Why You Need an Employee Handbook for Your Small Business

Katie Fleming

Katie Fleming

Co-founder and COO of Owner Actions

A small business owner sits at a desk working on writing an employee handbook

Your small business employee handbook outlines the rules and expectations you, the employer, have for your team members. Your handbook should inform and instruct your team. It should clarify business practices. And, it should also help your employees understand the company they’re part of in terms of its history, mission, values, and views of how they’ll be treated in the everyday course of work.


Does my small business need to create an employee handbook?

Some states require employers to provide their workers with written copies of their policies. Many owners respond by putting them in handbook format. This is a simple, easy way to meet this requirement.

Of course, you might want to create a handbook even if you aren’t legally required to do so. Here’s why:

  • Your handbook can help you spell out the rules your team must follow.
  • It’s a way to explain behaviors they’re expected to engage in or avoid for the good of the business.
  • It can inform your employees of the steps you’ll take to create a safe working environment.
  • It affirms your employees’ rights.
  • It’ll help you show that policies will be applied the same way for everyone, regardless of their rank, age, gender, religion, ability, or any other distinguishing factor.
  • It can serve as an easy go-to resource for team members who want to confirm a policy or practice.
  • It can help you defend against claims of discrimination, unfair treatment, harassment, wrongful termination, and other matters by showing the practices you’ve put into place to avoid wrongdoing.


What should my small business include in its employee handbook?

Your handbook should include the policies, practices, and information your business needs to succeed. For many businesses, these include:


Let’s talk a bit about policies. In your handbook, you’ll need to cover policies that are mandated by state and federal labor departments. These might include:

  • Your standard operating hours
  • Planned business closure dates
  • Antiharassment, anti-discrimination, and antiretaliation policies
  • Accommodation policies
  • Code of conduct requirements, which should include attendance policies, mealtimes, substance abuse policies, allowed uses of personal and company technology, and dress codes (if they apply to your business)
  • Safety and security policies
  • Pay policies, including methods and frequency of pay, timekeeping requirements, rest period allowance, overtime and hazard pay eligibility, holiday pay practices, and whether team members are eligible for bonuses or stock options
  • Benefits policies, including whether health care, dental, vision, or life insurance is offered, eligibility factors, and the enrollment periods
  • Vacation policies, which should spell out how it’s accrued and how it should be scheduled
  • Other leave policies, including sick leave, FMLA leave, military leave, military spouse leave, bereavement leave, crime victim leave, and other forms of leave you choose or must include by federal, state, or local law
  • Workers’ compensation policies
  • Promotion and raise criteria
  • Discipline policies
  • Processes for filing complaints and handling disputes
  • A statement that affirms employment-at-will
  • Disclaimers that the handbook replaces any previous policy documents, that it can’t be construed as a contract or guarantee of employment, and it can change at the employer’s discretion
If your small business has policies for dispute arbitration, nondisclosure agreements, nonsolicitation agreements, non-compete agreements, and assignments of intellectual property rights, you can include them in your employee handbook. But you should also provide them as separate written agreements that require your employees’ signatures.


Be sure that your handbook also includes policies that matter to your business. These may include:

  • How and when work time can be used for personal tasks
  • Whether cell phones can be used while driving company vehicles
  • When and how employees can discuss the business in external conversations/forums
  • Specific behavior requirements
  • Other expectations that need to be spelled out
The National Labor Relation Board’s General Counsel is a great resource for forming handbook statements. One point the counsel makes is that terms should be clear, succinct, and specific, but they should not overreach or intrude on your employees’ legal rights.


Finally, your handbook should include a detachable acknowledgment page. This page will include a statement that says the employee has read, understands, and agrees to follow the policies within the handbook. Each member of your small business should sign this page upon receipt of the employee handbook and return the signed form to you or your HR rep (who will store it in their personnel file).



Do I need to create more than one version of my employee handbook?

Some owners do. Here’s when it makes sense to take this step:

  • If you have team members in states that enforce different employment laws.
  • If you have team members in substantially different roles who need distinct sets of policies, practices, and procedures.


Of course, if your employees take on similar work from a standard location and all work within one state, you can likely get by with one version.


How should I set up my small business employee handbook?

There are lots of ways to lay out your handbook. The Society of Human Resource Managers (SHRM) suggests using this outline to organize the key points:

