Writing An Employee Handbook: 5 Things You Need To Know

When you're launching a startup, writing an employee handbook probably isn't the first thing on your mind. But once you start hiring, and have enough employees to round out a company softball team, you'll start to realize that maybe you should actually put some rules down on paper. And then you remember the employee handbook you were given when you were a lowly cog in the system, and how you glanced at it, threw it in a drawer and never looked at it again. Except there's one difference now -- now, you're the boss.

While an employee handbook is about as fun to write as it is to read, it can be one of your company's most important documents. Where should you begin and what should you include? Here are five things you need to know.

1. A handbook can protect you in court. A business can be sued for countless reasons. You fire someone who doesn't believe they deserve to be fired, and they lawyer up. A lecherous employee makes a pass at another employee, who eventually takes you to court. "In the United States, most civil rights laws apply to companies with 15 or more employees, and some local human rights ordinances apply to organizations with less than 15 employees," says Rita Barreto Craig, president of The Craig Group, a Palm Beach Gardens, Fla.-based HR consulting firm. "Companies need to become aware of local, state and federal laws to ensure they are in compliance."

So a handbook is your chance to get everything in writing, to establish rules on virtually every topic you can come up with. Obviously, having everything in writing doesn't mean you won't wind up on an episode of "Judge Judy," but it can help demonstrate in court that you weren't making up everything on the fly. And the justice system notwithstanding, writing up all these rules and thinking about how to handle each situation will probably help you run your business more efficiently. Can't remember your own sick-day policy? Check the handbook.

2. Cover the gray areas. Like what, you ask? "The tech boom is here to stay, and it's causing all kinds of new litigation," says Craig, who has worked in human resources for the past 30 years, served as the chair of the Florida Commission on Human Relations and has written numerous employee handbooks. "Make sure you develop policies that identity what is and isn't acceptable. Facebook, Twitter, etc. Where does work begin and personal life end? This is a new and growing issue."

Remember to consider the everyday workplace scenarios that still pose challenges, even if they are not legal issues, Craig adds. "There is no law on the books that's going to stop people from falling in love at work," she says. "Cover it. Think about those gray areas that are open for interpretation. When is my vacation earned? Do I have to call in if I'm going to be out sick? What happens if I'm called on jury duty?"

3. Remember, it's only a guide. Some employees -- and their bosses -- misunderstand the nature of a handbook and treat it as a contract. But unless you want it to be, clarify at the outset that the handbook contains policies, and does not serve as a contract. Your opening pages might include a statement along the lines of this: "The contents of this manual should not be confused for a contract between the company and its employees. This is a summary of our policies, which are being offered here only as information."

Why is this important? Well, consider the topic of employment-at-will, says MaryAnne M. Hyland, associate professor in the School of Business at Adelphi University in Garden City, N.Y. If you're not familiar with the term, employment-at-will means you can fire an employee for basically any reason. There are some obvious exceptions like discrimination, of course. But if somebody is incompetent or the company budget calls for eliminating a position, as an employer, you probably want the freedom to let people go whenever you want. However, Hyland says, if your handbook lists specific reasons for termination, without the proper disclaimer up front, "these could be interpreted as the only legal grounds for termination if the handbook is considered to be a contract."

4. Avoid endless jargon. "The tone of the writing should match the company culture, but it should be professional," advises Janet Flewelling, the director of HR operations for Administaff, which specializes in offering full-service HR services to companies with 10 to 20,000 employees. "Even if the company is very lax and informal, it's fine to have an informal tone, but you still want to make it professional and understandable." She also advises that "if most of your employees are high school graduates, you want to make sure you're writing to the level that they will understand."

5. Consult an employment attorney. In the beginning, if you're just writing 10 bullet points on a sheet of paper as an early outline, this might not be necessary. But once your handbook is finished, and if it's pretty comprehensive, Flewelling suggests that you have an employment lawyer take a look before finalizing it. "It's worth the money to have an attorney review and approve it," Flewelling says. "There are state laws that are often overlooked, and if a company operates [or has employees] in several states, those states may have different rules you need to abide by."

And once your employee handbook is finished, Flewelling suggests reviewing it at least once every two years. The world moves fast. If your employee handbook has references to typewriter policies, chances are, it's time to update.

The original version of this article appeared on AOL Small Business on 8/7/10.