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Employee Handbooks: A Complete Guide

With this comprehensive employer resource, we explain how to craft a perfect employee handbook that can protect your company and its employees, while saving you valuable time and money.

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    While not required by law, a comprehensive employee handbook is a very important tool that most HR experts agree every company should have. Done well, it can serve as a singular touchstone to which employees can easily refer for guidance, whenever necessary. Done poorly - or worse, not at all - and your company could be left vulnerable to a host of costly legal actions taken by current and former employees. Not to mention, disorder within your company’s ranks. This resource page will give you some important things to consider while you’re writing your company’s employee handbook.

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    What is an Employee Handbook?

    An employee handbook clearly and concisely documents all of the rules, policies, and conditions that your company and its employees operate under. Though it is not a binding legal document, an up-to-date, compliant handbook is a viable first line of defense against huge litigation costs. The implementation of clear, concise policies that employees understand and managers apply consistently can assure employees that they are being treated fairly, and can reduce the number of claims filed against the employer. If an employee or former employee does file a claim, a handbook can provide valuable documentation to demonstrate that the employer had equitable and compliant workplace policies in place.

    Additionally, your employee handbook is an ideal way to communicate with employees, whether it be about what is expected from them, what they can expect from their management and the company itself, or to provide updates to company policies.

    Why Your Company Needs an Employee Handbook

    Introduce Employees to the Organization’s Culture, Mission, and Values

    Your employee handbook is every new employees’ introduction to your organization’s culture and where they will fit within it. This helps to foster a sense of pride and belonging, which studies show will help employees become more productive in a shorter period of time. The introduction section of an Employee Handbook should answer questions like: “what do we do that sets us apart?,” “How did the company get here?,” “what are we passionate about?,” and “how can I, as a new hire, become a part of this culture?” The introduction section sets the standard for the employment relationship in general, and provides a guidepost for the remaining policies communicated in the handbook.  

    Communicate to Employees What is Expected of Them

    A well-written handbook provides employees with a clear understanding of their responsibilities. The handbook also serves as a compass for the organization’s policies and procedures. For instance, your handbook will advise employees what the procedures are for requesting time off. If an employee has to call in sick, the handbook advises them whom they should contact and what the timing should be. It also tells employees whom to go to if they have questions about any of the specific policies in the handbook. The handbook also communicates an employee’s general responsibilities regarding safety, timekeeping, reporting, and so on. By providing this clear, accessible information, handbooks ensure companies continue moving in the right direction.  

    Educate Employees About What They Can Expect From Management and Leadership

    An employee handbook clarifies company objectives and leadership styles, as well as management best practices, to foster healthy professional relationships between managers and their reports. It also outlines logistics, such as timekeeping requirements, hours of work, pay periods, and so on. Further, a complete employee handbook advises employees of their various entitlements to federal and state leaves, such as FMLA or Jury Service Leave. These clearly communicated policies help to eliminate confusion and inconsistencies that result when handbooks are silent on these topics.   

    Communicate Key Company Policies, Clearly and Consistently

    No policy is effective if it is practiced inconsistently. An employee handbook will accurately communicate your organization’s policies regarding employment, conduct and behavior, compensation, and other policies and procedures your organization follows. Most importantly, managers can refer to the handbook when answering questions or making decisions regarding your policies, and ensure their answers and actions are consistent with your policies and best practices.

    Showcase Benefits

    If your organization offers vacations, 401k, health insurance, paid parental leave, or other benefits to employees, make sure they know about these benefits and the eligibility requirements by communicating them in the handbook. A robust benefits package can help you retain your best and brightest employees, so be sure they know about your full suite of offerings by communicating these in the handbook.

    Ensure Compliance with Federal and State Laws

    No matter what state you do business in, or how many employees you have, you will be subject to state and federal employment laws. Your handbook not only communicates these various entitlements and obligations to employees, but is useful in demonstrating your organization’s commitment to remain compliant with these regulations. For example, if your employee is called away to active-duty military service, you want to be sure they understand their rights and obligations when communicating their need for leave to you. In this instance, your Military Leave Policy should clearly define these parameters to the employee. Similar policies should communicate rights and obligations regarding state disability leaves, federal FMLA leave, and other government mandates.   

    Defend Against Employee Claims

    The unfortunate reality is that, as an employer, facing a lawsuit or similar challenge from a current or former employee is a matter of when, not if. An up-to-date, compliant handbook is a viable first line of defense against huge litigation costs. If an employee or former employee does file a claim, a handbook can provide valuable documentation to demonstrate that the employer had equitable and compliant workplace policies in place. It will help to prove that the organization exercised “reasonable care” towards its employees. The employee’s signed acknowledgement page will show that the employee had an opportunity to familiarize themselves with the organization’s policies, a chance to ask related questions, knew whom they could turn to for help within the organization, and agreed to follow the terms and conditions of employment set forth by the organization.

    Lets Employees Know Where to Turn for Help

    Employees should feel comfortable approaching a trusted member of management for help when they want to report workplace violations, get workplace-related assistance, and get answers to any other questions they may have. The alternative is for them to turn to an outside third party, like the EEOC or Department of Labor, which could trigger a costly and time-consuming investigation. When a handbook not only outlines one or two management individuals for an employee to turn to in these situations, but also designates another individual to turn to in the event the employee disagrees with the first decision, they are more likely to keep their complaints in-house, which is a good thing for employers.

