Employee Handbooks: What They Are and What They Aren’t

It is not uncommon for small business owners to believe that they have their company policies in writing for their employees, when what they really have are various agreements, or even just “procedure manuals,” which do not replace the need for Employee Handbooks.

At the beginning of this month, we shared the basics of Employee Handbooks, and explained that they are a lengthy agreement that protects both you and your employees by making legally-compliant policies very clear in writing.  Like most of your internal documents, this document has the ability to change and grow over time as your business grows.

You may, however, have other documents circulating around your business that do not fit the profile of an “Employee Handbook,” but are important nonetheless.  These documents might be …

  1. Procedure Manuals. A procedure manual is a document that instructs your employees, contractors, and even management on how operations are to be done in your business day-to-day. For example, if your business has a particular way of handling customer service, then a procedure manual is a great place to document the step-by-step process of taking care of a customer. This document is unlike an Employee Handbook, in that not just “employees” will follow these procedures, but even your independent contractors can be required to agree to the procedures you have put in place in order to achieve some continuity in your business operations.  You may even have separate procedure manuals for different departments such as Accounting Procedures, OSHA Safety Procedures, etc. Procedure manuals establish consistency in your business operations, protect you and your employees, and they are a great tool for training as you hire or bring on more team members in the future.
  2. Independent Contractor Agreements. Sometimes agreements are necessary because the service provider is not an employee at all, but rather an Independent Contractor.  Independent Contractor Agreements will include clauses for policies such as Non-Disclosure, Intellectual or Tangible Property Ownership, etc.  In this case, your Employee Handbook, by definition, does not cover your independent contractors, so they need their own agreements with similar policies to your Employee Handbook, such as Confidentiality, Standards of Conduct, Compensation, etc.  Remember, these Independent Contractor Agreements are to be signed by both the contractor and yourself.
  3. Employee Offer Letter / Terms of Employment. This document is an introductory document for your employees.  It is just a 2 to 3 page document detailing the most basic, specific information needed for the person to whom you are offering employment to make an informed decision.  This document informs a specific employee of their job title and description, pay rate, term of employment, any benefits offered, a non-disclosure clause, etc. Employee offer letters are a necessity when bringing on a new employee, but they are not as comprehensive as an Employee Handbook.
  4. Various Policy Agreements. You may also have certain policies written as separate agreements for your employees to sign. This may include vehicle use policies, confidentiality policies, and more.  Stand-alone agreements can be much more comprehensive and exhaustive than what your Employee Handbook would contain; plus, your Employee Handbook has the ability to point to or reference your stand-alone policies as presiding documents in the event that the policy in the Employee Handbook is brief.  You can also utilize stand-alone policy agreements to specify which employees have certain responsibilities.  For example, if you have 14 employees but only two of them drive company cars, then it may not be necessary to include the entire length of a Vehicle Use Policy in your handbook.  Instead, those two employees may simply be required to sign a Vehicle Use Policy Agreement, and the handbook may simply make mention of that policy as the “governing” document for Vehicle Use.

Employee Handbooks are, in fact, their own type of document with a specific purpose.  If you are utilizing internal agreements with your workers, always have an attorney look over your documents to vet them for legal compliance and efficiency for your business.  If trouble ever were to arise with a worker, it is important to know if and where they have signed specific agreements with you as the representative of your company.

Check out our other posts about Employee Handbooks here and here.

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