  1. Welcome Message
    1. Company Mission Statement
    2. Equal Opportunity Statement
    3. Contractual Disclaimer and At-Will Statement
    4. Purpose of the Employee Handbook
    5. Background Information on the Company
    6. Orientation
  2. Policies and Procedures
    1. Americans with Disabilities Act
    2. Personal Safety
    3. Sexual Harassment
    4. Drug and Alcohol
    5. Violence and Weapons
    6. Attendance
    7. Hours of Work
    8. Meal and Rest Periods
    9. Overtime
    10. Timekeeping
    11. Personnel Records
    12. Paydays
    13. Payroll Deductions
    14. Garnishments
    15. Performance Reviews
    16. Promotions
    17. Transfers
    18. Termination: Reduction in Force, Layoff/Recall
    19. Bulletin Boards
    20. Phone, E-mail, and Internet Use
    21. Social Media
  3. Benefits
    1. Holidays
    2. Vacation
    3. Sick Leave
    4. Disability Leave
    5. Personal Leave
    6. Bereavement Leave
    7. Family and Medical Leave
    8. Jury Duty
    9. Military Leave
    10. Paid Time Off
    11. Health Insurance
    12. Life Insurance
    13. Retirement and Pension Plans
    14. Call-In/Report-In Pay
    15. Training
    16. Educational Assistance Program
    17. Service Awards
    18. Workers’ Compensation
    19. Unemployment Insurance
  4. Employee and Employer Responsibility for Safety
    1. Commitment of the Company
    2. Emergency Procedures
    3. Medical Services
    4. Personal Protective Equipment
    5. OSHA Requirements: Safety Rules, Reporting Accidents
  5. Procedures
    1. Standards of Conduct
    2. Progressive Discipline
    3. Exit Process
  6. Summary and Acknowledgment
    1. The Importance of the Policies and Procedures
    2. Acknowledgment of Receipt
Be sure to include disclaimers that you (the employer) have the right to change the rules without notice. You’ll also need to state that employment is at-will, that the handbook supersedes any previous policy statements, and that the handbook can’t be construed as a contract or guarantee of employment.


Some owners build their handbooks from scratch using a simple Word document. Others work with an outsourced HR team that can take on the bulk of the work.

Interested in working with an HR team? Here are a few that can clear this task and many others off your plate:

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You could also use an online template to build your employee handbook. FormsBuildr and SHRM are two options that offer free, customizable templates built around state-specific laws. You’ll find lots of other options by running a simple web search.

If you choose to use a template, be sure to connect with your state’s labor department and an attorney to ensure that your handbook complies with state laws. You can connect with your state’s labor department through the links below.

Be sure to contact the labor department in every state in which you staff employees. This is important because rules can vary by state.



(334) 206-6020


(808) 586-8982


(617) 626-7100

New Mexico

(505) 841-8437

South Dakota

(605) 773-3101


(907) 465-2784


(208) 332-8941


(517) 335-5858

New York

(800) 447-3992


(844) 224-5818


(602) 542-4661


(217) 782-6206


(651) 284-5070

North Carolina

(800) 625-2267


(800) 628-5515


(501) 682-4500


(800) 457-8283


(601) 321-6000

North Dakota

(800) 366-6888


(801) 526-9675


(916) 654-7241


(888) 848-7442


(800) 735-2966


(888) 405-4039


(802) 828-4000


(303) 318-8000


(888) 396-3725


(406) 444-2840


(405) 521-6100


(804) 371-2327


(860) 263-6000


(502) 564-3534


(800) 833-7352


(503) 947-1394


(800) 987-0145


(302) 761-8482


(225) 342-3111


(775) 684-1890


(833) 722-6778

West Virginia

(304) 558-8000


(850) 245-6000


(207) 623-7900

New Hampshire

(603) 228-4033

Rhode Island

(888) 870-6461


(608) 266-3131


(800) 436-7442


(888) 634-4737

New Jersey

(609) 292-1704

South Carolina

(803) 737-2400


(307) 777-6367

How can I make sure my handbook is legally sound?

It’s best to have an attorney review your handbook before you share it with your team. Here’s why. Your attorney can help you ensure that your statements are inclusive and don’t infringe upon your employees’ rights. They’ll also ensure that you don’t imply that you have formed a contractual agreement with your employees.

Would you like to connect with an attorney? We can help. Click the button below to get started:

How should my small business share an employee handbook with my employees?

Lots of owners print and share their handbook every time there is an update. This is a simple, easy way to get this important information into your employees’ hands.

But an even better—and greener—practice is to publish your handbook on your intranet. This option makes your handbook easy to access and easy to update as changes are needed. Though, of course, you’ll need to alert your team members with every update. You’ll also need to provide a paper form your employees will sign to affirm they have seen and acknowledge the newest version.

Of course, you may want to have some hard copies on hand. You can share these with team members who don’t have access to the internet in their workdays, for instance, and anyone who asks for a physical copy. You could also share hard copies when the entire handbook is reworked to include new practices.


How often should I update my employee handbook?

You should update your handbook any time laws or policies change.

Be sure to archive every version of your handbook and record the dates that each was in circulation. Your records could help you defend against future suits from past or current employees.

What’s next?

Log into your owner’s portal for a free step-by-step guide to starting and growing your business. This guide will help you manage your team, take on your tax and financial concerns, work through risks, choose systems, and implement strategies for growth.

You can also browse the articles in our Find Your Team library. Here, you’ll learn some expert tips on writing a job post, winning over great candidates, and vetting the people who impress you. You’ll also find guides on choosing benefit plans and retirement packages. Plus, you can find articles on coaching your team to success and working through the performance review process. Every guide is set up to help you take action, right now, so your business performs at its best.

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