Employee Handbooks 101

employee handbooks

Employers use employee handbooks as an efficient way to communicate essential information to employees about company. In addition, some policies may provide general notice and details of employee rights required by laws. Other policies may provide additional information about the company and its mission. As well as discuss employee benefits such as paid time off, clarify staff expectations and other vital issues. The handbook may even provide legal protections to the employer. Thus, a properly drafted employee handbook can be a valuable communication tool.

Why Should I Have an Employee Handbook?

Though many laws require employers to notify employees of certain rights, no laws require an employer to have a handbook. So, unfortunately, plenty of employers choose not to have one. But, for several reasons, creating and maintaining an employee handbook is a good idea and a best practice.

A well-prepared handbook answers many routine questions that would otherwise end up on the desk of Human Resources. In addition, when employees know to look in the handbook first, it saves management time. Moreover, an employee handbook is a valuable tool for providing information that, by law, must already be delivered in writing. Thus, rather than provide employees with a pile of mandatory notices—it makes sense to collect them into an organized handbook.

Finally, a legally compliant and up-to-date employee handbook may even provide legal protection if an employer’s policies or practices are ever in question at court.

What does an employee handbook do?

There is no one-size-fits-all employee handbook. However, a well-written employee handbook may start by first providing company information, philosophy, and the business. Second, the handbook may define or summarize the legal relationship between the employer and the employee. Thirdly, it should include any workplace notices or policies required by law, such as those related to the Family and Medical Leave Act (FMLA), Consolidated Omnibus Budget Reconciliation Act (COBRA), and sexual harassment. Fourth, the employee handbook may provide information on benefits, paid time off, and other perquisites. Finally, it should set out rules, standards of conduct, disciplinary procedures, and any additional information.

Convey the corporate mission or philosophy.

The employee handbook is a great communication tool because it is given to all employees. Therefore, it is also a great opportunity to let employees know certain things about the company.

Depending on the message the employer wants to send, the handbook might include:

  • A brief history of the company
  • An explanation of the philosophy or mission (e.g., customer service, continuous improvement, excellence, high ethical standards)
  • A statement about the employee’s role in the company’s success or statement about the company’s equal opportunity policy
Define the employment relationship.

Promises made by employers in employee handbooks can sometimes be mistaken as contractual obligations. Therefore, to avoid unintentional contractual commitments, all handbooks should include a section at the very beginning that states that nothing in the handbook is intended to create a contract with the employee.

In most states (Montana is the exception), this is also a good place to include an “at-will” statement. The statement clarifies that employment is at-will and may be terminated at any time for any legal reason. It’s also smart to include a statement reserving the company’s right to change, amend, or delete sections at its discretion. These statements should be included in a separate acknowledgment to be signed by the employee when they receive the handbook.

Provide notice of rights and responsibilities as required by law. 

As mentioned above, most employers are already required to provide employees with certain written notices under state and federal laws. So, the employee handbook is a sensible place to do so.

In fact, though state and federal laws do not expressly require employee handbooks, some states do require that if an employee handbook is provided, it must include certain notices of leave, anti-discrimination, and remedial rights.

A few examples of these policies may include:

  • Information on COBRA continuation rights as required by law
  • Notice of FMLA or paid sick leave rights, as required by law
  • Notice of employees’ right to report workplace injuries/illnesses without fear of retaliation, as required by the Occupational Safety and Health Act (OSH Act)
  • Details on the company’s policy on sexual harassment, discrimination, and retaliation, and its complaint procedures
Provide benefits, leave, and other information important to the employee. 

The employee handbook is also a good place to:

  • Define part-time and full-time employees & exempt and nonexempt employees
  • Provide basicinformation about employee benefits, while also referring employees to the plan document for more details
  • Explain vacation, sick time, holiday, and other paid time off
  • Provide any other details or information generally applicable and important to most of your employees
Set expectations for conduct and performance. 

The employee handbook often includes policies that inform employees of job performance expectations and the consequences for violating these rules.

Note: Handbooks are not the same as supervisors’ policy manuals. 

A policy manual provides guidance for supervisors and managers on the administration of the company’s policies. The employee handbook provides more general information to employees. Some items might be covered in both publications, but at different levels of detail.

What do I include in an employee handbook?

Employee handbooks come in all shapes and sizes. However, there are certain policies that should be included in every handbook. Often these policies are either required by law or protect an employer from legal liability. In addition, there are policies in almost every handbook because the policy is universally important to both employees and employers. Finally, there are those policies that are tailored to the organization and focus on a message for employees. Different organizations have different communication needs.

