Key Provisions for Every Employee Handbook

*Note: This article is directed to businesses in a non-union setting.

Every employer, no matter how small, should have an employee handbook even if it is only a few pages. A handbook provides the basic understanding between the employer and employee and, as such, it can reduce inconsistencies, misunderstandings, and legal liabilities in the workplace. While the content of the handbook may vary depending on the size and nature of the company, several key provisions are critical and are universally applicable.

1. At-Will Employment.

Every handbook should clearly state the at-will nature of the employment relationship which allows either the employer or the employee to terminate employment at any time, with or without cause or notice. This provision helps to protect the employer from claims that employment was offered for a defined period of time during which the employee may be terminated only for cause.   

2. Wages and Hours of Work.

A section on wages and hours of work should include detailed information on pay schedules, how to record hours worked, and overtime policies. Claims for unpaid wages are the most common employment-related claims filed in court and often result in substantial liability to the employer, not only for the alleged unpaid wages (which may be a fairly small amount), but for liquidated damages, attorney fees and costs. These cases are highly sought after by plaintiff-side attorneys who advertise for such cases and represent claimants on a contingency basis, often collecting attorney fees which far exceed the disputed wage amount. 

3. Anti-Discrimination and Anti-Harassment Policies. 

Policies against discrimination and harassment should clearly define what constitutes discrimination and harassment, outline reporting procedures, and identify the consequences of violating the policy. Under certain circumstances, these policies can form the foundation of a complete defense for the employer. While most federal and state laws which prohibit discrimination in employment apply to employers with 15 or more employees, local ordinances often apply to smaller employers with just a handful of employees.

4. Accrual and Use of Paid Time Off (PTO). 

Paid time off polices should address accrual, rollover, use and disposition of paid time off (PTO) upon separation. Employers should consider specifying a cap or “use it or lose it” provision on year-to-year rollover and the amount usable or payable upon separation from employment. Additionally, payout upon separation can be limited to situations where separation is amicable and sufficient notice is provided by the employee. When there is no written policy, employees often assume that they will be paid out for accrued PTO upon their separation from employment—regardless of the circumstances. If that is not the company’s intent, the written policy should say so. Otherwise, unpaid wage disputes are bound to arise.

5. No Reasonable Expectation of Privacy on Computers.

Employees should be informed that there is no reasonable expectation of privacy when using company computers and other electronic devices. This provision should address the monitoring of email, internet usage, and other electronic communications to protect the company’s assets, ensure compliance with policies, and monitor employee job performance and conduct.

6. Signed Employee Acknowledgment of Receipt. 

Finally, each employee should sign a written acknowledgment that they have received, read and understand the employee handbook and will comply with company polices. This demonstrates that the company has effectively communicated its policies to its employees.

Of course, there are other policies which may be helpful and informational notices which employers are required to post or provide to employees, many of which depend on company size and nature.