I've posted before and I will post again on the importance of putting policies and procedures in writing when hiring an employee. All documents should be reviewed by an attorney, even if you only have one employee. Your policies on sexual harassment reporting and general discipline procedures need to be covered. Not having a reporting system or general procedures in place can make you liable as an employer trying to correct behavior- even if the employee did something wrong.
I always suggest you have a lawyer review the handbook and ensure he or she includes a disclaimer stating clearly that the manual is in no way a legal contract. This way if you have to change a policy, you can and do so easily. Also, creating the handbook isn't enough. You have to have each employee sign a statement stating they have read the handbook, hold no questions about the policies and understand, agree and will abide by all the policies and procedures within it. I like for employees to receive and sign for new handbooks yearly, if not every six months months.
If you need help developing an employee handbook please contact me. I will be happy to send you personal suggestions before you have a legal review performed.