How to Create an Employee Handbook

Introduction to Employee Handbooks

An employee handbook is an invaluable resource that serves as the foundation for clear communication between a company and its employees. This comprehensive document outlines essential company procedures, workplace policies, and expectations, ensuring that everyone is on the same page from day one. For new employees, the handbook acts as a guide to understanding the company’s mission, values, and the standards of conduct expected in the work environment. For existing staff, it provides a reference point for procedures and updates. By creating an employee handbook, businesses can foster consistency, reduce misunderstandings, and support a positive workplace culture. Ultimately, a well-structured handbook not only helps employees navigate their roles but also protects the company by documenting important policies and procedures.

Background Information

When selecting the state of employment, remember that employment law varies drastically between states. The background section of an employee handbook typically includes the company's history, company's mission, and values to help new employees understand the organization's culture.

Number of Employees

For this step, the employer must determine whether certain policies, such as those required by the Family and Medical Leave Act (FMLA), apply based on whether the handbook will be used at a location that employs 50 or more employees working within 75 miles of that work site. Answering “Yes” here will simply enter the required disclosures under the FMLA and require your company to provide the notices specified in the Act. More information is available on the Department of Labor’s website.

Note: While an employee handbook is not mandated by federal law, employers may be required to include certain policies to comply with various regulations.

Employment Status

This question allows you to specify the employees that will be considered full-time workers. The employee handbook should clearly define the employment relationship, including definitions of full-time, part-time, exempt, and non-exempt employees. Full-time employees typically work at least 35 or 40 hours per week. Those working less than the amount that you specify will be considered part-time employees. Part-time employees are often not eligible for certain benefits. However, you may still allow part-time employees to receive certain benefits, which will be based off your company’s official policy documentation for each specific benefit offered to full- and part-time employees.

Payroll Information

In this section you will specify employee compensation:

• How often employees will be paid
• When each payday will fall
• The method(s) of payment
• Your policy on pay advances

It is important to note that state law may impose requirements on payment frequency depending on the occupation, industry, or other factors. Therefore, be sure to check whether your state law imposes a payment frequency on your company.

Smoking Policy

You have the option of specifying which areas of company premises employees are allowed to smoke in. Note that any areas you specify must be in conformance with state law. Most states prohibit smoking inside company facilities, but there may be additional restrictions as to outside areas as well.

Meal and Rest Breaks

Our employee handbook will automatically include information regarding the minimum amount of any meal or rest breaks required by your state. If your state requires one or both of these, your company may still allow more than the state minimum. If your state does not require these, the form builder will give you the option of allowing these breaks.

Benefits Offered

The company offers a range of benefits, including health insurance, retirement plans, and employee perks, in addition to workers' compensation insurance. Most benefits are typically discretionary. Federal law requires employers with 50 or more employees to provide health insurance to full-time employees, and state law may impose requirements on smaller employers.

The employee handbook should include a section outlining employee benefits, such as paid time off and family leave.

Performance Reviews

Requiring performance reviews is often an effective way to incentivize good behavior and strong job performance among employees. Our form builder allows you to specify whether you want to require performance reviews, and, if so, how often they will occur. Since employees often will want to discuss their performance periodically, this section will help require supervisors to monitor performance and provide constructive feedback on employee strengths, weaknesses, and opportunities for improvement. If you choose to not require performance reviews, the handbook will still advise employees that they are free to discuss their performance informally with their supervisors.

Paid Leave Offered

When choosing the types of paid time off (PTO) or leave your company will offer, you will have the option of selecting between offering a lump sum of paid leave to be used for sick, vacation, and/or personal leave as needed by the employee or you can choose to provide specific amounts of leave for each of these (sick, vacation, and personal). Note that if you select to offer a lump sum of paid leave, then you must at least offer any minimum amount of sick leave your state may require. The helper text next to the relevant question will tell you if your state requires a minimum amount of sick leave.

Also note that you may still choose to provide any required sick leave upfront at the beginning of the year as an "allotted" amount, instead of having employees "accrue" the leave over the course of the year. Even if you choose to provide an "allotted" number of days of lump sum PTO at the beginning of each year, you will still be asked for the maximum days of PTO an employee may "accrue." Don’t be confused by this use of "accrue," as PTO days can be both allotted (each year) and then accrue (from year to year) if you indicate that unused PTO days should not be forfeited at the end of each year.

Company Culture and Values

A strong company culture is at the heart of every successful organization, and your employee handbook is the perfect place to communicate it. Clearly state your company’s mission, vision, and core values, so employees understand what drives your business. Outline expectations for conduct, including your commitment to diversity, inclusion, and anti-harassment. By explaining policies on employee benefits such as paid time off, medical leave, and rest periods, you demonstrate your dedication to employee well-being. Including these elements in your handbook not only sets clear expectations but also helps create a respectful, supportive work environment where everyone can thrive.

Legal Considerations

Ensuring your employee handbook is legally compliant is essential for protecting both your company and your employees. Your handbook should reflect all applicable federal and local employment laws, including the Civil Rights Act, Title VII, and anti-discrimination regulations. It’s important to address employee protections related to medical leave and workplace rights, and to update your handbook regularly as laws change. Consulting with legal counsel can help you navigate complex regulations and avoid potential legal liability. By prioritizing compliance, you create a fair and respectful work environment and reduce the risk of costly disputes.

LegalNature offers the guidance to help you create a state-specific and legally compliant employee handbook for any or all 50 states and the District of Columbia.

Final Steps

Print a copy of the employee handbook for each employee and have them sign the acknowledgment form at the end, confirming they have read and understood the entire document. Be sure to retain a copy of the signed acknowledgment form in each employee’s personnel file. Including this acknowledgment form helps ensure employees are aware of and agree to abide by the company policies outlined in the handbook.

The handbook should also include procedures for resignation or termination, as well as a disclaimer stating that it is not intended to be a contract and that the employment relationship is at will.

Besides providing employees with copies of this employee handbook as well as any updates to it, various state and federal laws may require you to post relevant information regarding employee rights in conspicuous places in the work setting, including specific leave and benefits rights. These notices are usually available for free online.

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