Selecting Topics for the Employee Handbook

When selecting topics for the employee handbook, there are certain factors to keep in mind. These include the ease with which a policy can be explained and understood, the frequency with which the policy might change, the number of employees affected by the policy, and the importance of each policy.

Ease of explaining or understanding

Some items may be so complex that they can’t be thoroughly explained in the employee handbook. This is especially true of topics such as group health insurance and other benefit plans where a thorough treatment would have to include eligibility requirements and details of coverage. In addition, employers are already required to provide employees with a separate summary plan description (SPD), which is a comprehensive document describing the features of the benefit plan.

Therefore, it is usually preferable to limit benefit and health coverage information in an employee handbook to a brief listing of available benefits while referring employees to the SPD, group health plan, or other appropriate documents for details. Other complex topics may be similarly managed by summarizing the basics in the employee handbook, then cross-referencing other documents and resources for in-depth details.

Frequency of change

If the information that will be covered by a policy changes on a regular basis, it might be a better strategy to provide a general description but avoid details. For instance, an employee handbook might include a policy on holidays indicating how many paid holidays employees will receive each year. However, because the actual days may vary from year to year, the company may not want to list them in the employee handbook.

Number of employees affected

There are some policies that will apply only to a small group of employees, such as those related to executive perquisites or sales commission plans. As a general rule, the employee handbook should include policies that are applicable to the majority of employees. Information on items that affect only a few employees can be distributed separately.


An employee handbook may be relatively short and cover only key topics. On the other hand, some companies have comprehensive employee handbooks that are very long. Having a lengthy and comprehensive handbook is not necessarily a bad thing as long as the handbook is well organized and easy to understand and navigate. But if the handbook is too long or difficult to use, its purpose has been lost, and the effort put into creating it has been wasted.

Whatever form of handbook you choose, be sure to prioritize your handbook so that the most important policies are included and given proper coverage.

At-Will Employment, Contract Disclaimer, & the Acknowledgment Form

In nearly all states, private employees are employed at will. This means that either the employee or the employer may terminate the employment relationship at any time, for any reason, with or without notice.

Exceptions to employment at will include employees covered by a collective bargaining agreement (union contract), public employees, and employees with an individual contract of employment that includes a specific term.

Unless one of these exceptions applies, employers should take steps to preserve the at-will nature of the employment relationship. Accordingly, at the beginning of every employee handbook, there should be a statement including the following:

  • Employment is at will and may be terminated at any time by either the employee or the employer
  • Nothing in the employee handbook creates or is intended to create a contract of employment
  • The at-will nature of employment may not be modified by any oral or written statement made either before or during employment
  • Policies in the handbook provide information and guidance to employees, but the company reserves the right to amend or change the policies at its discretion with or without notice to employees
Revising a handbook to add a disclaimer

The law related to contract disclaimers and employee handbooks has developed at the state level. Organizations with older employee handbooks may need to revise their handbooks to include language related to at-will employment and to add a contract disclaimer and acknowledgment form.

Because old handbook provisions may be viewed by a court as having created a contract with employees, it is a good idea to seek the advice of experienced employment counsel about the best way to implement these changes.

Acknowledgment form

In addition to the beginning statement of the handbook, the last page should also include an acknowledgment. At the time an employee receives a copy of the employee handbook, he or she should be required to sign and date an acknowledgment stating that a copy of the employee handbook was received.

In addition, an even better practice is to have the employee agree that he or she has not merely received the handbook, but also read the handbook and understood the policies. The acknowledgment should also state that the employee understands their employment is at will, and that the company may amend or change the policies at its discretion with or without notice.

This signed acknowledgment should then be placed in the employee’s personnel file.

Additional disclaimers

In addition to including the disclaimer at the beginning of the handbook, employers may want to consider adding disclaimer language to policies related to discipline and/or workplace rules. For instance, if an employer has a policy related to disciplinary procedures, it is a good idea to include a statement reserving the employer’s right to determine what level of discipline is appropriate in any given circumstance, up to and including the immediate termination of employment.

Likewise, if there is a policy listing conduct that will not be permitted in the workplace, it should include a statement indicating that the list is not all-inclusive, but is provided as guidance about the types of behaviors that will result in discipline, up to and including the immediate termination of employment.

