Writing an employee handbook is no small task — but all highly successful companies have them, and some states consider it a “best practice” to have one. When it comes to safeguarding your business, your employment practices liability (EPL) insurance can point you in the right direction regarding what info needs to be in the handbook. This post will cover why a handbook is vital to your company’s success, what to include, and how your EPL coverage lines up with having an employee handbook.
What Is EPL Coverage?
Before we dive into information about employee handbooks, let’s discuss employment practices liability insurance. We often see EPL coverage teamed with directors and officers (D&O) insurance, especially in startups. And it only makes sense since the two policies work as a one-two punch, offering robust protection for fast-tracking businesses.
Nevertheless, EPL works to cover companies for claims arising from their employment conduct practices. For example, situations surrounding the hiring and firing process, code of conduct, workplace standards, etc. all fall under the blanket of EPL coverage.
Also, if an employee alleges that your company victimized them (i.e., discriminatory practices, sexual harassment, wrongful termination, and a slew of other reasons), EPL will typically respond by covering defense fees and settlement costs.
EPL-related claims have been rising steadily for years. Mostly because government regulations funnels employees to respond that way — but more on this later. Strangely enough, it doesn’t take a massive workforce to face a significant risk of an employee filing a lawsuit.
Private companies become subject to regulatory statutes when they employ 10-15 individuals. For quickly evolving startups, hiring 10+ employees in one month isn’t uncommon. Strangely enough, entering into the “danger zone” is honestly only a few paces away from merely launching a business. Some municipalities and state’s employment laws apply to companies having as few as five employees.
For this reason, implementing an employee handbook should be one of the first tasks on your EPLI to-do list. Here’s why.
Why Should You Have an Employee Handbook?
Writing an employee handbook might seem like a daunting task, but online resources have simplified the process immensely. Try Googling “employee handbook templates,” and marvel at the motherload of results. While it may be hard to decide among the many choices, keep in mind that some of our carrier partners offer — for free — handbooks and enough employment-related resources to fill a robust HR department. Here are a handful of reasons why having an employee handbook benefits your company.
It’s a Guideline
First, an employee handbook is a user’s manual that employees, managers, and executives all reference. It’s a living document that evolves with your company, guiding your entire workforce and leadership panel. Plenty of companies have excellent examples of employee handbooks.
Think of your handbook as an educational document that teaches employees how you want them to behave and how the company will respond when they do or don’t. Plus, an employee handbook is more than merely a list of stringent rules; it helps to portray company culture and what an individual can expect when working there.
As the ultimate guideline, an employee manual not only informs employees about company expectations, but it speaks to onlookers, as well.
Helps with Company Branding
Professional branding is a significant part of successful marketing nowadays. Without a distinct and recognizable brand, it’s challenging for a company to make those much-desired leaps and bounds in the business world.
Some employee handbooks encourage employees to “wear 15 pieces of flair,” such as in the movie Office Space. Others establish a company voice to use as a baseline for customer service. No matter what precedent you set, an employee handbook could work as a tool to promote company branding.
Prevents Legal Problems
Although the Federal Department of Labor doesn’t require companies to have a handbook, it’s the sensible thing to do. An employee handbook is the first place individuals go for legal clarification. Not only that, but it’s also the go-to authority for company policies and procedures.
Keep in mind, also, that employers navigate a multitude of regulatory structures in the area of employee practices. From federal to state laws, and even local municipalities, statutes exist that frequently overlap and can cause massive confusion. It’s crucial to understand the workplace laws at play that might impact your handbook — state, federal, local, and union laws.
Here are a few examples of the different sets of broad federal statutes:
- Americans with Disabilities Act (ADA)
- Age Discrimination in Employment Act (ADEA)
- Family Medical Leave Act (FMLA)
Additionally, the US government has established the Equal Employment Opportunity Commission (EEOC) to advocate for individuals who believe their employers have victimized them.
An employee handbook can help a company navigate the murky water of employment practices. The act of putting a handbook together can help the company with compliance issues relating to the above laws and regulations, and it can also help shape company ethos and is another way to deliver the company’s mission and values. And all of this can be done directly from the get-go. However, it’s vital to include the right information in the handbook and update it continually.
What Should Your Employee Handbook Include?
While every company is unique to its industry, most employee handbooks aren’t comprehensive without the following information:
- Company values
- Mission statement
- Code of conduct
- Company policies around paid time off, and what leaves might not be paid
- Anti-discrimination and anti-harassment policies
- Procedures describing how workplace issues should be raised and how policies are enforced
- Ownership of Intellectual property
- Privacy/cybersecurity policies
- Dress code
- Time and attendance
- Conflict of interest
- Business travel
- Mobile devices
- Use of Social Media relating to the workplace and the employer
Do Your EPL Coverage and Employee Handbook Align?
It would be effortless to merely download an employee handbook template from a Google search, punch in your company information, and call it a day. We have seen companies whose name and logo are on the employee handbook cover, then there is a table of contents, but the first page begins with “NewCo welcomes you!” — the template hadn’t been filled in. Only this method is going to safeguard your company about as well as a screen door in a tornado.
Developing Your Handbook
Plan to draft and discuss several versions of the policies to be contained in your employee handbook; that’s a good way for leadership to focus on critical issues that everyone may take for granted, but they may have a different understanding of meaning or enforcement.
Here’s a cost-saving pro tip: store your employee handbook on the Cloud, so you’re not reprinting or handing out sectional revisions every other day. Policies change, laws change. The handbook, therefore, has to be a living document. Let it live securely in the Cloud.
To give you a better idea of how to complete this task, try comparing details of your EPLI policy against information you’d like to include in the employee handbook. For example, what are the guidelines for specific job classes? Do all of your employees time-track using the same app or instrument? How do you define business travel?
Of course, these are only a few of the questions to ask when drafting your handbook — but it’s an excellent starting point.
Aligning Your Handbook
EPL insurance and your employee handbook should work hand in hand, supporting one another to protect your business. Naturally, it’s nearly impossible to imagine every case scenario that could surface. However, an EPL policy can undoubtedly lead the way to develop a well-thought-out and comprehensive employee handbook.
Many EPL policies we can find for you come with a very valuable add-on — a link to resources to put together a handbook, a hotline for employment-related complaints and questions, essentially an HR department or a compliment to your existing HR department. If used well, it will save you thousands on up-front HR costs, and could save even more in EPLI claims avoidance. Ask us!
Understanding the details of what coverage your company needs can be a confusing process. Founder Shield specializes in knowing the risks your industry faces to make sure you have adequate protection. Feel free to reach out to us, and we’ll walk you through the process of finding the right policy for you.
Want to know more about EPL insurance? Talk to us! You can contact us at firstname.lastname@example.org or create an account here to get started on a quote.