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Does a Small Business Need an Employee Handbook?

May 16th, 2023

Employee handbooks define company policies and procedures regarding employee questions and human resource (HR) issues. Well considered policies and procedures will help your business run more smoothly.

No matter the size of your business, it is highly recommended to have an employee handbook. In this guide to employee handbooks, we’ll cover:

  • What is an employee handbook?
  • Does every business need an employee handbook?
  • Who typically creates employee handbooks?
  • How to create human resource policies for small businesses
  • What if your business doesn’t have an employee handbook?

Once you’re familiar with this information, it may be easier to understand how strong human resources policies, procedures and an employee handbook can help protect your business from unnecessary liability and smooth the path for your long-term business success.

What is an Employee Handbook?

An employee handbook is used to provide guidance on employee-related issues for your business. While there are no one-size-fits all requirements, an employee handbook should include:

  1. Mission Statement
  2. Company Vision
  3. Core Values
  4. Workplace Policies
  5. Job Procedures
  6. Code of Conduct

An employee handbook can be a valuable resource for new employees to acquaint themselves with how you do business, and it can also act as a compass or reference for longer-tenured employees when they have questions.

Does Every Small Business Need an Employee Handbook?

To put it simply, yes.

No matter what size or type of business you run, an employee handbook is an essential piece of organizational stability. Even if your employee handbook is simple and covers only a few topics at first, that can be a great building block from which to start. Extending that concept further, employee policies can and should change as your organization grows and adapts – and it’s not too late to work on yours if you haven’t started.

Who Typically Creates Employee Handbooks?

An employee handbook is often crafted by leadership team collaboration, reviewed by an HR professional and legal team or company lawyer. For many larger organizations, there is a mandate for updating and validating previous versions of company policy, which helps to keep the employee handbook current and up to date.

However, when starting or running a small business, those roles and responsibilities may not exist – or may be in the process of being fully developed.

At a minimum, an owner or executive should work on the first employee handbook draft and have a person who is familiar with business law review it. This could be a lawyer, HR consultant or in-house HR professional.

There are also boilerplate employee handbooks that can be accessed online and assimilated to be a working copy of your business policies until you have the time or resources to create a customized employee manual for your organization.

How to Create HR Policies for Small Businesses

Even if your employee handbook is a work in progress, you need to have HR policies in place. Small business HR policies should cover the following at a minimum:

  • Employment guidelines
  • Employee classifications
  • Work days and times
  • Pay period dates
  • Overtime policies
  • Breaks and meal policies
  • Payroll deductions

These are some of the building blocks included in HR policies. While having in-house HR professionals to create these is preferable, it is possible to find your state and county laws online and create baseline HR policies as a business owner or manager. It is always recommended to have your HR handbook reviewed by a consultant or legal representative who can help ensure that your policies are compliant with labor laws.

What if Your Business Doesn’t Have an Employee Handbook?

While it is highly recommended that every business organization have an employee handbook, it is not a legal mandate. However, without a company handbook and well-defined employee policies, it may be more likely that your business will be exposed to risk and litigation.

Without clear policies and procedures, your team will rely on seniority, institutional memory and decision making in-the-moment. This can potentially lead to legal issues if there are decisions made that are not consistent with local, state or local labor laws, or might be viewed as discriminatory.

Even basic business operations such as reporting employee hours, collecting and depositing money, and tracking expenditures could be impacted by lack of an employee handbook. Don’t put your business in that position.

Community West Bank Helps Small Businesses Make Banking Easier

At Community West Bank, we are prepared to meet with local businesses with plans to grow.

If you are looking to work with a team of experienced banking professionals who will help to give you an opportunity to grow your business successfully, please reach out to us today. We’re here to help.

Employee Handbooks

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