Caution: National Labor Relations Board (NLRB) standards

In the past, the NLRB has taken action against employers it deems to have included broad disclaimers in employee handbooks. For example, in one case, an administrative law judge (ALJ) ruled that an employer engaged in an unfair labor practice when it included the following language in its employee handbook as part of the at-will employment disclaimer: “I further agree that the at-will relationship cannot be amended, modified, or altered in any way.”

According to the ALJ, the problem with this disclaimer was that it could have been interpreted by employees to mean that organizational activities would be futile and that workers could not alter their at-will status through unionization. Therefore, the disclaimer was found to violate employees’ Section 7 rights to engage in concerted activities and join a union. (NLRB v. American Red Cross, Case 28-A-23443).

However, in 2017, the NLRB revisited its standard for reviewing employment policies, work rules, and handbook provisions in a 3-to-2 decision. The NLRB established a new test: When evaluating a facially neutral policy, rule, or handbook provision that, when reasonably interpreted, would potentially interfere with the exercise of National Labor Relations Act (NLRA) rights, the Board will evaluate:

  1. The nature and extent of the potential impact on NLRA rights, and
  2. Legitimate justifications associated with the rule.

In general, the Boeing standard should provide employers with more clarity and autonomy in developing and applying well-intentioned workplace rules, policies, and handbook provisions. Nonetheless, because of the fact and situation-specific nature of the interpretation of the rules, employers should still have legal counsel review handbook contract disclaimer language to ensure it complies with NLRB’s current interpretation of the NLRA.

(See Union and NLRA Concerns below for additional information on unions and employee handbooks.)

Specific Policies to Include in the Employee Handbook

In addition to statements regarding at-will employment, the following policies are included in most employee handbooks:

  • EEO statement, including information on the Americans’ with Disabilities Act (ADA) and reasonable accommodation
  • FMLA policy (if the employer has 50 or more employees, is a public employer, or is covered by an applicable state law)
  • Family Military Leave policy (as required under the amended FMLA)
  • Military leave policy
  • Policy regarding other leaves such as jury duty, school conferences, etc.
  • Policy against harassment, discrimination, and retaliation that includes sexual harassment and a complaint procedure meeting the requirements of both federal and state law
  • COBRA policy that provides employees with the notice of rights required upon commencement of employment
  • Internet, e-mail, social media, and/or other technology policy limiting any employee expectation of privacy
  • Policy on electronic monitoring, if applicable
  • Smoking policy
  • Solicitation policy
  • Policy explaining part-time versus full-time employment and exempt versus nonexempt
  • Rules for timekeeping for nonexempt employees
  • Designation of regular paydays and when time must be submitted
  • Hours of work
  • Lunch and rest periods
Specific Policies to Include in the Employee Handbook: Continued
  • Policy on overtime, including any mandatory approval process
  • Absences and tardiness, including procedure for calling in to report absences and any rules related to job abandonment
  • A noninclusive list of conduct that is not acceptable and will result in discipline, including threatening conduct or violence; theft; possession or use of illegal drugs in the workplace; inappropriate use of the Internet, e-mail, voice mail or other forms of electronic communication; harassment; etc.
  • A description of the disciplinary process and statement that the employer will decide what level of discipline, up to and including the immediate termination of employment, is appropriate in any given circumstance
  • Policy on drug and alcohol testing, if applicable
  • General description of employee benefits such as health, dental, life, and disability insurance
  • General description of any 401(k) or other retirement plan
  • Notification of employees’ right to report any workplace injury or illness, as required by the OSH Act
  • Additional information on safety and workers’ compensation
  • Policies on education or tuition reimbursement
  • Credit union participation
  • Code of ethics
  • Policy on competition, confidentiality, intellectual property, etc.
Other policies may be included to suit the company’s needs. 

As noted earlier, many companies use the employee handbook to give employees information about the company’s history, mission, products, and customers. This is often done through a letter from the company’s president or chief executive officer.

The employee handbook may also include policies encouraging volunteer work or explaining an open-door policy. In addition, a public company might want to include a statement regarding confidential information and media relations. Employers may consider a wide range of other policies depending on the needs of the individual organization.

Union and NLRA Concerns

As noted above, employers must be careful not to include language in their handbooks that in any way infringes on or discourages an employee’s right to organize. Section 7 of the NLRA, which applies to most private workplaces (even those that are not unionized), provides employees with the right to engage in “concerted activities” to advance their interests as employees. These activities might include discussing pay, workplace conditions, and discipline with others.

