Most startups don’t need a full employee handbook until they reach about 20 employees, but every startup with employees needs the workplace policies its state requires. As the team grows, a short handbook is the easiest way to keep those policies in one place, apply the same rules to everyone, and make clear that employment is at will. The best startup handbooks are short and built around legal requirements rather than a template, and they’re reviewed every year.
Does my startup need a handbook?
- Under about 20 employees: usually not. Offer letters, a confidentiality and invention assignment agreement, and any standalone policies your state requires are enough. Some states, including New York and California, require certain written policies from your first hire.
- Around 20 employees: adopt a short handbook built around the required policies.
- Employees in several states: use one core handbook plus a short addendum for each state with special rules (see below).
Which policies does my state require?
The two states our clients hire in most:
| Policy | New York | California |
|---|
| Harassment policy and training | Written sexual harassment policy and annual interactive training for every employer | Written harassment, discrimination and retaliation policy, and training every 2 years, at 5+ employees (longer training for supervisors) |
| Pregnancy leave | No separate pregnancy leave statute; 20 hours of paid prenatal leave a year, plus paid family leave after birth | Pregnancy disability leave notice and policy at 5+ employees |
| Workplace violence prevention | Retail employers with 10+ retail employees: written policy and training | Written prevention plan and training for most employers since July 2024 |
| Paid sick leave | Required; up to 40 or 56 hours a year, depending on company size | Required; at least 40 hours (5 days) a year |
| Electronic monitoring | Written notice at hire, acknowledged by the employee | No general notice law, but covered businesses must give a privacy notice |
| Paid family leave | State program, funded by payroll deductions | State program, funded by payroll deductions |
| Pay | Salary ranges in job postings; employees may discuss pay | Salary ranges in job postings; employees may discuss pay |
Many other states now require paid sick leave, and several have their own harassment, leave and pay-notice rules. Check every state where you have an employee. Remote employees count.
What must every handbook say?
- Employment is at will. Either side can end it at any time, for any lawful reason.
- The handbook isn’t a contract. It doesn’t promise employment for any period, and it doesn’t promise any particular process before discipline or termination.
- The company can change it. Policies may be updated, with notice to employees.
- An acknowledgment page that each employee signs, confirming they received the handbook.
What about mission, values and culture?
A one-page welcome and a short statement of your values are a fine way to open the handbook. Keep them short and aspirational. The legal work happens in the policies.
What else belongs in a startup handbook?
Beyond your state-required policies:
- Equal opportunity and anti-harassment, with at least two ways to report a problem (not only to the employee’s manager) and a no-retaliation promise
- Leave: sick leave, vacation, holidays, family leave under state programs, and federal FMLA once you reach 50 employees
- Hours and pay: pay periods, timekeeping and overtime for non-exempt employees, and expense reimbursement (required in California and several other states). See Exempt vs Non-Exempt Employees.
- Remote and hybrid work: where people may work from (a new state can create new obligations), equipment and availability
- Technology, security and AI use: company devices and accounts, data security, and what employees may and may not put into AI tools
- Monitoring: what the company monitors or records. Tell employees in writing; New York requires it, and some states require everyone’s consent to record calls.
- Code of conduct: conflicts of interest, gifts and anti-bribery
What should never go in a handbook?
- A ban on discussing pay. Federal labor law protects employees’ right to talk about wages with each other, and California, New York and many other states separately prohibit pay-secrecy rules. Say the opposite instead: “You are free to discuss your own pay.”
- Overbroad conduct rules. Blanket bans on “negative” social media posts, recording, or sharing “any company information” can be read as restricting employees’ legal right to discuss working conditions. Draft confidentiality and social media rules narrowly and tie them to real business needs, such as trade secrets, customer data and security.
- Promises about reviews, raises or promotions. “Reviews every six months” or “strong reviews lead to promotion” can turn into a contract claim. Describe these practices loosely, or leave them out.
- “Probationary periods” leading to “permanent” employment. That wording undercuts at-will status.
Compensation and benefits: describe pay periods and how benefits work in general terms, and point to the actual plan documents. Equity terms belong in the equity documents, not the handbook.
What belongs in a separate signed agreement instead?
Anything you need to be enforceable as a contract should be its own document, signed by the employee:
- Confidential information and invention assignment agreement. See The CIIA Agreement.
- Arbitration agreement
- A narrow non-solicitation agreement, where enforceable (not a non-compete). See Non-Solicitation Clauses.
- Equity award documents
- Commission or bonus plans (California requires commission plans in writing)
- New York’s electronic monitoring acknowledgment
See What Agreements Should Startups Have With Their Employees?
How do I handle a remote team in several states?
Use one core handbook that applies everywhere, plus a short addendum for each state with its own rules (sick leave, harassment training, family leave, final pay). Update an addendum whenever you hire in a new state.
How do I roll it out?
Send it with a short note, collect a signed or electronic acknowledgment from every employee, and keep the acknowledgments. Keep each acknowledgment in the employee’s personnel file, because investors and acquirers ask for them in diligence. Review it once a year, because state rules change often.
See our General Counsel service.
