Code of Conduct: What to Include and How to Roll It Out

If you already have an employee handbook, you may wonder whether you need a code of conduct too. You may also wonder what it should say and how to get your team to read it, sign it and live by it. The answers are simpler than most long, legal-sounding codes suggest.

A code of conduct is a short, plain statement of how people are expected to treat each other, your customers and your business. A well-written code gives managers something to point to in a hard conversation. Team members get a clear picture of what's expected before anything goes wrong. This guide is for Colorado owners and managers, from the employer's side of the desk.

What a code of conduct covers

A code of conduct sets out the behavior you expect from everyone who works for you. A handbook explains how things work, like pay, time off and scheduling. The code explains how people should act, including how they treat coworkers and customers, how they handle the business's information and money, and what to do when something feels wrong.

It applies to everyone, including you. If managers and owners don't follow the code, the team learns that the rules are optional, and that lesson is harder to undo than having no code at all. Most codes for small businesses cover a similar set of topics:

• Respect at work: how people treat each other, including your rules against harassment and discrimination.
• Honesty and integrity: accurate time records, expense reports and customer information.
• Conflicts of interest: outside work, relationships or gifts that could pull someone's loyalty away from the business.
• Confidential information: customer data, client lists, pricing and other business information.
• Safety: following safety rules and reporting injuries and hazards.
• Company property and technology: equipment, vehicles, email and the systems your team uses.
• Raising a concern: who to talk to when something isn't right, and a promise that nobody will be punished for speaking up in good faith.

A code can be short and still do its job. For a small team, a few clear pages people will actually read work better than a long legal document that sits in a folder and never gets used.

Code of conduct vs. employee handbook

The two documents do different jobs. Your employee handbook holds your policies and procedures: pay periods, time off, paid sick leave, benefits, scheduling, and the Colorado and federal rules that apply to your business. Your code of conduct holds the standards of behavior that sit underneath all of those policies. A handbook answers "how does this work here?", while a code answers "how do people act here?"

You don't need two separate binders. For most small businesses, the simplest option is to put the code of conduct in the handbook as its own section, near the front, so a new team member reads it on day one. A standalone code makes more sense when you want to share it with people who don't get your handbook, such as contractors or volunteers, or when you want a one-page version to hand out. If you go that way, make sure the two documents say the same thing, and have the handbook point to the code.

Both documents work better when they're short and written in real language. I once took a 95-page handbook written by a large HR/legal services company and turned it into a practical, polished 26-page handbook that still covered everything needed. The conduct section of a handbook can follow the same rule. If a manager can't find the answer mid-conversation, it's too long.

One Colorado rule applies to whatever you hand out. If you distribute a handbook, manual or written policies, the state labor department's wage and hour guidance says it must include a copy of the current COMPS Order or Poster, Colorado's Overtime and Minimum Pay Standards. For the other Colorado laws your handbook should reflect, see my Colorado employment law guide.

What to include

Start with what matters in your business. A retail shop, a law office and a construction crew don't face the same risks, and your code should read like it was written for your team rather than copied from someone else's.

A short opening

Say why the code exists and who it covers. That should be everyone, owners and managers included. Add a line that the code can't list every situation, and that team members should use good judgment and ask a manager when they're unsure.

Respect, harassment and discrimination

This part of the code carries real legal weight, so it's worth getting right. Colorado's anti-discrimination law reaches further than the federal one. The Colorado Civil Rights Division says any employee working in Colorado is covered by the Colorado Anti-Discrimination Act. On the federal side, the EEOC's guidance for small businesses shows that most of the federal discrimination laws it enforces apply once a business has 15 or more employees. That means even a very small business needs a clear rule against harassment and discrimination.

Colorado's definition of harassment is also broader than many owners expect. One part of the state's POWR Act, in effect since August 7, 2023, says harassing conduct doesn't need to be severe or pervasive to be unlawful under Colorado law. If your current policy describes harassment as conduct that is "severe or pervasive," that wording needs updating.

For what a good policy looks like, the EEOC's small business fact sheet on harassment strongly encourages employers to have a clear, easy-to-understand anti-harassment policy, more than one way to report a concern, training for everyone, including supervisors and managers, and steps to make sure the policy is followed consistently. The fact sheet also notes that harassment by anyone, including coworkers, customers and clients, can violate federal law, so your code should cover how team members are treated by the public as well as by each other.

How to raise a concern

Tell team members exactly who they can go to, and give them more than one option, so nobody has to report a problem to the person causing it. In a small business that might be the owner and one manager, or the owner and an outside HR contact. Say plainly that nobody will be punished for raising a concern in good faith or for taking part in an investigation, and then make sure that promise holds (more on that under enforcement).

Honesty, conflicts of interest and gifts

Ask team members to keep accurate time, expense and customer records, and to tell you about outside work, investments or relationships that could conflict with their job. Gifts from vendors or customers are worth a sentence too. A simple rule, such as checking with a manager before accepting anything more than a small token, saves awkward conversations later.

Confidential information, without a gag on pay

Your code can and should protect customer data, client lists, pricing and other business information. Be careful how broad that rule gets. The National Labor Relations Act protects most employees whether the workplace is unionized or non-unionized, and the NLRB lists talking with coworkers about wages, benefits or other working conditions as protected activity that an employer can't discharge, discipline or threaten someone for. Colorado adds its own rule. The state labor department's summary of hiring laws says employers must not act against anyone for disclosing or discussing their own wage rate.

