With an investment of a few hours, you can both protect yourself and your business - and - increase employee satisfaction and morale. At a minimum, your employee manual should list your expectations (start time, end time, appropriate dress, appropriate behavior, things you don't allow, etc.), vacation policies and sick time, and your rules on performance and hiring/firing. There is room for more and you can add as you go.
When an employee joins the company - give them a copy of the manual (it can be only a few pages, or a complete bound document). Include three tear out pages - one saying that they received and read the manual, one saying they will keep the company's proprietary information proprietary, and one covering a non-compete if they leave or are terminated. All three pages should be signed by the employee, returned to you, and kept in their personnel file (locked in a file cabinet - with access only by the owner). This should precede their first paycheck.
There are many web sites that will help you write a manual or even write one for you. There are also a few books on books.google.com - that you can view and read.
Take the time to create and maintain an employee manual. When your employee comes to you and says "what about ..." you can pull out your copy and give a consistent, well thought out, policy.

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