An employee handbook is a vital resource for employees and employers alike. In its ideal form, it sets clear expectations, eliminating uncertainties while affirming company values. The manual acts as a reference for policies and procedures (especially in relation to the employee-employer relationship), including workplace guidelines, equal employment opportunity, code of conduct, employee classification, dress code, compensation and benefits, health and safety rules, promotions and raises, hiring and separation procedures, among other elements.
Besides being a communication tool, an employee handbook enables companies to apply their procedures and policies consistently to remain compliant. As such, it's important to review your employee handbook regularly to ensure all policies and procedures are up-to-date with the current law and reflect the company's practices.
Seeking an expert to look into the handbook also ensures the organization gets recommendations on additional areas relevant to the industry that need to be covered. But most importantly, it reduces the risk of creating contractual obligations that may increase the company's risk of litigation from disgruntled employees.
If your employee handbook is due for an audit, follow this guide to learn how to go about it.
How Often Should You Review Your Employee Handbook?
Ideally, an employee handbook review should be performed at least once a year. This ensures it remains up-to-date and complies with current federal, state, and local employment laws. Once changes are made to the handbook, it is important to notify the employees immediately. Besides ensuring staff understand and abide by the company's policies and procedures, reviewing the manual protects the company from the risk of non-compliance, which can result in potential lawsuits.
If your business is looking to hire a group of people all at the same time, then review the handbook before proceeding to employee onboarding to ensure things are up to date and reflective of your company's current rules.
In addition, the handbook should be manually reviewed by a professional every two years. An audit by an employment attorney helps identify employee handbook compliance issues that may expose the company to litigation.
Tips for Reviewing the Employee Handbook
There is no definite time of the year when the handbook must be reviewed. But generally, the exercise can be conducted as part of the end-of-year or start-of-year HR procedures, or alternatively, whenever there are federal/state/local policy changes necessitating an immediate revision.
Below are some tips to consider before commencing the employee handbook review:
- Seek board approval
- Constitute a team of reviewers (board members and staff) to spearhead the process
- Consult an HR expert or employment attorney for counsel on the relevant laws and compliance requirements
- Involve the whole staff in the process by requesting their input
- Collaborate with the finance committee to ensure proposed changes are financially viable
- Seek board approval at the end of the process
- Set a date for the next review
How to Review an Employee Handbook
With the basics laid out, let's now get into the details of what to review and how to go about it.
As much as the employee manual spells out the company policies and procedures to eliminate uncertainties and guide the employees on what is expected of them, it's important to ensure the document does not create unintended legal obligations for the business. Specifying the employee's and employer's rights in every given scenario avoids vagueness and implied terms that may be legally interpreted against the business.
Understand the Associated Risks
Handbooks are not contracts, but they may convey implied contractual terms of employment. For instance, making statements that imply the employee is permanent, will be treated in a certain way, or will be disciplined/terminated only for specific reasons, creates an implied contractual term of engagement. The company could face a potential lawsuit if, say, it fails to renew an employee's contract after expiration or after terminating/suspending them for reasons not stated in the manual.
Engaging an employment attorney to review the manual ensures it does not convey statements that bestow unintended legal obligations on the business.
Verify Applicable Information
During the review, it's important to have updated information on the workforce size. The specific employer requirements, as specified in the employment laws, may vary depending on the number of employees.
Whether your organization is private or public may also affect the details to include in the handbook. For instance, if the company is publicly traded, it must comply with the Whistleblower Protection Act.
Also, if it has unionized employees, the policies outlined in the manual should comply with the collective bargaining agreement, which governs their terms of employment.
Identify Relevant Laws
Identify the applicable federal, state, and local laws. Federal requirements may also vary depending on the size of the workforce, while state and local laws may affect the manual provisions based on where the employees are stationed. If the company has employees in multiple states and cities, ensure each location manual complies with the relevant state and local labor laws.
Some common federal laws that should be considered may include anti-discrimination provisions and leave protections. In the same way, different states might have unique minimum wage and overtime requirements, types of protected classes, and leave requirements. Some counties and cities also have varying laws, so the manuals must comply with the relevant local laws as well.
Specify Rights
Ensure the manual includes disclaimers to specify rights so that legal obligations are not created that weren't intended. For instance, including an at-will clause ensures handbook provisions are not interpreted as contractual terms. Similarly, specify the company's right to modify the handbook, e.g., a clause stating the company reserves the right to change or revise the document at any time without notice.
The manual should have an acknowledgment form for employees to sign, confirming they have received the document, read it, understood it, and agree with its provisions. All employers should keep a copy of the signed acknowledgment form; it's an essential document in the case of an employee lawsuit.
Review the Handbook Policies
Audit the policies included in the handbook, such as wage, leave, benefits, conduct, and other general requirements, to ensure they comply with the current federal, state, and local laws.
