7 Employee Policies You Must Know When Starting A Business

7 Employee Policies You Must Know When Starting A Business

While it is true that business owners learn a lot by doing, there are a few exceptions to this common rule. One such exception is the existence of a company employee handbook. Unless you are the sole employee for your company, developing company policies must happen at the start.

These rules will safeguard you from potential lawsuits in the future. Additionally, they set clear expectations regarding employee conduct and may promote work productivity.

So, what are the company policies you should have when starting your business?

1. Equal Opportunity Policy

The Equal Employment Opportunity(EEO) policy is a set of guidelines that conform to the anti-discrimination law. This policy prevents companies from discriminating against employees based on particular characteristics such as race and sexual orientation.

Previously, this anti-discrimination law did not protect the LGBTQ community employees, and more than 25 states could fire their staff for being queer. However, in July this year, Justice Gorsuch’s ruled that this was illegal and violated Title VII of the Civil rights Act of 1964.

2. Travel Policy

A travel policy guides you in ways of handling employee work-related travel. This policy covers travel costs, accommodation, reimbursements, and other expenses. It clearly defines the reporting procedures for all travel expenses and lists the non-refundable, i.e., upgraded flight, not covered by the travel policy.

3. Workplace Health and Safety Policy

Workplace injuries in the US are, unfortunately, a common occurrence. In 2019, the private sector reported 2.8 million work injuries, the manufacturing industry accounting for 15%. Therefore as you start your business, it would be best to design a health and safety policy.

The Occupational Safety and Health Administration (OSHA) details the employers’ role in keeping their staff safe. Recently, they updated these guidelines to include COVID-19 as a workplace hazard and listed the actions to take to ensure employee safety.

4. Substance Abuse Policy

According to the Drug-Free Workplace Act of 1988, any company receiving federal funds must maintain a drug-free environment. Additionally, people working in the security and safety industries must adhere to this law. Therefore, unless your business falls under these categories, it is upon you to develop a substance abuse policy.

Note that there has been some controversy regarding such policies. Due to the increasing trend in marijuana legalization, some experts have expressed the complications of such laws. According to an article posted on Business News Daily, it would be difficult to know whether an employee consumed cannabis on the job or during non-work hours. Some employers may want to consider a general ban. However, ensure that this policy is per the state laws.

5. Employee Conduct Policy

Your code of conduct policy is crucial for setting expectations about the workplace behavior and company culture. An effective conduct policy must contain the following:

  • Dress code
  • Attendance expectations
  • Recommended workplace behavior
  • Abuse of power
  • Social media when on-duty
  • Cybersecurity, including during telework
  • Provisions for how this policy addresses out-of-office work-related interactions

6. Personnel Policy

To avoid employee dissatisfaction, you should develop a personnel policy detailing employee compensation, time-offs, deductions, and parental leave, which must be in agreement with the Family and Medical Leave Act.

7. Employee Disciplinary Action Policy

This policy is a clear record of how employees must conduct themselves and outlines the consequences of misconduct. Also, it includes penalties. Typically policies should set disciplinary actions for the following violations:

  • Insubordination
  • Indecency
  • Failure to perform duties
  • Exposing the company’s confidential information

Remember to consult an employment lawyer before drafting and performing disciplinary actions based on this policy. Your lawyer will ensure all procedures are per current state and federal employment laws. 

Tips for When Developing Employee Policies

Now that you know the key policies to include in your employee handbook, you might be wondering how to start the drafting process. Here’s what you need to know about developing employee policies.

Determine the reasons for creating a particular policy

If you’re running a business with family members, the type of policies you develop will differ from what other companies use. Therefore, you may want to establish procedures if:

  • You deem that legal protection of your business is crucial
  • There’s confusion regarding roles
  • There’s inconsistency in spending

Decide on the content

Avoid ambiguity. Also, allow some flexibility by using words such as “may” and “generally” Instead of “must.” Your policy should include the purpose statement, a section on regulations, implementation, and the date on which the policy will be effective.

Obtain support from all stakeholders

Involving stakeholders promotes fairness and also reduces dissatisfaction. It promotes good communication and a shared understanding of its impact on the company’s performance.

Communicate these policies with your employees

Ensure you distribute these policies to all employees. Also, there should be a channel allowing employees to communicate their understanding and acknowledgment of receipt.

View and revise policies when necessary

Employers should continuously update these policies to ensure they comply with all regulations. Additionally, as an employer, remember to notify all employees about changes immediately through the right work communication channels.


Developing employee policies is a best practice that all business owners should adopt. Therefore, it would be best to ensure that all your employees read these policies and sign acknowledgment forms to serve as evidence. Remember that drafting these policies requires knowledge of the current state, federal and local laws. Therefore, be sure to seek legal counsel to guarantee that these employee policies are not only practical but also fair.

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