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HR Solutions: Employee Handbooks vs. Policies & Procedures

Q: What is the difference between an employee handbook and a manual of policies and procedures?

A: A policies and procedures manual is a comprehensive text that details all aspects of company policies, the procedures for following those policies and the forms required for the procedures. An employee handbook is designed to familiarize employees with basic company policies and benefits programs, and although it draws topics from the far broader policies manual, it presents them with much less detail.

A policies and procedures manual is designed as a reference tool and source of further information for managers and supervisors. It can also give them the rationale for company policies and support for enforcement by spelling out the federal and state laws that underlie the policies.

An employee handbook is written for all employees and typically is organized in a straightforward manner for easily learning about company policies and procedures. It also sets forth the company’s general expectations of employees, including acceptable and unacceptable behavior, and disciplinary measures.

The handbook can also be used to provide employees with information about specific federal laws and state labor laws, as required by the laws themselves or by various states. An example of a federal law that requires its terms to be provided to employees is the Family and Medical Leave Act of 1993.

After being given a handbook, an employee should sign and date a form acknowledging receipt and certifying that he or she has read the policies and procedures set forth in the book and understands them.

It is prudent to include various disclaimers in both the employee handbook and the policies and procedures manual. A frequently used disclaimer is the at-will employment statement, which states that the employee’s receipt and acceptance of the handbook or the policy manual does not imply an employment contract. The most commonly used disclaimer is the one that allows the company to revise policies and procedures at any time.


Q: A new employee is claiming 16 dependents on his W-4 form for federal tax withholding. Can this be done? Does the Internal Revenue Service (IRS) set limits on the number of dependents on a W-4?

A Yes, the employee can claim 16 allowances, and it means a few additional payroll steps for the employer.

As required by the IRS, employers must withhold federal income tax from pay for some employees. The amount withheld from pay is based on the number of allowances claimed. Pay includes an employee’s regular pay, bonuses, commissions, vacation allowances, and reimbursements and other expense allowances paid under an arrangement called a nonaccountable plan.

The income tax withheld from regular pay depends on the amount an employee earns and on specific information provided by the employee on Form W-4. Employees can use the Personal Allowance Worksheet on page 1 of Form W-4 to figure their allowances.

Form W-4 permits the employee to have federal taxes withheld at a single rate or a lower married rate. On the form, employees can indicate or claim the number of withholding allowances—thereby reducing the taxes withheld. Employees also can identify additional dollar amounts to be withheld.

Once the employee has completed Form W-4, the employer is responsible for withholding the appropriate tax amount. If your employee claims more than 10 allowances, your organization must send copies of Form W-4 to the IRS office where you file Form 941—the Employer’s Quarterly Federal Tax Return. IRS Publication 15-T, New Withholding Tables, contains guidance for employers on the subject, including how to calculate withholding for employees claiming more than 10 allowances.

Without a completed Form W-4 from a new hire at the time of payroll, the employer would withhold taxes at the highest rate—single with no allowances claimed.


Q:I’ve heard that under new regulations for the Fair Labor Standards Act (FLSA), exempt employees’ pay can be docked for disciplinary suspensions. Is this true?

A: Yes, exempt employees’ pay can be docked for disciplinary reasons provided three conditions are met.

First, such pay deductions can be made on a full-day basis only; partial-day docking of exempt pay is not permitted. Thus, if you send an employee home early for a disciplinary reason, the employee would be paid for that day, and the suspension—and the docking—would begin the following day.

Second, for the suspension to be unpaid, it must be imposed as a result of a violation of workplace conduct rules. Some forms of suspension cannot be unpaid. For example, if an exempt employee is suspended pending investigation and then it turns out that there is no evidence that the person violated a workplace conduct rule, the suspension would have to be paid. Also, in defining “violations of workplace conduct rules,” the Department of Labor (DOL) is referring to serious misconduct and specifically excludes suspensions related to performance issues and poor attendance.

Third, the suspension must be part of a “written policy applicable to all employees,” according to the DOL. Therefore, if an employer’s disciplinary policy does not state that all employees are subject to unpaid suspensions, then unpaid suspensions cannot be imposed on exempt employees. Any modification of company policies to permit such suspensions would have to be announced to all employees and have an effective date. After the policy takes effect, subsequent disciplinary actions could include full-day unpaid suspensions for exempt as well as nonexempt employees.

Bear in mind that although the FLSA permits unpaid disciplinary suspensions, it does not mandate them. An employer is free to establish reasonable and consistently applied disciplinary steps that will support its efforts to ensure that employees follow prescribed work rules. If an employer chooses to use suspension as an option, then it follows that for such disciplinary suspensions to be fully effective, they will be unpaid.



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