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If your business employs just a few workers, it’s in your best interest to establish clear workplace guidelines.

Putting company rules in writing helps set expectations and reduces misunderstandings. Formal personnel policies also protect your business in the event of an employee dispute.

But what if you’re starting from scratch? Going from no written policies to a detailed employee handbook can be overwhelming. You may wonder what’s most important.

These are the essential employee policies for any small business:

1. At-Will Employment: Employment status generally falls into two categories: "contractual” and “at-will.” If no contract exists, a worker’s status is likely at will. This means the employment relationship can be terminated at any time, by either the employee or the employer, for any reason or no reason at all. (The only limitation to this is termination for an illegal reason, such as discrimination.) Having a written policy that reinforces your right to discharge at will can help your defense in a wrongful termination case.
2. Payroll: Employee lawsuits claiming incorrect pay are on the rise. That’s why all businesses must have a formal payroll policy. It should include definitions of exempt and non-exempt employee classifications, as well as details on your pay period, payday, overtime-authorization rules, and any meal/rest break guidelines for hourly employees. You should also explain how payroll deductions are handled for time off (which will likely differ for exempt and non-exempt employees).
3. Time Off/PTO: A proper time-off policy will cover expected work hours, attendance expectations, and paid holidays. It should also answer these common employee questions: Do I get separate sick days and vacation days? How does my time off accrue? When can I start using it? How and when do I request time off? What happens if I don’t use my time? Does it roll over to the next year? What happens to earned time off if I quit or I’m terminated?
4. Rules of Conduct: Your conduct policy can set expectations on everything from dress code and customer interaction to personal use of company equipment and social media. In addition to laying the ground rules for your workplace, your conduct policy should include this phrase: “And any other management rules.” This covers you if a rule is broken that is not specifically listed on the policy.
5. EEO/Harassment: This crucial policy clearly states that discrimination and harassment are unacceptable in your workplace. Depending on the size and location of your business, it may be illegal to discriminate or harass workers based on gender, race, age, sexual orientation, sexual identity, or even political affiliation. Find out what your local laws are, and make sure they’re covered in your policy. Include language on how to report a concern, and provide the names of two individuals within the company who can be trusted to handle complaints properly and confidentially. (Be sure to provide training for those individuals.) Also, incorporate an anti-retaliation statement and this language, “We will keep your complaint as confidential as possible under the circumstances.” This provides the necessary leeway to conduct a thorough investigation.

One Final Tip

Have employees sign an acknowledgment stating they received the policies, read them and understand their content. Keep a copy of the signed acknowledgment in the personnel file, or a date and time stamp on an electronic acknowledgment.

This article is an excerpt from ComplyRight’s “Covering the Bases: A Beginner’s Guide to Employment Law.” You can download the entire e-guide here.