When Does Your Company Need an Employee Handbook?

The obvious answer is when your business has employees. But do you really need one when you only have one or two employees? Maybe not. However, in order to know what is best for your company, it’s important to take a step back and understand the protections an employee handbook provides. Once you understand what’s at stake, you can evaluate whether 1-2 employees justifies the protections compared to the cost.

Employee Handbooks address the following:

1. Instructs employees how to file a complaint of harassment or discrimination. This is important so the company will actually know if there is an issue, and will be able to address it.
2. Addresses how vacation and sick pay will be paid once the employee leaves the company, and whether it accrues year to year.
3. Establishes the company values and mission statement.
4. Sets expectations for employees and provides a way for the rules to be uniformly applied, thereby helping to prevent a discrimination claim.
5. Provides guidance to the managers so they know how to respond to medical requests for accommodation and requests for job protected medical leave.
6. Addresses absences and discipline for failure to follow the rules.

In general, the employee handbook create rules and policies to foster a better work environment. In addition, it helps protect the company from claims of discrimination, harassment, retaliation, etc. Under federal law, these statutes are not applicable to businesses with less than 15 employees. However, many states have similar laws, and apply to all companies with at least 5 employees. 

In California and other states, employer obligations may be triggered when the company has 2 employees, so it is best to understand your state’s employment laws when deciding if your company needs a handbook.

To answer the original question, there is no clear cut answer. Do you need a handbook for just one employee? Probably not. Should you have a handbook when you have 4 or 5 employees? Absolutely.

Check out my online Legal Agreement Template Shop to download documents to protect your business.