Zana Tomich
Dalton & Tomich, PLC
Dalton & Tomich, PLC
Most businesses don’t realize exactly when they stop operating like a startup and start functioning as an established organization. There is no announcement, no line on the calendar. The shift usually happens quietly, often right around the time the company prepares to bring on its tenth employee.
Why focus on ten employees? There is no federal employment law that suddenly takes effect at the ten-employee mark. The significance is practical, not statutory. Once a business grows beyond a handful of people, informal management stops working. Founders are no longer part of every conversation, decisions are made without shared assumptions, and small inconsistencies can create real legal exposure. Wage and hour issues become harder to monitor, confidentiality risks expand, and HR complaints often appear for the first time when a business reaches eight to twelve employees. In short, ten employees is the point where a company becomes complex enough that written policies move from optional to essential.
At this stage, a founder’s instincts and a few verbal ground rules are no longer enough to keep people aligned. Employees begin making decisions without the benefit of overhearing the leadership team. Departments form, roles blur, misunderstandings multiply, and the business faces risks that did not exist when four people shared a room and improvised their way through the day.
This is the moment, before employee number ten walks through the door, when every small business should put three foundational policies in writing. The goal is not to become “corporate.” The goal is to preserve stability, fairness, and clarity as the company grows.
—————
1. A clear, modern employee handbook. (Because “we talked about it once” is not a policy)
Many small-business owners believe they do not need a handbook because “everyone knows how we operate.” That may work for the first few employees who learned the business while sitting next to the founders. Once the company reaches ten employees, people no longer learn by osmosis.
A strong handbook does not need to be lengthy. It should clearly address the issues that most often create tension, including:
• How employment works, including an at-will statement;
• Standards of conduct and what will not be tolerated;
• How performance concerns and complaints are handled;
• Attendance, scheduling, and time-tracking expectations;
• Technology and cybersecurity requirements;
• How time off actually works;
• A simple, safe process for raising concerns without retaliation.
The value of a handbook is not the document itself. It is the consistency it provides. When a difficult situation arises and an employee insists “no one ever told me that,” the handbook becomes your record, your clarity, and your protection.
—————
2. A robust confidentiality and trade-secret policy (Because your business is worth protecting long before you are big enough to defend it)
Every business has information someone else would love to access. This includes customer lists, pricing strategies, sales processes, vendor relationships, product formulas, software code,
operational methods, and market positioning plans.
Small companies are particularly vulnerable because they often rely on trust and informality. Courts, however, do not protect trade secrets based on trust. They protect them based on the steps a company takes to keep information confidential. If you do not treat something as proprietary, you cannot credibly object when someone walks out with it.
A well-drafted confidentiality and trade-secret policy defines what is confidential, who may access it, how it must be handled, and the consequences for misuse. It also provides a legal foundation for action if an employee attempts to take shortcuts or a competitor tries to capitalize on your work.
With non-compete agreements rapidly disappearing across the country, this policy has become one of the few remaining tools available to safeguard a business’s competitive advantage.
—————
3. A Code of Conduct that reflects your culture (Not a generic list of corporate clichés)
Culture is what keeps a small business cohesive during growth. When the team is tiny, everyone absorbs the founder’s values simply by being in close proximity. As the company expands, that shared understanding disappears unless someone puts it in writing.
A Code of Conduct is your blueprint for how people interact. It should not sound like a template pulled from a corporate HR manual. It should reflect your voice and express the norms you expect your team to follow.
A practical and meaningful Code of Conduct addresses:
• Expectations around communication;
• Standards for professionalism and respect;
• How disagreements should be approached;
• When and how decisions are escalated;
• What accountability looks like;
• What “respecting the team” means in your environment.
This is not about micromanaging. It is about giving new hires a clear path to success, reducing unnecessary friction, and preserving the culture you worked hard to build.
—————
Why these policies matter before you reach 10 employees
Crossing the 10-employee threshold signals three major chances:
1. Legal exposure expands quickly. Each new hire brings additional HR, wage-and-hour, and confidentiality risks.
2. Culture becomes more fragile. A single new employee can shift the identity of a small business.
3. Consistency becomes essential. What once felt like flexibility can quickly be misunderstood as favoritism or unfairness.
These policies create the guardrails that allow a company to grow without losing stability. They protect your brand, your people, and the business you have worked so hard to build. I have worked with many companies that waited until a crisis forced them to put policies in place. Every one of them later said the same thing: “We should have done this earlier.” The businesses that thrive are the ones that prepare before the pressure hits. Employee number 10 is your early warning bell. Put these policies in place now, and your future self will thank you.
