Employee Handbook Ultimate Guide (+ Free Template)

This article is part of a larger series on Hiring.

1. 1 Free Employee Handbook Template
2. 2 Sections to Include
3. 3 Legal Considerations
4. 4 Where To Get a Handbook
5. 5 Costs
6. 6 Importance of Handbook Audits
7. 7 FAQs
8. 8 Bottom Line

An employee handbook is a reference document for employees to learn about key company policies like benefits, dress code, and work schedules. It also covers employee rules and expected behaviors.

For business owners, maintaining an up-to-date employee handbook ensures that employees always have access to accurate companywide information regardless of their manager or department. Likewise, a comprehensive handbook can help supervisors manage employees more consistently.

Free Downloadable Employee Handbook Template

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Quick Tip: Onboard new hires in 90 seconds with Rippling. You can simplify the process by having your employees review and electronically sign your employee handbook, I-9, W4 and offer letter within the software. Rippling also provides full-service payroll in all 50 states, benefits administration, and time & attendance built-in.

Disclaimer: This employee handbook template is provided as a general guide and is not intended to provide specific legal advice. We strongly recommend having the template reviewed by legal counsel to ensure compliance with all relevant federal and state labor laws.

Using an employee handbook template for small businesses can simplify the process of creating your own while ensuring that you include all the necessary sections. You can also use a dedicated employee handbook builder or work with your current HR services provider to draft a handbook that fits your needs. Our free downloadable employee handbook sample was created by one of our in-house HR experts and covers policies all businesses should consider for their own handbook. We picked these sections because they’re valid for small business owners in all 50 US states. Keep in mind, however, that the template doesn’t cover all of your business’s unique policies. What’s more, it may not be in-depth enough to meet certain state requirements, like mandated sick leave or Equal Employment Opportunity (EEO) protected classes (e.g., sexual orientation or identity). Before you finalize your handbook, check local laws—like those governing sexual harassment—to make sure your handbook is complete. If you’d prefer to use a payroll and HR software that makes it quick and easy to create and manage all of your policies, consider Rippling. Rippling lets you easily manage your employees’ payroll, benefits, expenses, devices, apps, and more all in one place. Plus, when you sign up for Rippling, your first month will be free. Visit Rippling

Sections to Include in Your Employee Handbook

• Introduction to Company and Values: Use the beginning of the employee handbook to share your company’s mission statement, as well as why and how you were founded.
• Touch on Company Culture:Company culture is an expression of a business’s personality and atmosphere. Use the employee handbook as an opportunity to describe the leadership style, mission, values, and other elements of the company’s identity.
• Nondisclosure Agreement: A nondisclosure agreement (NDA)—or confidentiality agreement—protects a business’s proprietary information by limiting the information an employee can share with others.
• Anti-Discrimination Policy: This portion of an employee handbook helps you comply with federal labor laws that aim to prevent discrimination in the workplace. Use a portion of your company’s employee handbook to outline relevant federal anti-discrimination policies, as well as any additional requirements imposed by state law.
• Compensation and Benefits: An employee handbook is an excellent place to detail how the company pays employees, how frequently, and on what day(s) of the month. From here, you can also go into detail about additional perks, like flextime, commuter benefits, and health insurance.
• General Employment Information: This section should clearly define a company’s probationary period (where applicable) and the steps that should be taken if an employee wants to quit. Use this section to detail the concept of at-will employment as well. If your company hires at-will employees, you or the employee is free to terminate the employment relationship at any time and for any reason.
• Computer and Technology Policy: Use your employee handbook to spell out your rights as an employer to view and access electronic documents and company electronics like computers. This is also a good place to establish a policy for updating passwords, provide tips for keeping passwords secure, and clarify your cellphone usage policy.
• Leave Policies: Let employees know what your paid time off, sick leave, parental leave, and other leave policies are and when they apply. This is also a good place to list company holidays and define the jury duty policy.
• Progressive Discipline Policy: For the business owner, this is a good section to define steps that will be taken under the company’s progressive discipline policy. It should also clearly identify prohibited behaviors and include a reminder that at-will employment remains in effect, regardless of the discipline policy.
• Signature: The signature section of an employee handbook verifies that the employee received a copy of the document, read it, and understood it. This step makes the employee take it more seriously and may help as a defense in case of a wrongful termination lawsuit. Services like LegalZoom can help you draft an employee handbook acknowledgment form.

