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Legal Compliance

3 Reasons Why You Need to Update Your Employee Handbook

Mark Twain said “The difference between the almost right word and the right word is really a large matter – ‘tis the difference between the lightning- bug and the lightning.”

In business, the difference between the almost right word and the right word can mean a lawsuit or a boycott.

For example, when two Whole Foods employees in Albuquerque, New Mexico, complained that they had been suspended briefly for speaking Spanish at work, groups like the New Mexico League of United Latin American Citizens threatened to boycott the company’s stores. Though the company said the suspension was due to policy violations, not because the employees were speaking Spanish, the ensuing brouhaha caused them to apologize for the misunderstanding and revise a policy in the company handbook.

Don’t have a company handbook? Get one. Have a company handbook? Make sure it clearly states your policies and update it every year.

Here’s why.

Why you need an employee handbook.

First, let’s examine why you need one in the first place. A company handbook is like having a rulebook for sports. It defines your company’s boundaries, gives ground rules and explains what is and is not considered acceptable behavior. It can detail anything from your payroll schedule and vacation policies to the federal, state and industry regulations with which you are mandated to comply.

Though some federal regulations – such as Title VII and the Americans with Disabilities Act – don’t go into effect until you have 15 employees or more, you can be sued for many other issues at any size. Let me repeat that: You can be sued no matter the size of your company.

How a handbook protects you and your company.

While a handbook can’t protect you from being sued, it can provide documentation that can help protect you if you are.

For instance, if your handbook explains how overtime is calculated (and your employees have been given the handbook), you may be able to use your policy as documentation to help protect yourself and your company in the event of an accusation.

The importance of updating a handbook’s contents.

Just having a handbook won’t cover you completely, though. You must make sure your employees are aware of your policies and that you review your policies every year.

Give employees a copy of your handbook upon hire and – best practice – have them sign an acknowledgement that it was received.

Review and update it annually since laws and regulations change. If you find sections that are no longer relevant or unclear – as in the Whole Foods case – rewrite the sections to clarify or change the policies. Every time your handbook is updated, redistribute copies to employees and require signatures acknowledging the updates.

You also have to follow policies consistently. If you distribute a handbook but don’t follow its practices and procedures, you will have a weak defense in the face of a dispute.

Though an employee handbook can be a daunting document to put together, it is priceless in solving problems, resolving arguments, and providing a solid defense. You need one as soon as you hire your very first employee.

Not sure how to write a company handbook or how to keep up with compliance? Insperity does and provides HR support and business solutions to more than 100,000 companies to help reduce risk, provide better benefits and lower costs. Find out more here.

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  • Terri Sanchez

    Terri Sanchez

    Senior Human Resource Specialist

    Terri has been a senior human resource specialist for Insperity for more than 12 years. She is also a certified Senior Professional in Human Resources (SPHR).

    Other posts by Terri Sanchez

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