Why focus on ten employees? There is no federal employment law that suddenly takes effect at the ten-employee mark. The significance is practical, not statutory. Once a business grows beyond a handful of people, informal management stops working. Founders are no longer part of every conversation, decisions are made without shared assumptions, and small inconsistencies can create real legal exposure. Wage and hour issues become harder to monitor, confidentiality risks expand, and HR complaints often appear for the first time when a business reaches eight to twelve employees. In short, ten employees is the point where a company becomes complex enough that written policies move from optional to essential.
At this stage, a founder’s instincts and a few verbal ground rules are no longer enough to keep people aligned. Employees begin making decisions without the benefit of overhearing the leadership team. Departments form, roles blur, misunderstandings multiply, and the business faces risks that did not exist when four people shared a room and improvised their way through the day.
This is the moment, before employee number ten walks through the door, when every small business should put three foundational policies in writing. The goal is not to become “corporate.” The goal is to preserve stability, fairness, and clarity as the company grows.
—————
1. A clear, modern employee handbook. (Because “we talked about it once” is not a policy)
Many small-business owners believe they do not need a handbook because “everyone knows how we operate.” That may work for the first few employees who learned the business while sitting next to the founders. Once the company reaches ten employees, people no longer learn by osmosis.
A strong handbook does not need to be lengthy. It should clearly address the issues that most often create tension, including:
• How employment works, including an at-will statement;
• Standards of conduct and what will not be tolerated;
• How performance concerns and complaints are handled;
• Attendance, scheduling, and time-tracking expectations;
• Technology and cybersecurity requirements;
• How time off actually works;
• A simple, safe process for raising concerns without retaliation.
The value of a handbook is not the document itself. It is the consistency it provides. When a difficult situation arises and an employee insists “no one ever told me that,” the handbook becomes your record, your clarity, and your protection.
—————
2. A robust confidentiality and trade-secret policy (Because your business is worth protecting long before you are big enough to defend it)
Every business has information someone else would love to access. This includes customer lists, pricing strategies, sales processes, vendor relationships, product formulas, software code,
operational methods, and market positioning plans.
Small companies are particularly vulnerable because they often rely on trust and informality. Courts, however, do not protect trade secrets based on trust. They protect them based on the steps a company takes to keep information confidential. If you do not treat something as proprietary, you cannot credibly object when someone walks out with it.
A well-drafted confidentiality and trade-secret policy defines what is confidential, who may access it, how it must be handled, and the consequences for misuse. It also provides a legal foundation for action if an employee attempts to take shortcuts or a competitor tries to capitalize on your work.
With non-compete agreements rapidly disappearing across the country, this policy has become one of the few remaining tools available to safeguard a business’s competitive advantage.
—————
3. A Code of Conduct that reflects your culture (Not a generic list of corporate clichés)
Culture is what keeps a small business cohesive during growth. When the team is tiny, everyone absorbs the founder’s values simply by being in close proximity. As the company expands, that shared understanding disappears unless someone puts it in writing.
A Code of Conduct is your blueprint for how people interact. It should not sound like a template pulled from a corporate HR manual. It should reflect your voice and express the norms you expect your team to follow.
A practical and meaningful Code of Conduct addresses:
• Expectations around communication;
• Standards for professionalism and respect;
• How disagreements should be approached;
• When and how decisions are escalated;
• What accountability looks like;
• What “respecting the team” means in your environment.
This is not about micromanaging. It is about giving new hires a clear path to success, reducing unnecessary friction, and preserving the culture you worked hard to build.
—————
Why these policies matter before you reach 10 employees
Crossing the 10-employee threshold signals three major chances:
1. Legal exposure expands quickly. Each new hire brings additional HR, wage-and-hour, and confidentiality risks.
2. Culture becomes more fragile. A single new employee can shift the identity of a small business.
3. Consistency becomes essential. What once felt like flexibility can quickly be misunderstood as favoritism or unfairness.
These policies create the guardrails that allow a company to grow without losing stability. They protect your brand, your people, and the business you have worked so hard to build. I have worked with many companies that waited until a crisis forced them to put policies in place. Every one of them later said the same thing: “We should have done this earlier.” The businesses that thrive are the ones that prepare before the pressure hits. Employee number 10 is your early warning bell. Put these policies in place now, and your future self will thank you.
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