Depending on the nature of your business, it may also make sense to include some or all of the following sections:

• Attendance policies
• Expense reimbursement procedures
• Alcohol, weapons, and drug policies
• Dress code
• Remote work guidelines

Compliance Note: Companies have often used noncompete agreements to restrict an employee from going to work for a competitor. However, states have begun placing restrictions on the use of noncompete agreements and, in May 2023, the General Counsel for the National Labor Relations Board (NLRB) issued a memo stating that noncompete agreements violate workers’ rights under US labor law. While they are still allowed, our template does not contain a noncompete clause. It does contain language, though, that prohibits employees from intentionally damaging an employer’s reputation or competing with the company’s interests during employment.

Legal Considerations When Creating an Employee Handbook

In addition to keeping your company’s employee handbook relevant by including content that’s tailored to your business’s size, location, and culture, consider these legal factors.

Compliance Note: In our increasingly digital and remote work environment, it’s crucial to remember that employment laws applicable to an employee are typically determined by where the employee is located rather than where your office is located or where your business is registered. This means your handbook must cater to the laws of various jurisdictions if you have remote employees spread across multiple states and cities.

• State Requirements
• Business Size
• Types of Employees

Consider your work locations when choosing sections to include in your employee handbook, and be sure to include relevant provisions for every state in which you have employees. Some examples of location-specific requirements are:

• Sick leave requirements: If your city or state requires employers to provide employees a minimum amount of sick leave, include that information in your company’s employee handbook. For example, California’s paid sick leave regulations require employers to provide employees at least one hour of paid sick leave for every 30 hours worked.
• Legality of marijuana use: In states where marijuana is legal—Alaska, Arizona, California, Colorado, Connecticut, DC, Idaho, Illinois, Kansas, Maine, Massachusetts, Michigan, Montana, Nevada, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, Virginia, and Washington—outline your company’s policy on its use by employees. In most states, even where it’s legal, you can still restrict employee use, similar to alcohol.
• Gun laws: If your state allows the open or concealed carry of firearms or other weapons, consider using your business’s employee handbook to detail when (if ever) an employee may carry a firearm in the course of employment. For example, some states allow the open carrying of firearms without a permit, and more states are adding gun laws annually.
• Break and lunch requirements: Neither the Department of Labor (DOL) nor the Fair Labor Standards Act (FLSA) imposes specific break and lunch requirements. However, some states enforce their own break time laws. As an example, California requires two 30-minute meal breaks for employees who work more than 10 hours a day.

When deciding which sections to include in your employee handbook, also consider the number of people your business employs. For example, if you have 50 employees or more, you must abide by the Family Medical Leave Act (FMLA), and you will need to provide health insurance, per the Affordable Care Act (ACA). Companies with 15 employees or more must abide by the Pregnancy Discrimination Act, and, depending on the size and location of your company, you may need a maternity leave policy, especially if you have employees in a state where maternity or parental leave is required.

Many state and local laws also impose work requirements on businesses above a certain size. For example, employers with 20 or more employees in Seattle, Washington, must provide commuter benefits. In California, pregnancy benefits must be provided for employees in businesses with as few as five employees.

Also take time to evaluate the types of workers your business employs when deciding what to include in the employee handbook. Relevant considerations include whether your business has:

• Hourly employees: If you employ hourly or part-time workers, you may need to clarify how break, lunch, and paid time off policies apply to them. Likewise, use the employee handbook to describe how the company compensates for overtime.
• 1099 independent contractors: Clearly state which policies and parts of the handbook, such as medical benefits, don’t apply to contractors.
• Remote workers: Now more than ever, it’s necessary to include details about remote employment in your employee handbook. Consider clarifying whether remote employers are entitled to any additional benefits and whether they’re required to work specific hours.

Where to Get an Employee Handbook

Before you start developing an employee handbook from scratch, consider that you may already be working with a provider that can offer you an employee handbook sample, like our free employee handbook template.

HR software lets you centralize employee-related information and keep track of all data and HR compliance records. Many human resource information system (HRIS) software vendors also include a sample employee handbook in their offerings. For example, starting at just $8 per employee monthly, Rippling can help you create, distribute, and store all your HR documents in one convenient location. Learn more about its functionalities in our review of Rippling.

