Why Small Businesses Should Spend Money on an Employee Handbook

Small business owners have a lot on their plates--from wearing multiple hats to supervising employees to managing cash flow. Creating an employee handbook seems like one more thing on the neverending to-do list. However, as human resources regulatory compliance becomes more daunting, the creation of a handbook is critical to help prevent compliance issues and serve as a resource for both management and employees.

Let’s look at five reasons why small businesses should spend money on an employee handbook.

Communicates Expectations to Employees

Your employee handbook communicates the company’s expectations to employees. A handbook addresses general employee responsibilities, such as how to log their time or how to call in for an unscheduled absence. Additionally, the handbook explains the policies and procedures on vacation, jury duty, performance reviews, discrimination, harassment, and complaint procedures. The employee handbook serves as the roadmap for how your business works and what conduct is expected from your team.

If your employees have an issue arise, like how to request vacation, they can go to the handbook for answers, as opposed to coming to you or a manager. Make sure the guide is readily available. You can either hand out hard copies of the handbook to your employees or post it on your employer portal.

Keeps Policies and Procedures Consistent

A handbook helps you, your managers, and your employees follow and apply the company’s rules consistently. Without a handbook, you run the risk of applying your company’s practices in an ad hoc fashion. A well-crafted employee handbook helps create a fair, non-discriminatory workplace, where both employee and the employer are held accountable for their conduct.

With a handbook, both you and your employees have a reference guide regarding employment policies and procedures. Applying and enforcing these rules consistently not only helps with your culture and managing employee expectations, but it also serves as a defense to employee complaints.

Helps with Onboarding

The onboarding process is critical in helping new employees learn about your company while getting acclimated into their new role. The employee handbook serves as an introduction to your company’s culture and mission while communicating the company’s rules and expectations.

Further, you should set your new employees up for success as they begin their new job. Giving them an employee handbook does just that by giving them the pertinent information on your business operations and management. This introduction can help avoid any unnecessary confusion, quickly getting your new employee up and running.

Ensures Compliance with Employment Laws

No matter how small your business, you must comply with both state and federal laws. Your handbook helps to reduce your risk of non-compliance with these laws by establishing written policies and procedures.

Your handbook should address all relevant state and federal laws that apply to your business. These laws should be written in a transparent manner to avoid any misunderstanding of expected conduct or responsibilities. Your handbook should also provide instructions to your employees about how to file complaints to management about misconduct in the workplace.

You can further reduce risk by facilitating focused training sessions for employees on key aspects of your handbook, such as preventing sexual harassment in the workplace. If you choose to offer training, be sure to have your employees sign attendance sheets, documenting that they attended the session.

Defends Against Workplace Claims

Employers should consider how to insulate themselves from complaints or lawsuits by current or former employees. In 2017, over 84,000 claims were filed with the U.S. Equal Employment Opportunity Commission (EEOC) for discrimination in the workplace. A complaint filed with the EEOC, or a resulting lawsuit, can become extraordinarily expensive and burdensome, taking time away from running your business. A thorough and well-drafted handbook can help defend against these claims and others by establishing your business’s written policies and procedures and demonstrating that employment situations are handled fairly and consistently.

One best practice to give yourself additional coverage is to have your employees sign an acknowledgment page stating that they received the handbook, read it, and had the opportunity to ask questions. Make sure you get a new acknowledgment if you update or revise your handbook.

The Lynch Law Firm offers a customized approach to drafting and implementing employee handbooks. Specifically, Susan Word, HR Specialist, engages with the company to understand the unique needs of the small business. After Susan has done much of the heavy lifting, Attorney Natalie Lynch reviews the work for legal appropriateness. In this way, smaller companies receive the protection they need at a more palatable price.


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