebar (opposite page), “What Goes in the Employee Handbook?” Here are some remarks about the more sensitive topics.

• Email Even if allowed to use personal devices for business purposes, employees have no right to privacy regarding any business emails that go through those devices or any personal emails that go through the business system.

“Your policy should state that your business owns all emails that go over your business system, even personal ones,” says Gregg. “Employees should not use the system for anything they do not want company management to see. They should also be informed that even if they hit the delete key, the emails will be retained on the company hard drive or in the cloud.”

• Overtime The 2004 revisions to the “Fair Labor Standards Act” created a “safe harbor” from liability for unpaid overtime when employers have adequate policies granting employees the opportunity to request wage corrections. “If you do not have such a policy, employees can sue you for unpaid overtime without telling you first,” says Gregg. “On the other hand, if you have a clear, correctly worded policy, you can win such cases.”

• Privacy Statement “Include a statement of your right to inspect computers, desks and telephones,” advises Gregg. “If you don’t have it, you can be sued for invasion of privacy for looking through what you considered company property.”

• Compliance with the “Genetic Information Nondiscrimination Act (GINA)” State that your business will not collect any genetic or family medical history information from employees. This will give your organization a “safe harbor” against a lawsuit for discrimination based on such knowledge.


Employee handbooks can be a two-edged sword. While they can help protect you from charges of discrimination or other illegal personnel acts, they can also create legal problems of their own.

“Handbooks can be dangerous if you don’t know what you are doing,” cautions Gregg. For instance, including poorly written statements in your handbook can affect the “employment at will” status normally enjoyed by businesses. “It’s easy to fall into the trap of creating a contract of employment.”

You may be tempted to include morale- boosting statements such as “You will always be treated fairly here” or “We know you will enjoy your long-term employment” or “Our policy is to promote from within.” These can come back to haunt you later if a disgruntled worker sues for a perceived violation of promises that he or she considers contractual.

There’s more. “Avoid falling into the trap of including policies that are not required by law,” says Gregg. “Suppose, for example, your business has only a few employees. You are not required to comply with the “Federal Family and Medical Leave Act (FMLA),” which applies only to businesses with 50 or more employees. Including a page about compliance with the FMLA can create a condition in which you are covered by that law even if you normally would not be.”

And watch out for seemingly innocuous requirements that can land your business in hot water. “Some policies that seem good on their surface can violate federal, state or local laws,” says James W. Potts, J.D., CEO of the Pasadena, Calif.-based human resources consulting firm Potts & Associates. “For example, an employer might state that departing employees must turn in company property such as cellphones or laptops before a final check is cut. That can be illegal in some states.”

In a related area, be aware of city and state laws and regulations that can require you to follow specific policies and prohibit others. “Many cities, especially larger urban areas, have laws covering such areas as family and sick leave,” says Beth Brascugli De Lima, president and principal of HRM Consulting in Murphys, Calif.

Some policies are best left out of the manual altogether. Suppose an employee will be late coming to work. Whom should they call? And how far in advance? These are specifics that you might want to communicate orally, to avoid tying down your company to procedures you might want to change later.

Writing an employee handbook can be a challenging task. “It’s a mistake to try to write the manual on your own,” says Richard Avdoian, of Midwest Business Institute in the St. Louis, Mo., area. “It is critical to consult an HR expert and have an attorney review the document so that you are in compliance with federal, state and local laws.”


An employee handbook can be as simple as a three-ring binder of pages covering the core issues. But once the document is completed, make sure everyone reads it and signs a document stating so. Then make sure everyone understands that the policies must be followed consistently.

“A common mistake is creating an employee handbook and then not following it,” says De Lima. “Often this is because business owners and managers do not understand the importance of consistency.”

The result can be a costly lawsuit. “Suppose Employee A is treated one way when violating a policy and Employee B is treated another way,” De Lima says. “If Employee B is a protected class under equal opportunity laws, he or she may have a cause for action.” Laws on the federal level, and often on the state and local levels, prohibit discrimination by such characteristics as race, religion, gender and national origin.


An employee handbook is not a “set it and forget it” affair. Laws, regulations and workplace conditions undergo constant change.

“Review your handbook on a regular basis,” advises Gregg. “Add policies that reflect new challenges and opportunities, and toss those that are no longer valid. Clean out your policies like you would old clothes from your closet,” he concludes.

What Goes in an Employee Handbook?

Employee handbook policies will be as varied as businesses themselves. You should consult with an attorney to understand what should (and should not) be included. Here are some questions that handbooks often answer:
What is your policy on sick leave and vacation? On attendance and tardiness?
May employees drink alcohol at lunch? Will you be testing for drug use?
Will you be inspecting workstations, email and voicemail messages?
What insurance and other benefits will employees enjoy?
How can employees ask for pay corrections related to overtime?