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 firstname.lastname@example.org 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.