Wage and Hour Policies
Review the wage and hour policies to confirm compliance with the relevant state and local laws.
You will want to make sure your employee handbook includes statements on the following:
- Minimum wage
- Payroll practices
- Timekeeping practices
- Overtime
- Paycheck deductions
Also, review the employee classifications (full-time, temporary, part-time, probationary, etc.) to ensure your employee handbook compliance.
Leave Policies
Verify the leave policies to ensure they comply with federal, state, and local laws for a comprehensive overview of every applicable law.
On the federal level, you must review these leave laws in your handbook:
- Family and medical leave (FMLA)
- Military service leave
- Jury duty leave regarding federal jury duty service
Depending on the state and locality, your review should consider the following common leave laws if applicable:
- Mandated sick leave
- Pregnancy leave
- Jury duty leave regarding state or locally specific jury duty service
- Victim or domestic violence leave
- Voting leave
Please be aware of any state or local laws that may impact your business and contact your state’s Department of Labor to ensure all leave laws applicable are adhered to.
Benefits Policies
Review the benefits section to ensure it's not unnecessarily detailed. It should only include a brief program description with a direction to check the main benefit plan documents for details.
Conduct Policies
Verify the employee conduct policies for compliance with the relevant laws. These policies should be designed to clearly state any prohibited activities while ensuring employee rights are not compromised.
The handbook should provide guidelines on these activities:
- Employee confidentiality and privacy
- Workplace safety and violence
- Dress code and grooming requirements
- Use of employer-provided internet and communication systems such as email, phone, and laptops
- Use of social media
- Soliciting and distributing materials within the workplace
However, the handbook should not detail disciplinary steps. Instead, it should have a clause with a disclaimer reserving the employer's right to bypass the disciplinary procedure.
General Policies
Many of your company’s standard employment policies should be carefully reviewed to communicate clear guidelines for employees.
These general policies include:
- Equal employment opportunity (EEO) statement
- Anti-harassment policy
- Anti-retaliation policy
- Protected classes (federal and state)
Including these policies in the handbook is not a legal requirement, but it demonstrates a commitment to adhering to the employment law.
On the same note, if a part of the staff speaks another language, consider translating the handbook into their native language.
Update Policies With Up-to-Date Legislation and Evolving Workplace Trends
Consider updating the policy to capture emerging trends or regulatory changes that could make a big impact on your workforce.
Some recent legislation and workplace trends that your handbook could address include:
- Pay equity and transparency
- Legalization of marijuana for recreational or medical use
- Remote and hybrid work options
- Use of generative AI in the workplace
- Data security concerns
Review the Handbook for Consistency
Finally, review the handbook's tone and clarity to ensure it's consistent with the company's culture.
It’s important to ask yourself the following questions to ensure your employee handbook is clear, accurate, and consistent:
- Is the information easy to read and understand?
- Are the terms used simple and understandable to the average reader?
- If policies are referenced more than once, are the rules consistent between sections?
- Are policies relating to labor laws up-to-date with the current legislation?
Ensure there are no ambiguous words or terminologies that contradict each other. Similarly, the procedures outlined in the manual should be consistent with the company's actual practices.
Additional Questions About Employee Handbook Reviews
With so many essential topics to review, edit, and add to your employee handbook, it can be challenging to understand how it all works. Here are some common questions for reviewing your organization’s employee handbook that could help kickstart the process:
1. How Often Should I Review the Employee Handbook?
At a minimum, you should review the employee handbook annually. However, additional reviews should be conducted whenever there are changes in employment laws, company policies, or organizational structure.
2. Can I Make Changes to the Handbook Mid-Year?
Yes, if there are significant changes in company policy or employment law, it’s essential to update the handbook immediately and notify employees of the revisions.
3. Is It Necessary to Adjust the Handbook to Different States or Locations?
Yes, if your business operates in multiple states, your handbook should include state or locality-specific addenda to reflect differing employment laws and requirements.
Key Takeaways
Updating the employee handbook policies regularly ensures that they are current and in compliance with the relevant federal, state, and local laws. Likewise, it keeps employees updated with the company's best practices and rules of engagement. Generally, the employee handbook should be internally audited annually and professionally reviewed by an HR expert or employment lawyer every two years.
Before reviewing the handbook, seek board or executive approval and have them involved throughout the process. Additionally, it's useful to seek the input of staff members, including collaborating with the finance committee to ensure any changes suggested are financially viable. Ideally, the process should involve verifying the applicable information, reviewing the relevant laws and handbook policies, and checking for consistency. And lastly, understand the associated risks and specify rights to protect the company from potential litigation.
If you need help updating your company's employee handbook, contact us today and let us connect you with a suitable expert.
