Small business Law Articles

Important Tip Make sure your handbook spells out the at-will employment relationship.

If your small business has employees, you should collect your important policies and procedures in an employee handbook.  A handbook serves several purposes.  It’s a useful one-stop reference for employees with questions about company policy, helps ensure that all employees are treated fairly and consistently, and helps you as an employer remember what your policies are.

What should your handbook contain?  Most importantly, it should make clear that the employment relationship is at will, meaning that both the employer and employee are free to end the employment relationship for any legally permissible reason at any time.  In other words, you need to make it clear that your handbook is not a contractual guarantee of rights.

In addition, most handbooks contain policies regarding equal employment opportunity, sexual harassment, anti-discrimination, travel and expense reimbursement, standards of conduct, dress code, overtime requirements, work hours, benefits, alcohol, drug, and tobacco policy, disciplinary procedures, and a confidentiality provision.  It is important to periodically review and update your policies to reflect current legal standards and company practices.  

A handbook is of no use if it’s not followed, so be sure that your policies are observed and consistently applied to all employees.  In fact, a handbook can do more harm than good if it’s not observed – providing employees with a weapon to assert claims of discrimination or disparate treatment.  

When drafting your handbook, be careful about wording policies in a way that could be construed as guarantees.  Words like “shall,” “must,” and “always” can limit flexibility.  In addition, probationary periods for new employees present the risk that a court will interpret them as guarantees of employment.

Every employee should be provided with a copy of your company’s handbook, and should sign an acknowledgment that they have read and understand the handbook.  If policies are revised, employees should be provided with updated copies of the handbook.

Finally, keep in mind that employee handbooks are flexible, and can and should be tailored to the specific nature and needs of your business.  There is no “one-size-fits-all” handbook that is appropriate for every business.  For example, jobs involving work with heavy machinery will likely require more detailed, and company-specific, safety policies than jobs in an office environment.  A restaurant will likely want to craft a more detailed food and alcohol policy than will a hair salon.  

Like so many legal disputes, small businesses can reduce their exposure to employment litigation considerably simply by investing time and money up front – before litigation arises – to craft a good employee handbook.