To support their customers’ HR needs, many payroll services offer an employee handbook sample as an add-on service. However, not all services offer HR features, so check with your payroll service provider to see if handbook templates are available—or find out if employee handbook assistance is included with a service before you sign up. Find some of our top recommendations in our roundup of the best payroll services.

A professional employer organization (PEO) is an outsourced HR service that partners with businesses to manage the back end of HR necessities, like payroll, benefits, and resources—including employee handbooks. While significantly more costly than HR software or a payroll service, a PEO is a nice option for small business owners who find employee and HR compliance stressful. Its team will not only help you put the handbook together but advise you on legal matters regarding policies as well.

Justworks is one of the more affordable PEOs, with prices ranging from $39 to $99 per employee monthly, depending on the size of your business and the tools you need. Learn more about its features in our Justworks review—or check out our top-recommended PEO services.

A human resources consultant or outsourced HR service can help you write or refine your handbook policies and review the final draft. HR consulting firms typically charge an average of $100 to $150 per hour. Some consultants also offer flat-rate services like building an employee handbook for a few thousand dollars. That said, you can often find freelancers with HR expertise to help with your employee handbook at a lower price.

View our roundup of the best outsourced HR services for some recommendations.

Alternatively, if you prefer not to work with an HR or payroll provider, consider a dedicated employee handbook-building tool.

• The Society for Human Resource Management (SHRM) – If you’re an HR department of one, it may be helpful to sign up for a membership to SHRM. As the industry leader in HR best practices, SHRM provides free downloadable HR policies, templates, and tools. You can also purchase the SHRM Employee Handbook Builder for $400 to create a custom handbook for every state where you have employees.
• AirMason – AirMason is an employee handbook creation, maintenance, and management tool that includes the ability to customize multiple handbooks that can be accessed on any computer or mobile device. Pricing starts at $149 per month (when billed annually) for the Startup plan, which covers businesses with between one and 99 employees. The Small Business plan costs $199 per month and is suitable for businesses with 100 to 199 employees. Custom pricing is available for larger companies. Try AirMason’s free seven-day trial or book a demo to see if the tool is a good fit for your business.
• Handbooks – Handbooks let small business owners create a detailed employee handbook that includes current and HR-approved language. The tool can be used in all 50 states and can be saved and edited as a Word Document. Users can choose from the free version, which includes a basic handbook with the most essential policies, or the comprehensive version for $79.95. With the more advanced package, users get access to 28 pages of policies, guidelines, and standards—as well as an extra handbook for independent contractors.

Employee Handbook Costs

Creating an employee handbook for your company may involve working with in-house HR professionals, a consultant, or an attorney specializing in employment. There are also annual costs associated with the maintenance of an employee handbook, but they are worth it because your employees will have access to the most up-to-date resources.

You may encounter these common costs and services when drafting an employee handbook:

Outsourced HR Services

If you don’t have an in-house HR team, HR firms and attorneys can create a customized employee handbook. By hiring a third party that specializes in human resources and employee communications, you can protect yourself from problems that can result from a vague, incomplete, or misleading employee handbook. Depending on your needs and location, you could pay up to $5,000 for this service.

Legal Review

Employee handbooks that are written by business owners or HR professionals may benefit from legal review. This type of review can ensure compliance with relevant employment law and protect business owners in case of an employee lawsuit. However, an attorney may charge hundreds of dollars an hour—especially in a large market. If you don’t want to hire an attorney, companies like LegalZoom offer packages that make it easy to create a handbook by answering a few simple questions. The Standard Plan starts at $35 per month, and LegalZoom’s specialists can also review documents for compliance.

Maintenance

In addition to drafting an employee handbook, commit time every year to updating the document to reflect current policies and legal requirements. Then, have your lawyer review the updated version, and schedule employee training to make sure everyone is on the same page. Again, if you don’t want to incur legal fees, consider a monthly membership like the one available through LegalZoom.

Importance of Employee Handbook Annual Audits

Let’s take a moment to emphasize a crucial practice: the annual handbook review. Just like a car needs regular maintenance to run smoothly, your employee handbook also requires periodic checkups to ensure it’s up to date and compliant with ever-changing labor laws.

