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People Processes: Employee Handbook Self Audit Pt 1

Employee Handbook Self-Audit


Most employment relations experts agree that employee handbooks are an essential part, if not the foundation, of effective human resources (HR) management and positive employee relations. Handbooks can also play a critical role in demonstrating employment law compliance. Properly used, employee handbooks:

  • Communicate policies and procedures.
  • Play a key role in the orientation process for new employees.
  • Serve as a valuable employee relations vehicle for educating current and prospective employees.
  • Contribute to uniform and consistent application, interpretation, and enforcement of company policies.
  • Protect against claims of improper employer conduct.

While carefully drafted employee handbooks can be an important part of employee relations media, handbooks that are unskillfully or improperly drafted can create organizational and legal headaches. Courts increasingly view employee handbooks as binding contracts subject to judicial enforcement. Accordingly, employers must carefully review every policy and procedure contained in a handbook to minimize potential contract claims and be prepared to update them periodically. The questions in this self-audit are designed to determine whether a handbook:

  • Includes positive employee relations provisions that will improve employee morale and create a positive image of an organization.
  • Educates employees regarding an organization’s origin, history, and employee relations philosophy.
  • Provides a mechanism for two-way communications.
  • Contains the necessary protective language to minimize the threat of litigation and/or employee complaints to governmental agencies.

Handbooks that are properly drafted and tailored to an organization’s needs can serve as the cornerstone of human resource management. However, improperly drafted, they can be a disruption that causes serious harm to the future well being of an organization. The questions that follow are designed to help an employer highlight the positive and negative features of an employee handbook.


  1. Has the organization developed policies and procedures dealing with the following:
  •   No Yes Wages?
  •   No Yes Benefits?
  •   No Yes Employee relations?
  •   No Yes Day-to-day operations and administration?
  •   No Yes HR management?
  1. How are these policies and practices communicated to employees?
  •   No Yes Orally and by having the employee observe how an organization operates?
  •   No Yes In written memos and documents given to employees and placed on bulletin boards (including intranet bulletin boards)?
  •   No Yes Through the use of a written employee handbook?
  •   No Yes By posting an electronic version of the handbook on an intranet?
  1. If the organization has promulgated an employee handbook, what are the purposes of a handbook?
  •   No Yes To help answer the employee question: “Why should I work (or continue to work) here?”
  •   No Yes To help answer routine employee questions about employment with the organization?
  •   No Yes To help create positive employee relations?
  •   No Yes To communicate important information to employees?
  •   No Yes To contribute to organizational orderliness?
  •   No Yes To comply with legal obligations and requirements?
  •   No Yes To delineate the organization’s employment-related prerogatives?
  •   No Yes Other?
  1.   No Yes Has the organization assessed the employee handbook’s success at meeting these objectives?
  2.   No Yes Does the employee handbook include a discussion of both the written and unwritten policies and practices of the organization?
  3.   No Yes Does the interviewer monitor comments made during the applicant interviewing process to determine if they are consistent with statements made in the employee handbook?
  4.   No Yes Have statements made on job application forms, offer letters, and other personnel action forms been reviewed to determine if they are consistent with statements made in the employee handbook?
  5.   No Yes Is an “issue date” indicated on each page of the employee handbook?
  6.   No Yes Are the policies and practices discussed in the employee handbook, the format and design of the handbook, and the methods used to distribute the handbook regularly reviewed?
  7.   No Yes Are revision dates indicated on pages of the employee handbook?
  8.   No Yes Have procedures been developed to ensure that all employees receive copies of revised handbook pages?
  9. Before issuing the employee handbook, was it reviewed by the following:
  •   No Yes The HR department?
  •   No Yes Senior management?
  •   No Yes Legal counsel?
  •   No Yes Supervisors and/or managers?
  •   No Yes A sample group of employees?
  •   No Yes Other?
  1.   No Yes Is the employee handbook an element of strategic HR activities?
  2.   No Yes Does the employee handbook add value to the employment brand?
  3. Does (would) the employee handbook create a positive image and a favorable impression of the organization with the following:
  •   No Yes Employees?
  •   No Yes Supervisors?
  •   No Yes Stockholders and investors?
  •   No Yes Employment practices liability insurance (EPLI) carrier?
  •   No Yes The Equal Employment Opportunity Commission (EEOC), the Office of Federal Contract Compliance Programs (OFCCP), the U.S. Department of Labor, and other governmental agencies that may have an occasion to inspect it?
  •   No Yes The courts and juries?
  •   No Yes Others?
  1.   No Yes Have any employee surveys been conducted to determine if the employee handbook effectively communicates the organizational and/or employee relations message?
  2.   No Yes Are supervisors sufficiently well versed in the employee handbook’s contents and the organization’s policies and procedures to accurately answer routine employee questions?
  3. Does the organization have any of the following:
  •   No Yes Employing units in more than one state?
  •   No Yes Diversity in the types of employing units, for example, a manufacturing plant, a distribution center, a call center, a computer center, retail operations, and an office facility?
  •   No Yes Both union and nonunion facilities?
  •   No Yes Employees that work on government contracts?
  •   No Yes A diverse workforce?
  •   No Yes A combination of different employment categories, for example, regular full-time employees, as well as a significant number of part-time employees, temporary employees, contract employees, and/or independent contractors?
  1.   No Yes Is English the second language of some employees, are some employees illiterate, or do some employees have difficulty reading small type font?
  2.  N/A No Yes If yes to Question #19, does the organization ensure that it effectively communicates employment policies, procedures, practices, and benefits to individuals that require special language and reading consideration?


