Employee Management

Why an employee policy handbook is critical for your small business

Safeguard your business by clearly stating your policies and procedures in an employee handbook.

Published: March 02, 2015
Updated: February 17, 2017

As a small business owner, you work hard to run your company, but are you doing enough to protect it?

Security breaches, new regulations, and new competitors could be threats from outside the company. While inside the company, your employees can sometimes put the business at risk through what they do or fail to do.

Protect your business from employee mistakes or misfeasances, such as posting inappropriate material on social media or sharing sensitive information about your company or a client, with clearly stated policies in an employee handbook. Employees will know what's expected of them and what they can expect from you, and you can use the handbook as legal protection should an employee later challenge you in court.

Structure your employee handbook

A comprehensive employee handbook is essential because it can not only protect a business owner, but it can help create a more productive workplace by making clear key procedures and policies. These could include:

  • An employment-at-will doctrine that leaves you and employees free to terminate employment at any time for any reason.1

  • Social media guidelines that make it clear that discriminatory, harassing, or threatening posts will lead to disciplinary action.

  • Expectations about attendance, hours, absences, and sick time so that employees know how and when to ask for time off.

  • Rules on the appropriate use of computers, phones, and other company equipment.

  • Rules for employee conduct that outline appropriate and inappropriate behavior regarding all business settings.

  • Employee responsibilities for complying with safety and health rules so that employees know to report accidents or hazards in the workplace.

Prevent IT abuses with a social media policy in your employee handbook

The popularity of social media means more people are sharing nearly every aspect of their daily lives on Facebook, Twitter, Instagram, and elsewhere — and sometimes taking it too far. Thirty-eight percent of the human resources professionals interviewed in the "2015 National Professionalism Survey Workplace Report," conducted by York College of Pennsylvania's Center for Professional Excellence, said IT abuses had increased over the previous five years.2 Employees might share proprietary information — sometimes inadvertently — or post a photo on Facebook that could impact your company's reputation.

In your employee handbook, guard against such abuses by outlining your approval process for company communications on social media, and clarify what you expect from employees regarding their personal social media use. For instance, are you comfortable with employees "friending" clients? Can they vent about work or talk about upcoming projects? Are they allowed to post pictures while on the job? Make any restrictions very clear in your policy, and ensure that employees are aware of how these impact their daily internet use.

Outline penalties in your employee handbook

The handbook should also include penalties for breaking any of the policies, such as the common three-strike rule:3

  1. Assuming no laws have been broken, the first step in a conduct violation process is a verbal warning, in which a manager discusses the incident or behavior with the employee and spells out consequences.
  2. For the second offense, the manager issues a written warning.
  3. After a third offense, the employee can be terminated.

As a business owner, it is up to you to decide how severe penalties will be for breaking rules. Whatever you decide, put it in writing, and require all new employees to review it and sign an acknowledgment of receipt. However before issuing any employee handbook, be sure to seek the advice of your own legal counsel.


1"The At-Will Presumption and Exceptions To The Rule." National Conference of State Legislatures. http://www.ncsl.org/research/labor-and-employment/at-will-employment-overview.aspx

2"2015 National Professionalism Survey: Workplace Report." Center for Professional Excellence at York College of Pennsylvania. http://www.ycp.edu/media/york-website/cpe/2015-National-Professionalism-Survey---Recent-College-Graduates-Report.pdf

3"Three Strikes, Is The Employee Out?" AllBusiness.com. http://www.allbusiness.com/labor-employment/human-resources-personnel-management/15256328-1.html

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