Your first employee starts Monday, and everything about how your business runs — the hours, the phone rules, what happens when someone is sick, what gets someone fired — currently lives in exactly one place: your head. That works precisely until the first misunderstanding, which usually arrives by week three. An employee handbook is the document that moves the rules out of your head and onto paper while moving them is still friendly — while there is exactly one employee, zero grievances, and a quiet afternoon to think instead of a dispute to win. Here is the complete checklist for a small company, item by item — what to include, why each one earns its place, and the legal cautions that keep the document a shield instead of a liability.
☐ Item 1: The welcome and the business story
Open with a page or two on what the company is, who it serves, and how it treats people — not as decoration, but because every later rule reads differently depending on whether the employee knows what the business stands for. Include the mission in plain language, a short history, and the standards the company is proud of. New hires decide in week one whether this is a real workplace; the first pages of the handbook are where that impression gets set in writing.
☐ Item 2: The employment basics — classification and at-will
State who is an employee and who is a contractor, who is exempt and who is non-exempt for overtime, and the work schedule each role follows. Include the at-will statement — that either side may end the employment at any time, for any lawful reason — in the form your state expects, because this sentence carries real legal weight and its wording matters. Keep the companion topic close: whether someone is a contractor or an employee at all is a legal classification with tests behind it, covered in 1099 contractor vs W-2 employee: which is right for your small business — the handbook assumes that decision was made correctly before the person starts.
☐ Item 3: Pay mechanics — schedule, overtime, timekeeping
Write down paydays, pay periods, how hours are recorded, how overtime is authorized and paid (time-and-a-half over forty hours for non-exempt staff, as the law sets), and what happens with tips or commissions if your business has them. Most early pay disputes are not about amounts; they are about mechanics nobody wrote down — the timesheet that was “due sometime Friday,” the overtime nobody pre-approved. The rule that prevents ninety percent of it: hours are recorded daily, overtime needs approval before it happens, and questions about a paycheck go to a named person within one pay period.
☐ Item 4: Time off — PTO, holidays, sick leave
State the holidays the business closes for, how much paid time off accrues and how fast, how requests are made and approved, and what happens to unused time. Then sick leave, carefully: several states and cities mandate paid sick leave with specific accrual rules, and your handbook must match your jurisdiction’s floor, not your preference. Write the call-in procedure precisely — who is notified, by when, by what channel — because “I texted someone” is the seed of a hundred small conflicts.
☐ Item 5: Conduct — attendance, dress, phones, substances
The behavior section, written in expectations rather than threats: attendance and punctuality standards, dress appropriate to the work, personal phone use, and the drug and alcohol rules — including how your state treats cannabis, which now varies enough that a copied policy from another state can be wrong in both directions. Keep it proportionate. A five-person business does not need a forty-page conduct code; it needs its actual expectations, the ones it will actually enforce, written before enforcement is ever personal.
☐ Item 6: Anti-harassment and equal opportunity — the non-negotiables
Whatever the company’s size, this section is mandatory in substance: a clear statement that harassment and discrimination are prohibited, the protected categories under federal and your state law, and — the part that makes it real — how an employee reports a problem, including a route that bypasses their own manager, and a promise that retaliation for reporting is itself a firing offense. Even where a tiny employer sits below a statute’s employee threshold, adopting the standard costs nothing and prevents the single most damaging category of workplace dispute. Mean this section more than any other in the book.
☐ Item 7: Safety, equipment and company property
Cover the safety rules of your actual workplace — not boilerplate, but your machines, your vehicles, your ladders and chemicals — plus accident reporting (immediately, to a named person, in writing). Then property: what the company issues (keys, laptop, tools, vehicle), what it may be used for, and what is returned, when, on the last day. The US Department of Labor’s workplace poster requirements belong in this orbit too — several notices must be physically posted or distributed, and the handbook is where you record that employees received them.
☐ Item 8: Confidentiality, customer data and social media
Three modern clauses every small handbook now needs. Confidentiality: what counts as company information (customer lists, pricing, processes), that it stays company property, and that the duty survives the last day. Customer data: how employee handling of names, payment details and records must work — the business carries the legal and reputational cost of careless handling, so the rule “customer information lives in company systems, never in personal accounts” belongs in writing. Social media: employees may not speak for the company unless authorized, must not post confidential material or customer images, and should understand that public posts identifying the workplace reflect on it. Draw these lines early and plainly; retrofitting privacy rules after the first incident is a miserable conversation.
☐ Item 9: Remote and hybrid work, if you offer it
If anyone works from home, the handbook needs a section the 1990s never imagined: eligibility, expected availability and response times, meeting and camera norms, who provides and maintains equipment, and how work hours are recorded for non-exempt staff working off-site — because overtime law follows the employee home even when the handbook forgets to. Add the data-security basics for home workers (company devices, locked screens, no public Wi-Fi for customer data without the company VPN) and the understanding that remote work is a working arrangement the company may adjust, not an entitlement. One page here prevents the slow drift of a dozen individual arrangements nobody agreed to.
☐ Item 10: Discipline, separation and the acknowledgment page
Describe how problems are handled — coaching, written warnings, final steps — while protecting your flexibility (see the caution below). Cover resignations (notice requested), final paychecks (timed by your state’s law, which is specific), and reference policy. Then close the book with the acknowledgment page: the employee signs that they received the handbook, read it, and understood the at-will statement — and that signed page goes into their personnel file on day one. The acknowledgment is what turns “we have a policy” into “you agreed to this policy” in any later dispute.
The caution that governs the whole document
Have a local employment attorney review the finished draft once, carefully, line by line — budget $500 to $1,500 — because handbooks create obligations as well as protections: sloppy discipline language (“employees will always receive two warnings”) can be treated as a promise that binds you, which is why the review focuses as much on what not to promise as on what to include. State plainly that the handbook is a guide, not a contract, and that policies may change with notice. One review, at one employee, is the cheapest version of this document you will ever buy.
How long should it be?
For a small company, ten to twenty pages covers everything in this checklist with room to breathe, and length beyond that usually signals borrowed boilerplate describing a company that is not yours. Every sentence in the document should pass a simple test: does this describe how we actually run, and would we actually enforce it? A short handbook that is true beats a long one that is theater, because the gap between the written rule and the lived rule is exactly where disputes and legal arguments breed. Write the business you have, review it as the business changes, and let the document grow with the company instead of ahead of it.
Keeping it alive
Review the handbook every year, and whenever headcount, locations or the law changes — new sick-leave rules and new states of operation are the usual triggers. Version it, date it, and re-issue with fresh acknowledgments when it changes materially. The finished checklist: the story, the basics, the pay mechanics, the time off, the conduct, the non-negotiables, safety and property, confidentiality and remote work, discipline and the signature — one document, written while there is one employee and no dispute, doing quiet protective work for every hire that follows.