We recently made some changes to our handbook policies regarding benefits offered to employees and have a disclaimer stating, “The Company reserves the exclusive right to change or terminate any benefits or related policy at any time in accordance with applicable law.” Are we required to have employees sign a new acknowledgement of the handbook because of these recent changes?


Yes, employees should be required to sign an acknowledgement noting that they are aware of any new policies or changes to existing policies.

Any new or changed policy should be provided to employees through the distribution of a new handbook accompanied by a brief memo directing the employees to the locations of the changes and requesting an updated acknowledgement signature. Without distributing and getting proof of receipt, the changed policies may be difficult to point to when correcting, disciplining, or terminating an employee. Most employers update their handbooks every one to two years. If there is a major change to an integral policy, that may be distributed separately and added to the handbook as an addendum until the next revision.

While not required, handbooks are a best practice in order to minimize risk. Clearly articulated and distributed handbooks can supplement a defense against many compliance issues such as, but not limited to, claims of sexual harassment, wrongful termination, and discrimination.

Handbooks are a general overview of policies and procedures. Key handbook policies include:

  • Definitions of commonly used terms.
  • Explanation of to whom the handbook and its policies apply.
  • At-will employment policy.
  • Disclaimer that handbook is not a contract and the right to change policies without notice.
  • Antiharassment policy.
  • Equal employment opportunity/discrimination/accommodation policies.
  • Leave of absence and family and medical leave policy (if applicable).
  • Maternity leave policy.
  • Drug free workplace policy.
  • Standards of conduct.
  • Timekeeping and overtime.
  • Paid time off/vacation/sick leave policies.

Lastly, because a handbook is not legally mandatory, it may contain whatever information an employer wishes to impart to its employees. In addition, handbooks are traditionally separate from benefits summaries and other health and welfare plan materials, although the handbook may discuss employee status (full time, part time, etc.) and may refer employees to benefit plan materials. Further, handbooks do not need to outline company job positions or titles; this can be maintained separately in the job descriptions.

As a best practice, we recommend reviewing new or modified policies with counsel prior to implementation.

About the author, Rhamy

Rhamy grew up watching and working with his mother and grandmother in the seniors insurance market. This familiarity with the struggles faced by people trying to navigate the incredibly complicated and heavily regulated healthcare market led him to start Poplar Financial while working on his degree at the University of Memphis. After completing his MBA and Bachelors in Finance and Economics, Rhamy guided Poplar Financial through the disruptive opportunity that is the Affordable Care Act. Since then Poplar Financial has received numerous awards from major insurance carriers, and has completed its fourth year in a row of doubling in size. Now his team focuses on the processes around human resources, and specializes in providing companies with between 20 and 1000 employees with the payroll, benefits, and HR needs.

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