Do I need an Employee Handbook for my business?

Do I need an Employee Handbook for my business?

Are employee handbooks still relevant in today’s workplace? The simple answer here is “yes.” Although there’s no law dictating that you must have an employee handbook, there are two ways to consider the value these documents still hold for companies. First, an employee handbook can massively reduce the administrative time needed to onboard new employees. By putting all of the requisite company policies and procedures in the handbook, you give new hires a quick boost during their first few weeks of starting the job. 

Alongside this, an employee handbook can act as a low-cost buffer to help reduce potential liability risks for your company. Taken together, the benefit of having an employee handbook will ultimately save your company time and money. 

Employer Benefits of an Employee Handbook


A common question for small businesses is what information should go into an employee handbook. Because there’s no law or any regulations that require an employee handbook, there’s also no standardized format for what goes into one. However, as we noted in the introduction to this post, framing the primary benefits of an employee handbook will help guide you toward what should go into it.

A good employee handbook should include the following (but not be limited to these):

  • A Safety Handbook can can either be included in the Employee Handbook, or created as a separate document
  • Your standard business policies and procedures
  • Acceptable use information for technology
  • Harassment policies
  • Other code of conduct definitions
  • Disciplinary policies and procedures
  • Any legal obligations you have as an employer
  • Any legal obligations your employees may have as it relates to your industry
  • Employee benefits (salary, vacation time, retirement plan, etc.)

The more detailed your employee handbook, the better. You can easily locate templates that help you get started writing your handbook; you’ll just need to adapt the template to suit the uniqueness of your business. 

Additionally, the better organized the handbook is, the easier it will be for you to quickly answer questions by pointing to specific sections in your employee handbook. This is a huge time saver for your company from an administrative perspective. 

From a legal perspective, you also have something to point to if an issue arises where an employee may need to be let go due to a policy violation that’s explicitly spelled out in the handbook. This is why most employers require new hires to read and sign the handbook; it’s an acknowledgment that the employee understands their rights and responsibilities and gives you firm ground to stand on should an employment dispute arise related to your policies. 

When you align your handbook to standard insurance policies that your business might carry, such as Employment Practices Liability Insurance or Workers Compensation, you’re also more likely to better protect yourself against claims that could arise in the future. Unless you state otherwise in the handbook, asking employees to read and sign the handbook makes it a legally-binding contract. That’s a boon from a business protection standpoint.

Are There Cons to an Employee Handbook?

The biggest downside to an employee handbook is that your employees may not read it. These handbooks can often be dozens of pages long and sometimes filled with legalese that employees don’t fully understand. Unless you’re doing your due diligence to ensure employees actually read and understand the document, you may end up in a situation where employees become frustrated and claim that they didn’t know about a policy or procedure because you relied on them to read and process the handbook. 

Nevertheless, a handbook will ultimately be a valuable resource for you and your employees with significant liability protection for your business during employment disputes. 

Need help navigating and aligning your employee handbook with your business’ liability insurance? Give us a call at 650-873-1255 to get expert advice on the insurance coverage needs that best fit small and medium-sized businesses in CA like yours.