Employee Handbook for Small Businesses

Plan on these sections, in roughly this order. Put job steps, like closing the register, in a standard operating procedure instead, so they can change without a new handbook.

Two lines in the welcome do quiet legal work. At-will employment is the US default: either side can end the job at any time, for almost any reason. But Cornell Law School's Legal Information Institute notes that a handbook promising specific termination procedures can create an implied contract¹, ending at-will status.

So say plainly that it isn't a contract and may change, and describe discipline as what usually happens, not a promise. Montana differs: once someone finishes your probationary period, firing them requires good cause.

1. 1

   Collect what exists

   Gather offer letters, old memos, rules announced in the group chat, and payroll and scheduling settings.

2. 2

   List the questions staff ask

   When is payday? How do I swap a shift? Who do I call when I'm sick? Answer each one.

3. 3

   Settle the open questions

   Does unused vacation carry over? Who approves overtime? Decide now, or mark the gap, rather than writing something vague.

4. 4

   Write it plainly

   Use short sentences, "you" and "we," and name the person or role to ask.

In the US, headcount partly decides which federal rules apply, and only employees count. Unsure whether some workers are contractors? Run a contractor vs employee classification check first.

The Equal Employment Opportunity Commission (EEOC) says most discrimination laws it enforces cover businesses with 15 or more employees² who worked at least 20 weeks this year or last. Age discrimination law starts at 20, and the Equal Pay Act covers virtually every employer. Businesses below those sizes may still be covered by a state or local anti-discrimination law, the EEOC adds.

The Family and Medical Leave Act (FMLA) applies to private employers with 50 or more employees. Once it covers you and anyone is eligible, the Labor Department says its general notice must go in your employee handbook³ or other written leave materials. Copying the FMLA poster's text meets the rule.

Sick leave, breaks, final pay and pay transparency also vary by state and city, so flag those policies and check them with your state labor department. Hiring in several states? An HR policy template library tracks which rules apply where.

Federal law doesn't require lunch or coffee breaks, though some states do. It does require reasonable breaks for nursing employees to pump milk, somewhere private that isn't a bathroom.

If you offer breaks, a Labor Department fact sheet says short rest breaks, usually 20 minutes or less, count as paid work time⁴. A meal break, typically 30 minutes or more, can be unpaid only if the employee is completely relieved from duty. A cashier eating at the register while serving customers is working.

The fact sheet adds that the extra minutes of a stretched break can go unpaid if you've clearly told staff three things. Say in the handbook how long breaks last, that going over is against the rules, and that it will be disciplined.

Salaried, exempt staff need a line too. Under the Labor Department's salary rules, docking their pay for a partial-day personal absence is an improper deduction. Make a habit of it, and everyone in that job under the same manager can lose the overtime exemption.

A clearly communicated policy against such deductions, with a way to complain, protects the exemption if you also repay any mistakes and commit to stopping them. The best evidence of that policy, the rule says, is a written one handed out beforehand, for example by publishing it in an employee handbook⁵.

Your anti-harassment policy needs a reporting path that works. When a supervisor's harassment creates a hostile work environment, the EEOC says the employer can avoid liability only if it proves two things⁶. It reasonably tried to prevent and promptly correct the harassment, and the employee unreasonably failed to use the preventive or corrective options it offered.

A path fails if the only person to tell is the one causing the problem. Name at least two people to report to, ideally one outside the employee's chain of command, and promise no retaliation.

Most employees also have a legal right to discuss pay. The National Labor Relations Board says a rule that bans employees from discussing their wages, or requires your permission first, is unlawful⁷, union or no union. So are policies that chill those conversations.

Give people time to read it and ask questions, then file a signed acknowledgment for each person.

Review it at least once a year and whenever a policy, law or headcount changes, with a fresh signature for each version. The employee handbook template and tracker records who signed which one.

Want a first draft? Describe how you run things in the box at the top of this page, and River drafts it in plain language, flagging each policy that depends on your state.