Small businesses that fail to provide workers with a solid employee handbook risk exposure to potentially crippling compliance and litigation costs. But the good news is that employers can turn the threat around with a well-designed manual.

While U.S. Bureau of Labor Statistics data varies, it is estimated that only about one in four small businesses have an updated handbook. And while not legally required, producing a good manual is still a smart best practice that protects the rights of workers and organizations alike, especially when addressing rules, laws, expectations, etiquette, benefits and other important workplace guidelines.

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For those who might need a quick reminder, an employee handbook is a critical compliance document that outlines employer policies, procedures and benefits in clear, unambiguous language. It typically describes an organization’s culture, philosophy and values. A well-written one defines workplace expectations and gives employees the rules they need to know to be successful in the organization.

Aside from good customer service, helping with employee handbooks is an effective way for employers to keep employees up to speed on available benefits. Here are ways manuals can help employers steer clear of regulatory compliance issues.

1. Ensures employment law compliance. A well-designed manual minimizes risk of employment liability due to clearly communicated and regulatory-compliant policies. It contains critical protective language that helps minimize litigation challenges and threats, should they arise.

2. Reduces management strain regarding HR laws and policy enforcement. A handbook allows for consistent interpretation, application and enforcement of policies by creating pre-developed, step-by-step procedural processes that can be followed. This helps reduce reliance on informal or word-of-mouth policies that can be vague or interpretable and can often open doors to litigation.

3. Prevents employee lawsuits. A handbook reduces the risk of employee discrimination and other lawsuits by defining, communicating and uniformly applying guidelines applicable to all employees.

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4. Reiterates at-will employment status. Explicitly documenting what “at-will” means in writing is crucial so there is clear understanding that the employment status between an employee and employer is not a contract. Doing so provides another important legal safeguard.

5. Provides a helpful, positive resource to employees. An employee manual demonstrates upfront transparency from management by laying out operational, cultural, conduct and other rules in writing. This can go a long way to establishing a positive image for the organizations and productive and pleasant work experience for employees.

6. Establishes a time-saving training and onboarding tool. A handbook is a great way to help get new employees up-to-speed quickly and efficiently, from covering work requirements to explaining benefit programs.

Simply stated, small businesses without an up-to-date handbook put themselves at danger for compliance violations.

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Marc McGinnis

Marc McGinnis

McGinnis is vice president of national sales for The Word & Brown General Agency.