What Should Be in Your Employee Handbook (And What to Leave Out)

An employee handbook has two jobs. The first is to tell people how things work at your company, hours, time off, how to report problems, what happens if performance slips. The second is to protect the company legally by documenting that employees were informed of key policies. Most small business handbooks fail at one or both.

What must be in every employee handbook

At-will employment statement. In most US states, employment is at-will. Your handbook must state this clearly. Make sure nothing else in the handbook contradicts it, language like “employees will only be terminated for cause” can create implied contracts that undermine your at-will status.

Equal opportunity and anti-discrimination policy. Required by federal law for employers with 15 or more employees. Reference all protected classes under Title VII, ADA, ADEA, and GINA. State laws often extend protection further.

Harassment prevention policy. Several states require this in writing. Even where it’s not required, the absence of a written policy is cited in nearly every harassment claim.

Leave policies. PTO accrual and usage, sick leave (state rules vary dramatically), FMLA eligibility, state-specific paid leave programs, parental leave if you offer it. This section goes out of date fastest, review it every year.

Compensation and pay practices. Pay frequency, overtime eligibility, expense reimbursement process. If you have commission-based roles, the commission plan should be a separate signed document, not just a handbook policy.

Code of conduct. Workplace behavior expectations, conflict of interest policy, confidentiality and IP protection, social media guidelines, how to report concerns.

Performance and discipline process. How performance is evaluated and what the discipline process involves. Do not describe a mandatory progressive discipline process unless you intend to follow it every time, courts have found employers liable for skipping their own stated steps.

Acknowledgment form. The last page every employee signs confirming they received and read the handbook. Without it, you can’t prove an employee knew about a policy in a dispute.

What to leave out

Rigid progressive discipline language you won’t always follow. Benefit promises that go beyond what’s actually in your plan documents. Anything describing employment as “permanent” or “guaranteed.” Policies from a template that don’t reflect how you actually operate, a handbook that says one thing and the company does another is worse than no handbook at all.

How often to update it

At minimum, review your handbook annually and any time you add employees in a new state. State employment law changes constantly. The three areas most likely to require updates each year: leave policies, pay transparency requirements, and harassment prevention training mandates.