I had the pleasure of having holiday dinner with my brother last week and, because he’s a VP of Sales in Atlanta, half the city (aka, his customers) seemingly were there as well. I met several small business owners and we talked a little business—and a lot of football. During a commercial, someone made a joke about employees, and I quipped back about how they better have covered that in their employee handbook.

It stunned me when three of them confessed that they didn’t have an employee handbook. (One said she didn’t even have an HR department either!) They all three said that they knew they should have a handbook, but had no clue what to put in it. Apparently, they thought the size of their companies protected them from most of the laws. Technically, it protects them from SOME federal regulations, but not ALL of them!! Hey, I’m just a snot-nosed blogger and even I know that.

It’s Employee Handbook: 101

Let’s face it … running a business is complicated. Owners and managers must not only be talented in their field, but they must also deal with employee relations. Training new hires, keeping experienced employees happy, and streamlining day-to-day operations are issues owners may learn on the job. But, they must quickly become experts. Many business owners have turned to the employee handbook as a solution to these problems.

An employee handbook provides:

• A convenient reference for all company policies
• Ongoing training requirements for new hires and long-time employees alike
• Protection from potentially devastating lawsuits (which are estimated to cost small businesses over $105 billion a year)

If you don’t already have an employee handbook, now is the time to get started. In addition to reducing the risk of lawsuits, day-to-day operations run smoother because of the extra training you’ve provided.

Barring any local laws that are in place where your business is located, an employee handbook is generally not a legal requirement. However, any business with more than a handful of employees would do itself a favor by providing the following information to all employees:

1. Specific job descriptions

Every employee has a right to know exactly what his or her job entails so as to avoid confusion. This section might include the specific duties of each employee, normal working hours, as well as overtime policies. For example, will some circumstances require mandatory overtime? If so, exactly what circumstances? List them all and be specific.

2. Compensation and benefits

Include information on insurance, bonuses, and other compensation plans. Employees need to know what deductions for taxes (state and federal), as well as any voluntary deductions for company benefit programs.

3. Leave: paid and unpaid

Clearly define family medical leave (FML), annual paid leave (APL), and other policies for time off. Employees should know how quickly they accrue APL, and the procedure for requesting time off. Update this information regularly as state and local laws affect these policies. Stay compliant with any legal changes.

4. Privacy policies

Many businesses may handle personal client information that is protected by national privacy laws. The Health Insurance Portability and Accountability Act (HIPAA) is one such law that could impose massive fines on your business for the misuse of information. Employees must be knowledgeable about appropriate and inappropriate use of privileged information. Just one breach could cost thousands of dollars in fines.

5. Employee contracts

Privacy is just as important when it comes to trade secrets and other proprietary information. Many businesses protect themselves by having employees sign non-disclosure agreements (NDAs) or other conflict-of-interest contracts. NDAs protect you from having former employees use information gained during their employment against you. The employee handbook should make clear exactly what each employee’s privacy obligations are.

6. Antidiscrimination and harassment policies

With the news these days, every employer should be aware of the costs of sexual harassment, and yet, some still think, “Oh,  it couldn’t happen here!” As an employer, you must comply with all equal opportunity laws. Employee misconduct, harassment, and discrimination leave you open to legal action, so make sure the handbook covers it. Include detailed information about intolerable conduct. Additionally, a specific and clear procedure for reporting harassment … and the subsequent investigation … should be spelled out.

7. General standards of conduct

If, as an employer, you want your workers to comply with a dress code, put it in the book. Your employees appreciate knowing what’s appropriate to wear on the job. Also, set policies about breaks, personal phone calls, Internet usage, and other downtime. If you don’t, even your best employees will spend chunks of their day checking social media.

8. Firing policies

This part is unlikely to be pleasant for any involved, so make sure you have some firm policies in place. Even in an at-will employment relationship, being uncertain about your policies can lead to trouble. For example, you fire an employee for misconduct. However, the handbook states he should have first received a simple warning followed by a disciplinary period. Chances are good you’ll be seeing him again in your office—this time with a lawyer!

9. Safety!!!!

Can there be too many exclamation points on this one? Honestly, almost any workplace is certain to have some sort of inherent hazard. Teach your employees how to handle all tasks safely. Then, make sure everyone follows procedure just like in your handbook. It only takes one avoidable workplace injury to devastate your business.

Remember, your employee handbook can only protect you from lawsuits if you actually stick to your policies! Once you’ve got something down on paper, make sure that you and your managers are familiar with the policies. Then, ensure every employee reads it and understands as well. Do this, and you are sure to have the upper hand no matter what happens—it is well worth the effort!