Every organization needs rules to run efficiently and maximize productivity. How
can an organization communicate its rules and policies to managers and employees and ensure they perform and behave as
expected? By crafting a well-thought-out,
clearly written employee handbook.
“An employee handbook is a guide to
your employer-employee relationship,” says
Nancy Pokorny, vice president of business
development at the Council of Smaller
Enterprises (COSE). “In addition to establishing ground rules for conduct and performance, an employee handbook can
describe company programs and benefits
and communicate general information
about the organization and its operations.”
Smart Business spoke with Pokorny
about employee handbooks, how to craft
one and why they’re so important.
Why are employee handbooks important?
Having a handbook in place helps ensure
that company policies are consistent with
management practices. It’s better for an
organization to set and communicate policies
than to have them develop by default.
Policies that develop because ‘that’s the way
we’ve always done it’ can result in inconsistent policies across the organization. Worse
yet, these policies run the risk of being
deemed discriminatory because they are not
consistently applied. Having clearly communicated, formal policies in place helps minimize the incidence of lawsuits brought on by
employees or former employees, and lessens
the likelihood of scrutiny by government
agencies. The information in handbooks
should also provide guidelines for compliance with laws and applicable mandates. For
example, most state labor laws require that
you make certain information available to
employees. If you have all of this information
in one place, it is much easier to comply with
the law and stay compliant over time.
What precautions should an employer take
when writing or updating health care policy?
It is important to understand which policies, benefits and programs are discretionary
and which are subject to legislative mandates
or laws. Those which are discretionary can be changed or terminated by the employer.
So, be sure to include language giving the
employer the right to change, add or terminate such policies, benefits or programs.
What types of benefit program information
should an employer include in its handbook?
Many employers use employee handbooks
to outline and define available benefit programs via Summary Plan Descriptions
(SPDs). SPDs are detailed documents written in easy to understand language and contain the main provisions of each benefit plan
or program. As the provisions for certain benefit plans or programs change, employers
must communicate those changes to employees. These changes may be communicated via Summary Material Modifications
(SMMs) and/or by re-issuing the SPD.
Organizations that choose to include SPDs
in their handbooks can end up with very
lengthy handbooks, so it may be best to
establish sections of the handbook that can
be ‘swapped out’ as updates are made.
Typical SPDs include those for medical, dental, vision and life insurance programs; retirement plans; tuition reimbursement; stock
purchase plans; employee assistance and
work-life programs; child or adult day-care
services; adoption services and paid time off.
How often should an employer distribute and
update its employee handbook?
All employees should receive a copy of the
handbook when it is first created. After the
initial rollout, a company should distribute
the handbook to new hires and develop a system to inform employees of updates or
changes. Many organizations ask their
employees to sign an acknowledgement of
receipt of the handbook, which states that
they have familiarized themselves with its
key provisions. Consider scheduling educational sessions to highlight all important
changes in policies and other handbook provisions. Many employers provide access to
the employee handbook on the company
intranet, as well. Also, be aware that the provisions of certain benefit plans must be re-communicated periodically, even if there are
no changes in benefits. Your legal counsel
will be able to advise you regarding the type
and frequency of communications required.
Can an employee handbook cover the organization legally?
At the very least, an employee handbook
will communicate expectations for employees in the workplace, save time by communicating performance and behavior standards,
and advise employees of their rights and
responsibilities. And, the handbook helps
managers adhere to consistent company
practices. But, having a handbook may not
be enough to protect you legally. To ensure
that you meet all legal requirements, seek
legal counsel when drafting your handbook
to minimize the company’s risk of major litigation and employee-relation problems.
NANCY POKORNY is the vice president of business development at the Council of Smaller Enterprises (COSE), one of Ohio’s largest
small business support organizations. Reach her at [email protected] or (216) 592-2309. Comprised of more than 17,000 members,
COSE strives to help small businesses grow and maintain their independence. COSE has a long history of fighting for the rights of all
small business owners, whether it’s through group purchasing programs for health care powered by Medical Mutual of Ohio, workers’
compensation or energy, advocating for specific changes in legislation or regulation, or providing a forum and resource for small businesses to connect with and learn from each other.