With the Boeing test in mind, it is still important for employers to consider that any policy that touches on an employee’s ability to discuss work with another person is fair game for the NLRB, so it’s still a good idea to review these policies with a couple of best practices in mind:

  • Be specific. Be specific as to the type of activity you wish to restrict. Vague policies that prohibit “negative attitudes” or “discussing sensitive information on social media” are less likely to pass muster than policies that specifically state that employees should not harass colleagues or disclose customers’ data to noncompany personnel.
  • Use disclaimers. When in doubt, remember the power of the disclaimer. An NLRA disclaimer can help clarify an otherwise vague policy by specifically alerting employees that “nothing contained in this policy is designed to interfere with, restrain, or prevent employee communications regarding wages, hours, or other terms or conditions of employment. Company employees have the right to engage in and refrain from such activities.”
Practice tip:

Employers, whether unionized or not, should make sure that their employee handbooks do not conflict with employees’ rights under the NLRA. Even if such policies are not enforced, the NLRB may still find the employer engaged in an unfair labor practice just by maintaining such policies.

As noted above, an attorney experienced in labor law should review employee handbooks for compliance with the NLRA.

Legal Concerns

In most states, courts have held that statements in an employee handbook may create a contract between the employer and employee. Therefore, it is important to carefully consider the information that will be included in the employee handbook. Employers should also be prepared to follow the policies in the handbook.

Where Problems May Arise
Long-term employment guaranteed

Phrases such as “you are now part of the XYZ company family” and you can expect to be employed “as long as you do a good job” have been problematic in several court cases. Some courts have interpreted these statements as creating a binding contract that prevented termination except in cases where the employer could demonstrate “just cause.”

Creating legal obligations

A promise in an employee handbook may obligate an employer to provide statutory benefits that it otherwise would not be required to provide. For example, in one case, an employer that was not covered by the FMLA had nonetheless included information in its handbook stating that eligible employees were entitled to 12 weeks of leave under the FMLA.

An employee who was replaced while on medical leave sued the employer claiming that the employer had violated the FMLA and that it should be bound by the handbook promises. The employer argued that it was not liable because it was exempt from FMLA’s provisions.

The court disagreed, ruling that even though the employer was not covered by the FMLA, it still could be bound by the promises in the handbook, particularly when the employee relied on those promises in taking medical leave (Peters v. Gilead Sciences, Inc., 533 F.3d 594 (7th Cir. 2008)).

In another case, a federal district court came to the same conclusion, holding that an employer could be bound by a handbook provision clearly promising FMLA leave, even though the employer was not covered by the FMLA (Reaux v. Infohealth Management Corp., No. 08 C 5068 (N.D. IL 2009)).

Procedures not followed

Some employees have fought dismissal or other disciplinary action by claiming that procedures in the handbook were not followed. For instance, if the handbook sets out a three-step disciplinary process, an employee who did not receive all three steps of this progressive discipline might challenge his or her termination on the grounds that the disciplinary process was promised, and if given the chance, he or she could have improved job performance or corrected inappropriate conduct.

Changes not recorded

Another potential problem arises when the handbook is not updated to conform to new rules or procedures. Employees might claim that they relied on the written policies and did not know about the new or different rules.

Each of these potential problem areas can be addressed by including a properly drafted at-will employment statement and a properly worded contract disclaimer in the employee handbook and by having employees sign an acknowledgment. There is more guidance on at-will employment and avoiding implied contractual agreements on the Employment Contracts topical analysis.

Practical Tips to Avoid Liability

The following practical tips are aimed at helping employers avoid the legal traps associated with employee handbooks. However, still taking full advantage of the positive aspects of communicating with employees:

  • Have any new policy or handbook reviewed by local employment counsel before distributing to employees.
  • Include an at-will disclaimer that is bold and conspicuous at the beginning of the handbook.
  • Include a specific disclaimer with certain policies; e.g., policies related to progressive discipline, performance reviews, dispute resolution, and workplace rules.
  • Consider disclaimer language with policies that may limit or restrict employees’ NLRA-protected communication about work conditions, pay, or similar matters.
  • Avoid using the word “probation” or referring to employees as “probationary” employees.
  • Avoid the word “permanent.”
  • Be fair and consistent in the interpretation and enforcement of policies.
  • Review and update the handbook regularly so that the written policies are consistent with actual practice and applicable law.
  • Train managers and supervisors in the proper administration of company policy.
  • Each time an employee is hired—or when a revised employee handbook is issued—have employees sign acknowledgment forms.


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