Then check with your state department of labor to make sure your handbook complies with the laws in your state. Keep the handbook up to date as laws change. If you have specific legal questions, a brief consultation with a lawyer should be sufficient to clear them up. Make sure your handbook doesn't promise more than you can deliver . Your handbook may be treated as a contract that can actually limit your right to fire employees.
Most large companies review and evaluate their employees periodically.
This is a sound management practice and one which many small companies should consider especially for new employees. Evaluating new employees periodically gives them a chance to improve if they're not performing well. If you later find it necessary to discipline or fire an employee, it won't come as a surprise to the employee. By putting your evaluations in writing and saving them in the employee's file, you normally have a credible history of documented problems you can use if an employee claims that he or she was fired for an illegal reason. Keeping a short note of what you told the employee and when can be helpful as evidence that you gave the employee a chance to improve before you fired him or her.