    Employee Handbook Roadmap - Complete Payroll

    What to Include in Your Employee Handbook

    Welcome Statement

    Make a good first impression! Begin your handbook with a brief statement welcoming your new hire into the family.

    Company Info

    Give new employees a sense of your company’s history. Include any awards or other recognition. Here, you should also include your company’s mission and vision statements, which assert your company’s core values and ambitions. A well-crafted mission statement lays the foundation for how the company and its employees carry themselves, internally and externally.

    Clearly stated purpose of the handbook

    Briefly explain what your handbook is, as well as what it isn’t. For instance, this section would be a perfect place to explain that the handbook itself is a guide to understanding your company’s various policies, methods and processes, and not an employment contract. Also mention the fact that the policies contained within are subject to change.

    Employment Information

    To remain legally compliant, include statements regarding Equal Opportunity Employment (EEO), your state’s “Employment-At-Will” policy. Consider having an attorney draft these documents since it’s possible that even one error in verbiage could render your policy unenforceable.

    Compensation and Benefits

    Inform employees of your company’s pay frequency, paid time off policy , and any overtime or holiday pay policies. If employees are eligible for benefits upon completing their introductory period, a simple overview of those benefits will suffice. To avoid having to constantly update your handbook, save any specific details about benefit programs for supplemental materials that you can distribute when appropriate.

    Sexual & Other Unlawful Harassment Policy

    Creating a safe space for your employees to work should be of paramount importance to your organization. It should be made clear to all employees that harassment of any kind is expressly prohibited. Provide a number of channels through which employees can register harassment complaints, and be sure to outline the disciplinary consequences employees can expect to face if found in violation of your harassment policy.


    The Americans with Disabilities Act (ADA) requires all companies to provide what they consider “reasonable accommodations” to accommodate workers with disabilities to do their jobs. Any such accommodations should be clearly stated in your handbook.  Also make sure to include any lactation accommodations your company makes for nursing mothers.

    Employee Conduct

    Here is where you can establish your company’s rules about drug and alcohol use, social media usage, etc. Be careful when drafting your company’s dress code, though. Banning facial hair and headwear outright may unintentionally offend employees who have religious or medical reasons for not shaving and/or wearing a headdress. Also, unless it is absolutely necessary to your business (and you can prove it), always refrain from requiring female employees to wear skirts, jewelry or makeup.


    Employee Sign Off/Acknowledgement

    It is always a good idea to have each employee sign a document in which they acknowledge that they were provided with your employee handbook. Being able to produce this document when necessary will protect you in the event that an employee takes legal action, arguing that they were terminated or otherwise disciplined for violating a company policy they were unaware of.


    If your company handles highly-sensitive customer data, it is important to convey to your employees their responsibilities when handling said data. Supplement this by having each employee sign a confidentiality waiver, but do not include the document itself in the employee handbook.

    Employee Handbook Roadmap - Complete Payroll

    What to Avoid In Your Employee Handbook

    Limiting Employees’ Rights to Discuss Wages

    Policies that prevent employees from discussing their wages violate federal law. Section 7 (C)(d) of the National Labor Relations Act (NLRA) contains a provision that gives all employees – whether unionized or not – the right to discuss "wages, hours, and other terms and conditions of employment" with their fellow employees. The National Labor Relations Board (NLRB) has taken the position for decades now that pay and benefits are term and conditions of employment, therefore any attempt to stifle employee discussion is a violation of federal law. Courts have uniformly supported this position.

    Long Introductory Periods

    The Affordable Care Act (“ACA”, commonly referred to as “Obamacare,”) prohibits waiting periods longer than 90 days. So, most employers find it simpler to adopt a 90-day introductory period for new employees before they gain access to certain benefits offered by the company. Extensive introductory periods have also shown to erode the employment-at-will relationship.

    Using the Term “Probationary Period”

    While we’re on the subject, it has been found that the term “Introductory Period” is vastly preferred over the term “Probationary Period” when referring to the beginning of a new employee’s tenure. “Probationary” has a negative connotation. It sounds punitive; as if the new employee is not to be trusted until they have been employed at the company for a certain amount of time. It’s not exactly the kind of first impression you want to make. More importantly, though, the word “probationary” implies that an employee is entitled to greater rights once they complete their introductory period.

    Specifics About Benefits

    Though it is always wise to regularly update the content of your employee handbook, keeping it updated with specific plan information every time plans and policies change will end up devouring your time and resources. Instead, it is recommended that you only outline that benefits are available to certain employees under certain conditions, and create a separate packet for specific information. Most carriers have these readily available anyway.

    Procedures, Job Duties and Safety Protocols

    Like benefits information, procedures, job duties and safety protocols are better left for a supplemental document where you can go into greater detail without having to constantly update your employee handbook each time you add or amend something.

    Arbitration, Non-Disclosure, and Non-Compete Agreements

    Unless you are an attorney, or have ready access to one, you should avoid including any arbitration, non-disclosure (NDA) or non-compete agreements in your employee handbook. Even if you are a legal professional, since the employee handbook is not a legally binding contract itself, these legally-binding documents have no place in yours. Moreover, if you do include them and they are not written correctly, you will find they risk not being enforceable.

    Get Help With Your Employee Handbook

    Download the FREE Employee Handbook Roadmap

    Given all there is to consider, the process of not just assembling your employee handbook, but also making sure it is current and meets legal requirements can be daunting. We want you to get it right, so you can focus on growing your business. So, we’ve put together The Employee Handbook Roadmap, a handy (and FREE!) template that will help you eliminate the guesswork of building an employee handbook.

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