When Should Our Company Adopt an Employee Handbook?

A frequent employment law question from new and emerging small businesses is: When should we adopt an employee handbook? There is no hard and fast answer to this question. An employee handbook is not required under federal or New Hampshire state law. However, there are many advantages to creating an employee handbook at the time a company hires its first employee. Then, the company can review and expand the handbook as it grows.

Below are just a few of the reasons in support of early adoption of a handbook, regardless of a company's size.

Increased Communication. Employers generally benefit from increased communication with employees regarding company policies, benefits, and work rules. An employee handbook is an opportunity for an employer to establish in one central location workplace expectations for conduct, attendance, dress codes, timekeeping, and safety, and to caution employees on the consequences they will face if these standards are not met. Employers can also describe the various benefits the company offers, and how to request time off from work and take advantage of various benefits. This is particularly helpful to new employees who can become better acquainted with workplace practices and benefits at the outset of their employment.

Decreased Legal Disputes. In addition, use of an employee handbook can be particularly helpful in decreasing the potential for litigation. It allows employers to clearly communicate in writing certain policies which may be required by law. For instance, in New Hampshire, employees must be informed, in writing, of the rate of pay or salary, the pay period, permissible deductions, the place of payment, the employer's practices and policies as they pertain to paid vacations, holidays, sick leave, bonuses, severance pay, personal days, payment of the employee's expenses, pension, and all other fringe benefits. In light of this, a handbook is a good place to achieve compliance with these laws. The New Hampshire Department of Labor usually requests to see the employee handbook when conducting an audit.

Additionally, an employer will have a distinct advantage if it can establish that an employee had notice of an employer's rules and policies. It is much easier to defend disciplinary action, including termination, taken against an employee when the employer can show that the employee had full notice of the rule or policy that the employee violated.

Further, courts and agencies, such as the New Hampshire Commission for Human Rights, expect employers to have written anti-discrimination and harassment policies. The New Hampshire Law Against Discrimination, found at New Hampshire RSA 354-A, applies to employers with six or more employees. Once an employer reaches that threshold it is strongly recommended that it adopt an anti-discrimination and harassment policy. A well written harassment policy may provide an employer with an affirmative defense in case of a lawsuit. Again, a handbook is a good place to store and publish these types of workplace standards.

Reiterate Employment At-will Policy. Finally, the employee handbook offers an opportunity to state affirmatively and confirm that employment is at-will, thereby possibly insulating the company from many claims. This helps to put all parties on notice as to the nature, scope, and rules of the working relationship from the outset.

Conclusion. Having an up-to-date, well-written, legally compliant handbook benefits both employers and employees. At a minimum, employee handbooks should contain these six basic chapters: (1) Discrimination and Harassment Policies; (2) Pay practices; (3) Time Away from Work; (4) Benefits; (5) Safety; and (6) Conduct/Employee Relations. Within each chapter, the employer can then create specific workplace policies to inform employees of their rights, responsibilities, and any consequences for failing to follow the company's policies. As noted above, the handbook is extremely valuable for managing the overall employer-employee relationship.

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This is not a legal document nor is it intended to serve as legal advice or a legal opinion. Devine, Millimet & Branch, Professional Association makes no representations that this is a complete or final description or procedure that would ensure legal compliance and does not intend that the reader should rely on it as such.

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