As a new small business owner, the cost of various employee related expenses can seem to add up too quickly; payroll taxes, worker’s compensation, paid time off, unemployment claims, payroll and benefits administration, etc. Hence wanting to keep things simple where you can and reduce paperwork sounds appealing and efficient.
One word of caution in your goal to streamline:
Cutting corners when it comes to developing and maintaining employee handbooks can ultimately leave you exposed to costly risks when it comes to employment practices compliance and enforcement.
Though it’s not uncommon for some new clients to be unaware of the benefits of a well-developed employee handbook, I was recently surprised to have one that was completely resistant to a thorough one because they felt it didn’t benefit them or their employees and didn’t like documents that were too “wordy”.
After some review, we finally put one in place, but it took some time for them to realize how a good employee handbook actually saves money and reduces headaches:
The process of creating a handbook educates an employer:
To create a handbook, you don’t just sit down and write a policy to accommodate how you want things done, it takes a certain amount of legal knowledge, access to resources on employment laws, and business acumen to compile the policies that build a handbook. An HR Organization / Individual or Employment Law professional are the best resource for this. Is there an initial cost to do that? Yes.
However, gaining a better understanding on Wage & Hour laws; how to properly classify Contractors and Exempt employees; your obligations under the National Labor Relations Act; Family Medical Leave; ADAAA; final pay laws; confidentiality practices, discrimination or retaliation landmines; state specific paid sick or other leave administration, etc. will save you money repetitively in back wages, tax penalties, Department of labor or EEOC fines and, most of all, legal defense costs. Having these policies and guidelines, and following them, will help keep you and your managers out of hot water. The scary reality is that basic violations of employment practices can bankrupt a small business in certain states (think California).
Handbooks help to set expectations for employees:
Good onboarding and retention has a lot to do with effective communication. When employees have clear guidelines of what is expected in the handbook and what the consequences are for poor performance, they are more likely to accurately self-manage to meet those expectations. When they fail, you are in a better position to discipline because you did your part at the front of the employment relationship by discussing steps for corrective action and the employees’ accountabilities.
On the other hand, nothing is more frustrating than having to foot the bill for defense costs because a past, terrible, employee files a wrongful termination suit. Unfortunately, the employer is the one faced with the burden of proof that your decisions and actions were appropriate, lawful, and warranted. A good handbook addresses Standards of Conduct, Performance Expectations, Evaluation processes, Attendance standards, Open Door and Concern Resolution processes, Zero Tolerance for Harassment or Discrimination, Confidentiality requirements, establishes your “at-will” relationship, and specifies other day to day, on-the-job responsibilities for employees.
This sets clear expectations for employees before they make poor decisions, and helps support you when you must enforce your policies. (Assuming you enforce them consistently!) Most often, the FIRST thing that will be requested by a Case Manager or an opposing attorney is documentation with the reason for termination and proof of your policies and practices associated with the Corrective Action. When you are prepared, there is little argument for a retaliatory former employee who was very clearly informed that an inappropriate behavior and policy violation would lead to unemployment.
To look at the more pleasant side of things, handbooks are also a window into the organization’s values, mission and culture. Most handbooks introduce what your organization cares about and sets the tone for your leadership. Letting employees know you are a responsible employer with the wherewithal to have formal policies in place, communicate your values, and provide enough information in the handbook to serve as a helpful resource guide, saves you from having to answer basic questions over and over and provides confidence in your ability to run a business that is a safe and ethical place to work, which builds loyalty and reduces turnover.
Don’t forget – things change. Handbooks are not a “one and done”.
Your time IS money as a business owner or leader in the organization, and staying abreast of changing state and federal laws can be time consuming and digging yourself out of compliance mistakes even more so. The once a year, or every two years, review to update your handbook can be done quickly and inexpensively by a professional who is already poised to identify out-of-date or missing policies, and that expense is a much easier pill to swallow when you realize what legal ailments the process saves you from suffering down the line.
Top 10 reasons to update your employee handbook.