Conducting an annual audit of your handbook should focus on a few key areas:

• Legal Compliance: Law and regulations related to employment are frequently updated and vary from state to state, and even between cities. An HR consultant will help keep you updated as laws change, but if you’re doing updates yourself, your annual review is a good time to make any legal changes.
• Company Changes: As your business grows and evolves, so do its policies and procedures. An annual audit allows you to update the handbook to reflect new strategies, technologies, or changes in your company.
• Employee Expectations: A current handbook helps set clear expectations for employees about their roles, rights, and responsibilities. It also provides them with current information on company policies and procedures.
• Consistent Enforcement: Regular updates ensure that managers across your organization have the same information, promoting consistency in policy enforcement.
• Risk Management: A well-maintained handbook can protect your business against employee lawsuits and claims, like wrongful termination, harassment, and discrimination.

Employee Handbook Frequently Asked Questions (FAQs)

Here is a suggested communication process when updates are made to the employee handbook:

1. Announcement: Announce that an update has been made to the handbook. This can be done in a staff meeting, through email, or via the company intranet.
2. Summary of Changes: Provide a summary of the changes in a format that’s easy to understand. Highlight the key points so that employees can quickly grasp what’s new or different.
3. Make It Accessible: Ensure that the updated handbook is easily accessible to all employees. If it’s a digital handbook, provide a link. If it’s a physical book, make sure new copies are distributed.
4. Acknowledgment of Receipt: Ask employees to sign an acknowledgment that they’ve received, read, and understood the new policies. This could be a digital confirmation or a signed paper form.
5. Q&A Session: Consider hosting a Q&A session where employees can ask questions about the updates. This can be done in a town hall format, or digitally via a chat or forum.
6. Reminders: Regularly remind employees about the handbook and its updates, especially the critical ones, so they remain top-of-mind.

Remember, communication should be clear, open, and two-way. Encourage employees to ask questions if they’re unsure about any changes.

How can the handbook be made accessible to all employees, including those with disabilities or those who speak other languages?

Accessibility is crucial when creating and distributing an employee handbook. Here’s how you can ensure it:

1. Language Translation: If you have a diverse workforce that speaks multiple languages, consider translating your handbook into those languages. This ensures everyone understands the policies and guidelines.
2. Accessible Formats: For individuals with disabilities, provide the handbook in accessible formats. This could include large print versions, audio recordings, or digital versions compatible with screen readers for visually impaired employees.
3. Online Accessibility: If your handbook is available online, ensure the website or platform is accessible. Use alt text for images, provide transcripts for videos, and make sure the site is navigable using only a keyboard.

The handbook should be detailed enough to provide clear guidance but not so detailed that it becomes overwhelming. It should cover all essential areas like company policies, behavioral expectations, benefits, leave policies, and procedures for reporting issues. However, avoid going into excessive detail that might be better suited for separate, more specific policy documents or procedural manuals.

Your handbook is not just a set of rules; it’s also a reflection of your company’s culture and values. Here’s how you can incorporate them:

1. Mission and Vision: Start with your company’s mission and vision statements. These provide a clear picture of your company’s purpose and goals.
2. Company Values: Outline your company’s core values and explain what they mean in practice.
3. Work Environment: Describe what it’s like to work at your company. Highlight aspects like collaboration, innovation, work-life balance, diversity and inclusion, etc.
4. Employee Benefits and Perks: Showcase the benefits and perks that make your company a great place to work.
5. Success Stories: Include stories of employees who embody your company’s values. This brings your culture to life in a relatable way.

Remember, your employee handbook should feel like a guide to being part of your team, not just a rulebook.

Bottom Line

Employee handbooks are an important way to protect business owners while helping employees understand company culture, job expectations, and current policies. Having a good handbook can save you time, money, and headaches in answering employees’ questions. What’s more, a well-written handbook can serve as a defense in case of a wrongful termination lawsuit.

To create a simple and effective employee handbook, consider using our free template as a starting point. If you’d prefer to use a payroll and HR software that makes it quick and easy to create and manage all of your policies, consider using Rippling. Rippling lets you easily manage your employees’ payroll, benefits, expenses, devices, apps & more all in one place. Plus, when you sign up for Rippling before December 1, 2023, your first month will be free.

About the Author

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Heather Landau

Throughout her career, Heather has worked to help hundreds of small business owners in managing many aspects of their business, from bookkeeping to accounting to HR. Before joining Fit Small Business, Heather was the Payroll/HRS Manager for a top cloud accounting firm in the industry. Her experience has allowed her to learn first hand what the payroll needs are for small business owners.