What HR Policies Are Legally Required for Small Businesses?

Ah, the age-old question that haunts small business owners: What HR policies do I absolutely have to have? Spoiler alert: the magical answer is it depends. (Sorry, we know that’s not the satisfying "yes or no" you were hoping for.) But before you throw up your hands in frustration, let’s break it down in a way that makes sense for your small business.

Required vs. Best Practices: What’s the Difference?

First, let’s clear something up: required means “if you don’t have it, you could be breaking the law.” Best practices mean “if you don’t have it, you might be making your life (and your employees’ lives) unnecessarily complicated.” Both are important, but one comes with the threat of fines and lawsuits, while the other comes with the potential for chaos and confusion.

The tricky part? What’s legally required for your business depends on several factors:
- Size of your business (headcount matters more than you think!)
- Industry (Construction? Tech? Retail? Each has its own quirks.)
- Location (State and local laws can be wildly different. California, we’re looking at you.)
- Ownership type (LLC vs. sole proprietorship can affect your obligations.)

Now let’s dive into what you have to do, and what you really should do.

The Legally Required HR Policies

Here’s the short list of policies you might need (based on laws you need to follow), depending on your size:

Equal Employment Opportunity (EEO)
The federal government requires you to provide an equal opportunity workplace if you have 15 or more employees (thanks, Title VII of the Civil Rights Act). But even if you’re under that threshold, having a policy is a good look. No one wants to explain why they don’t take discrimination seriously.

Family and Medical Leave Act (FMLA)
For businesses with 50+ employees, FMLA requires you to provide unpaid leave for things like having a baby, caring for a sick relative, or dealing with your own health issues. Not there yet? Consider a general leave policy that covers the basics.

Wage and Hour Policies
This one’s universal. Regardless of your size, you need to comply with the Fair Labor Standards Act (FLSA). That means being crystal clear about overtime, minimum wage, and proper timekeeping practices. And yes, time theft is still a thing in 2025.

Anti-Harassment and Anti-Discrimination
Even the smallest businesses need to address harassment and discrimination. Some states require you to provide training (yes, mandatory anti-harassment training for two employees is a thing in some places). A written policy shows you take it seriously—and it’s a lot easier to defend your business if something goes wrong.

Safety and Health Policies
OSHA (the Occupational Safety and Health Administration) might be a small business owner’s least favorite acronym, but you’ve got to play ball. If you have employees, you’re required to provide a safe work environment, and documenting how you do that is step one.

Best Practices (aka The Policies You’ll Thank Yourself for Later)

Even if you don’t have to create certain policies and practices, here are a few that make sense for most small businesses:

Employee Handbook
Yes, you can probably survive without one, but why would you want to? A good handbook spells out expectations, keeps everyone on the same page, and saves you from endless “can we wear jeans?” questions.

Paid Time Off (PTO) and Attendance Policies
Whether you have one employee or 100, clear PTO and attendance rules keep everyone sane. Without them, you’re just inviting confusion and it can be really hard to treat people equally.

Technology Use and Social Media Policies
In a world where everyone has a smartphone and a hot take, you need a policy about what’s okay to post on social media and what’s definitely not. Trust us, it’s better to have that conversation upfront.

Disciplinary Policies
You don’t need to go full corporate overlord, but having a roadmap for handling performance issues makes your life a lot easier. It’s not about punishment; it’s about setting clear expectations and giving employees a chance to succeed.

Why It All Depends

The truth is, there’s no one-size-fits-all answer to HR policies for small businesses. What’s required for a five-person bakery in Ohio might look completely different from what’s required for a 50-person tech startup in Texas.

That’s why it’s so important to:
- Know your industry and local laws.
- Work with a trusted HR partner (like, say, Peopleish) to figure out what you need and when.
- Review your policies regularly to keep up with changing laws and your growing business.

The Bottom Line

When it comes to HR policies, “it depends” isn’t just a cop-out—it’s the honest truth. But with a little guidance and a solid understanding of your obligations, you can create a policy framework that keeps your business compliant and running smoothly. And if you’re not sure where to start, Peopleish has your back. We’ll help you sort through the legal mumbo-jumbo, tailor policies to your unique needs, and set you up for success.

Because at the end of the day, the best policy is the one that works for YOU and your employees.