Do It By the Book

A well-crafted employee handbook will go a long way in conveying what is expected of store staff and can help insulate a retailer from potential legal issues.





Petco, PetSmart and Walmart have long recognized the virtues of having an employee handbook, and what works for the big-time operators can work for a small pet specialty retailer as well—even if it employs just a handful of workers.
Consider some of the advantages of having an employee handbook. For starters, once it is given to employees, storeowners don’t have to remember whether they gave the employee a list of paid days off or explained their vacation policies. It’s all there in the book, and all workers are getting the same informa­tion.

In addition, an employee handbook can help protect a pet retailer legally if an employee sues the company. For example, a handbook statement that sexual harassment won’t be tolerated in the workplace can be crucial in a sexual harassment lawsuit.

Be aware, however, that there can be a legal downside to having an employee handbook. If business owners are not careful, a hand­book may be treated as a contract that limits their right to fire employees. To avoid that result, it is important to state in the handbook that employees don’t have employment contracts unless they are in writing and signed by the company president. It should also be made clear that the retailer reserves the right to terminate employees for reasons not stated in the handbook, or for no reason at all.

Unfortunately, even these precautions may not be foolproof. Courts tend to look at the handbook as a whole. If a reasonable employee would conclude that the handbook creates a set of rights for the employee, a court might treat the handbook as a contract.

Retailers can produce an employee handbook quickly and cheaply by using a self-help book or software program as a starting point. Sample wording can be modified to fit the specific needs of the business. Then, if the retailer has specific legal questions, they should seek the advice of a lawyer.


Here are some topics to include in an employee handbook.

Introduction—Describe the company’s history and business philosophy. This helps set the tone, which can be friendly and welcoming if that’s the business owner’s style. But it should be made clear that the handbook doesn’t cover every possible situation.

Hours—State the normal working hours and how overtime pay is authorized for those employees entitled to it.


Pay and salaries—Be clear on how pay and sal­aries are set and how they’re raised. In very small businesses, this may be a statement that levels of pay are established and adjusted by the company president taking into consideration past performance, cost of living changes and the ability of the business to pay.


Benefits—Employee benefits typically include paid vacations, health benefits, sick pay and unpaid leave for extended illness, pregnancy or family matters. Since the law doesn’t require employers to provide paid sick days or vacation days, a business owner is free to set the terms under which such benefits are granted. Be clear on whether the employee can carry unused sick or vacation days into the next year and what happens to such bene­fits if an employee quits or gets fired. Finally, de­scribe any 401(k) or retirement benefits the company offers.

Drug and alcohol abuse—Most businesses prohibit employees’ use of alcohol or illegal drugs in the workplace. In addition, some businesses offer help to employees in dealing with abuse of these substances—often by paying for professional counseling.

Sexual harassment—Remind employees that sexual ha­rassment is illegal and violates the company’s policies. Let them know that unwelcome sexual comments or conduct will not be tolerated.

Job attendance—Emphasize the importance of good attendance and showing up on time. Tell employees the types of absence that are excused—such as illness, and perhaps a family member’s death. Also, explain that piling up a load of unexcused absences or coming to work late too often can be a basis for disciplinary action or even firing.

Discipline—List the types of conduct that can get employees in trouble—for example, theft or violence. But again, let employees know this isn’t an exclusive list and that the storeowner always reserves the right to decide to terminate an employee.

Employee safety—State that employee safety is a major concern and that employees are expected to heed the posted safety rules and to call attention to any possibly dangerous conditions.

Smoking—Most businesses need a written policy for on-the-job smoking. Many cities and some states now prohibit or restrict workplace smoking. Be sure that company policy meets the requirements of state laws and local ordinances.

Grievances—Let employees know the procedures for resolving grievances. Consider setting up a grievance committee consisting of employees who meet informally and make recommendations on employment issues.

Workplace civility—State that employees must treat each other with respect and that the success of the business depends on cooperation and teamwork.

It should be documented that each employee received the handbook. This is another chance to let employees know that the handbook isn’t a contract, that it doesn’t guarantee continuous employment and that the retailer is not obligated to continue the current job benefits forever.

To do this, include two copies of an Employee Handbook Acknowledgement with the handbook. Then ask each new employee to sign both copies to acknowledge that he or she has received the handbook and is familiar with its terms.
Keep one signed copy of the Employee Handbook Acknowledgment in the employee’s personnel file. The employee can keep the other copy. Have each employee sign a similar receipt each time significant revisions or updates of the handbook are distributed.


Fred S. Steingold practices law in Ann Arbor, Michigan. He is the author of Legal Guide for Starting and Running a Small Business and The Employer’s Legal Handbook pub­lished by Nolo.

Legal strategies may vary depending on the state in which you live and the specifics of your situation. See your lawyer for legal advice.

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