Setting the Standards

Step Inside Design, Mar/Apr 2008 by Perkins, Shel

PROTECT YOUR INTERESTS BY ENSURING EMPLOYEES KNOW "THE RULES." A COMPREHENSIVE EMPLOYEE HANDBOOK IS A BUSINESS ESSENTIAL.

Quite separate from employment agreements specific to individuals, the handbook applies equally to all staff members. It documents general policies and rules and helps shape the overall culture of the company. In this article, we'll provide guidance to design firm owners and managers on the essential contents of this important document.

In the U.S., companies are not required by law to create an employee handbook. If there is a handbook in place, however, and an employee brings a lawsuit against the employer, the current trend is for the court to regard the handbook as a legal document. A well-researched and well-written handbook indicates you are aware of, and it is your intention to comply fully with, state and federal laws regarding employer/employee relationships. It clarifies standard practices and expectations, demonstrates that they are consistent and reasonable, and helps to create a level playing field where all employees can excel.

A WELCOME

Typically, the handbook is provided to a new employee at the time of hire. To set a warm tone, many handbooks open with a section on the company's history, an overview of what the firm does and an explanation of how it's organized. Beyond that, the handbook is likely to include the following sections and topics:

General standards for business ethics

* Equal employment opportunity

* Antiharassment policy

* Immigration law compliance

* Policies regarding use of company property & supplies

* Policies regarding potential conflicts of interest (this is a particularly important issue if your creative firm buys third-party goods & services on your client's behalf)

Employee performance

* General expectations for employee performance

* Orientation

* Standard working hours, including the timing of breaks & meals

* Attendance & punctuality requirements

* Performance evaluation process

* Performance counseling & conflict resolution

* Disciplinary procedures

* Termination of employment

* Confidentiality of personnel records

* Policies on providing employment references

Employment status

* Explanation of the difference between part-time & full-time status (which may have an impact on eligibility for benefits)

* Explanation of temporary status (temporary positions such as student internships may have limited eligibility for benefits)

* Clarification of exempt/nonexempt status in regard to overtime pay. (On a related note: Employees who are exempt from overtime pay sometimes ask for compensatory or "comp" time, but comp time is not usually stated as a formal policy. Design firms tend to negotiate it on a case-by-case basis. Once a firm has established a precedent, however, it must be followed in a consistent way.)

AT-WILL EMPLOYMENT

This will have been stated in each person's employment agreement, but chances are the handbook will reiterate the important fact that staff members are employed "at will" rather than for a fixed duration.

EMPLOYER'S OBLIGATIONS

Up to this point, most of these handbook contents have emphasized things the company expects from employees. In contrast, the next few sections describe benefits the company is providing in return:

Employee compensation

* Explanation of pay periods (such as biweekly or semimonthly)

* Information about the direct deposit system (if there is one)

Insurance benefits

* Group health plan (typically, this will be either a Health Maintenance Organization/HMO or a Preferred Provider Organization/PPO, & detailed paperwork from the insurance company will be provided separately)

* Disability insurance

* Life insurance

* Workers Compensation insurance

* COBRA (legally required short-term continuation of insurance coverage after termination or layoff)

Retirement benefits

In most design firms, this section will explain a qualified retirement plan, which is any plan approved by the 1RS for favorable tax treatment. The most common category is a defined contribution plan, meaning the amount available to an employee upon retirement will depend on the amount the employer and/or employee contributed to the plan over the years of employment. Each defined contribution plan has different rules and contribution limits. An official plan document-often referred to as a Summary Plan Description-will be provided separately, including details about eligibility for participation. It's most likely that you'll encounter one of the following types of plans:

* 40i(k)-A tax-deferred savings plan that allows employees to save through payroll deductions. Depending on details of the plan, the employer may have agreed to match a portion of the employee's contribution.

* Profit-sharing plan-In this type of plan, the employer contributes a percentage of company profits. That amount is prorated across eligible participants and placed into tax-sheltered individual accounts.

Additional benefits

* Paid holidays (a list of major national holidays when the office will be closed)

* Paid vacation time