How to Create an Employee Handbook for Your Small Business

From the minute you make your first hire, deciding how you will handle certain employee programs and processes are essential. Documenting them in an employee handbook ensures the business is protected and serves as a. vital communication tool that outlines company policies, procedures, and expectations. For small businesses, a well-crafted handbook can help foster a positive workplace culture, ensure compliance with laws and regulations, and provide clarity to employees. Here's how to create an employee handbook for your small business.

Step 1: Define the Purpose and Scope

Before diving into the content, determine the primary purpose of your employee handbook. Ask yourself:

• What key information do you want to convey to your employees?
• Which policies are critical to your business operations?
• What policies are required by the state your employees work in?
• How will this handbook support your company’s mission and values?

The scope of your handbook should be comprehensive enough to cover all necessary aspects but concise enough to be easily understood and referenced.

Step 2: Gather Essential Information

Group your handbook into sections based on the employee life cycle and required legal content.. Typical sections include:

• Welcome Message: Introduce your company, its mission, vision, and values.
• Company Policies: Include policies on equal employment opportunity, anti-harassment, workplace safety, and code of conduct.
• Compensation and Benefits: Outline pay schedules, overtime policies, benefits, and leave policies.
• Work Hours and Attendance: Specify work hours, attendance expectations, and procedures for reporting absences.
• Employee Conduct: Define acceptable and unacceptable behaviors, dress code, and use of company property.
• Technology Use: Detail policies on internet use, email, and social media.
• Disciplinary Procedures: Explain the process for addressing violations of company policies.
• Acknowledgment Form: Include a form for employees to sign, acknowledging they have received and understood the handbook.

Step 3: Write Clear and Concise Content

Use clear, straightforward language to avoid misunderstandings. Write in a tone that reflects your company culture—professional yet approachable. Avoid legal jargon, but ensure that the language is precise and unambiguous. For this reason, we suggest orgs using an online handbook builder to still review the handbook to make it more readable for your org. 

Be specific, instead of saying "Employees should avoid tardiness," be specific: "Employees are expected to arrive at work by 9:00 AM. Repeated tardiness may result in disciplinary action."

Step 4: Ensure Legal Compliance

Your handbook must comply with federal, state, and local laws. Some critical areas to address include:

• Employment Laws: Adhere to laws regarding minimum wage, overtime, and non-discrimination.
• Leave Policies: Comply with the Family and Medical Leave Act (FMLA) and any state-specific leave laws.
• Safety Regulations: Follow Occupational Safety and Health Administration (OSHA) guidelines.

If you have employees working in different states, you will need to decide how you are going to handle conflicting laws. The easiest thing to do is treat all employees the same as those in the most generous state. If that isn’t feasible, your handbook will need to have sections for different treatment per state. Consult with a legal expert or human resources professional to review your handbook and ensure it meets all legal requirements.

Step 5: Review and Revise

Once you have drafted your handbook, review it thoroughly. Consider seeking feedback from managers or a small group of employees to ensure clarity and comprehensiveness. Revise the document based on their input.

Step 6: Design and Distribute

Format your handbook to make it visually appealing and easy to navigate. Use headings, subheadings, and bullet points to break up text. Consider creating both a printed version and a digital version accessible via your company’s intranet or shared drive.

When distributing the handbook, accompany it with a brief training session to highlight key sections and answer any questions. Ensure that each employee signs the acknowledgment form, confirming they have read and understood the document.

Step 7: Keep It Updated

An employee handbook is a living document that should evolve with your business. Regularly review and update the handbook to reflect changes in laws, company policies, or procedures. Communicate any updates to your employees promptly and require them to acknowledge the revisions.

We suggest full reviews annually, especially in states where laws change often. Should laws change before a review can be completed, updates regarding the law or policy change should be sent to employees noting that the policy will be added to the next handbook revision.

While employers are not legally required to create and distribute employee handbooks, they are a risk mitigation tool that ensures the practices of the employer are clearly documented and shared with employees. Many legal situations use policies in an employer handbook to determine culpability on the part of the employer. Of course, those policies have to be followed, but when they are, they can lower the risk of legal consequences.