That means a confidentiality section shouldn't list pay as confidential or tell team members not to discuss their wages. Keep the rule focused on business and customer information. If you're not sure whether a line crosses into protected territory, check it before the code goes out.

Social media and off-duty conduct

Social media and life outside work need a lighter touch than the rest of the code. Colorado law generally makes it unlawful to fire a team member for lawful activity off your premises during nonworking hours. There are exceptions, for example when a restriction relates to a bona fide occupational requirement, is reasonably related to the duties of a particular team member or group, or is needed to avoid a conflict of interest.

Federal law reaches social media too. The NLRB says using social media can be a form of protected concerted activity, including sharing information about pay, benefits and working conditions with coworkers, although one person's individual griping about work generally isn't. A blanket rule against posting anything negative about the business can go too far. A code can still ask team members not to share confidential business or customer information, not to speak for the business unless they're authorized to, and to treat coworkers with the same respect online as in person. Colorado's labor department adds that employers must not ask team members for access to their personal social media accounts.

Safety, property and everyday expectations

Cover the basics your business depends on. That includes following safety rules and reporting injuries and hazards right away, and using company equipment, vehicles and systems with care. It also includes showing up ready to work, with a clear rule on alcohol and drugs at work. Where a topic already has a full policy in your handbook, such as attendance or safety, the code can state the expectation in a sentence and point to that policy.

What happens when the code is broken

Close with a short statement that breaking the code can lead to corrective action, up to and including termination, and that you'll look at each situation on its own facts. Avoid promising a fixed set of steps for every case. A progressive discipline framework is useful, though you want room to respond right away to something serious.

Rolling it out and getting sign-off

How you introduce the code matters as much as what it says. A code sent as an email attachment is easy to sign and forget. When you walk the team through it in a meeting, it has a much better chance of being used.

1. Start with your managers: go through the code with them first, so they can answer questions and are ready to model it. They're the people your team will watch.
2. Walk the team through it: in a team meeting, cover the main points with examples from your kind of work, and leave room for questions.
3. Make it readable for everyone: the EEOC's fact sheet says employers should consider whether team members have trouble with English, with reading or with understanding the material when they create a harassment policy and training. If part of your team reads another language more comfortably, a translated version is worth the effort.
4. Collect a signed acknowledgment: more on this below.
5. Give it to new hires on day one: add the code and the acknowledgment form to your onboarding paperwork.

The acknowledgment

The acknowledgment is a short form where each team member confirms they received the code, read it and had the chance to ask questions. Word it so it confirms receipt rather than agreement with every word. Keep the signed copy, paper or electronic, in each team member's personnel file, and collect a new one whenever the code changes in a meaningful way.

If your code is part of a handbook, there's a Colorado detail to remember. According to the same wage and hour guidance, if you require a signed acknowledgment of receiving a handbook or written policies, you must also require a signed acknowledgment of receiving the current COMPS Order or Poster. The simplest fix is one acknowledgment form that lists the handbook, the code and the COMPS Poster together.

Training and yearly review

People remember a code better when they practice it. I run harassment-prevention training, which pairs well with the rollout of a new or updated code. After that, revisit the code at least once a year and whenever a law or your business changes, the same schedule I follow for handbook reviews.

Enforcing it consistently

A code of conduct only works if it applies the same way to everyone: your top salesperson, your longest-serving manager, a family member on the payroll and you. When two people break the same rule and get very different outcomes, the team notices, and the difference can look like favoritism or, worse, like discrimination.

Consistent doesn't mean identical. A late arrival and a safety violation aren't the same problem, and context matters. The process is what should stay consistent. You take every report seriously, look into it promptly, decide based on facts and respond in proportion to what happened.

Respond to reports promptly

The EEOC's fact sheet says an effective response to a harassment complaint often involves two steps, an investigation and, if needed, corrective action, and it calls for an investigation that is prompt, impartial and thorough. The corrective actions the fact sheet lists range from informal counseling or a written warning to suspension, demotion or termination, and it's clear that an employer isn't required to fire someone just because harassment happened: the goals are to stop it now and prevent it in the future.

Colorado gives you another reason to take this seriously. Under one part of the POWR Act, when a supervisor has harassed a team member, the employer's defense depends in part on showing it has a program reasonably designed to prevent harassment, that it takes prompt, reasonable action to investigate and address complaints, and that it has explained the program to supervisors and other team members alike.

Write it down

Keep short, dated notes of what was reported, what you looked at, who you spoke with, what you decided and why. Notes written at the time are far easier to rely on later than anyone's memory. If a complaint involves you or a senior leader, or the facts are disputed, an outside investigator can help. I act as a neutral investigator, including for complaints about owners and senior leaders, and I provide a written summary of the findings.

Check for retaliation and accommodation needs

Before you discipline someone, check the timing. Colorado's anti-discrimination law protects people who complained about discrimination or asked for a reasonable accommodation from retaliation, so a write-up that lands right after a complaint deserves a careful second look. Colorado employers also have a duty to provide reasonable accommodations for disability and for pregnancy, childbirth and related conditions. If a team member tells you a conduct or attendance problem is connected to a health condition or a pregnancy, pause and treat it as a possible accommodation request. My post on reasonable accommodation for employers covers the employer's side of that conversation.

If you'd like help writing a code of conduct or fitting one into your handbook, that's part of the handbook work I do in HR Foundations & Compliance. When the harder part is living by it, with discipline, investigations and the conversations around them, that's Employee Relations & Engagement. Either way, it starts with a conversation, and you can contact me whenever you're ready.