|
Hiring
New Workers: 10 Regulatory Compliance Steps
Business is booming, and profits are on the rise. As the business owner,
you could not be happier! But, there is one nagging element that is
becoming hard to ignore: as your workload continues to increase, so
does your need for help.
With all the new business start-up resources available online, it is
relatively easy to develop a systematic approach to recruiting quality
workers. In addition, you also need to fully understand how state and
federal requirements affect your business when you become an employer.
To help ensure compliance with state and federal requirements, follow
these ten steps:
Step 1: Employer Identification Number (EIN): Before
you hire any employees, you will need to obtain an Employment Identification
Number, also known as an EIN. An EIN is obtained from the Internal Revenue
Service (IRS); either via mail or online by visiting www.irs.gov.
You will need an EIN to report employee information to the IRS, and
to state agencies.
Step 2: Employee Tax Withholding: As an employer,
you are required to keep documented records of all employment taxes
you file for a minimum of four years. You will need to issue and retain
records of the following:
- Federal Income Tax Withholding (W-4): Your employees are required
to submit a completed W-4 form on or before their first day of employment.
All employee W-4 forms must be submitted to the IRS.
- Federal Wage and Tax Statement (W-2): Every year, you must submit
a completed W-2 form to the IRS for each employee who is paid a salary,
wage, bonuses, tips, or other form of compensation.
- State Taxes: Depending on where your employees are geographically
located, you may be required to withhold state income taxes from employee
paychecks.
Step 3: New Hire Reporting: As mandated by The Personal
Responsibility and Work Opportunity Reconciliation Act (PRWORA), all employers
are required to report new hires to their state directory within 20 days.
This is a requirement for both new hires and rehires. Step 4: Workers’
Compensation: All businesses with employees (and contractors) are required
to obtain workers’ compensation insurance. Research carriers, and purchase
coverage from an agent authorized to write insurance policies in your
area.
Step 5: Verify Employment Eligibility:
As an employer, you must verify that new employees are authorized to accept
employment within the U.S. Regardless of citizenship status, all employees
must complete and submit the U.S. Citizenship and Immigration Services
(USCIS) Form
I-9 to verify their employment eligibility within 3 days of hire.
When you receive the pertinent documentation from your new employee, you
must accept it if the information appears to be genuine. You are required
to retain documentation records for each employee for three years or one
year after employment is ceased, whichever comes first.
E-Verify is a free and voluntary service that provides a viable, electronic
solution for employment eligibility verification compliance. If you plan
to use E-Verify in your workplace, you are required to post mandatory
notices including: The
Department of Homeland Security Anti-Discrimination Notice and the
E-Verify Notice.
Step
6: Unemployment Insurance: In most cases, employers are required
to pay Unemployment Insurance Taxes (UI). UI is a federal program mandated
by the U.S. Department of Labor that provides temporary payments for workers
who become unemployed through no fault of their own. If you are required
to pay UI taxes, then you will need to register your business with workforce
agency in your state.
Step 7: Disability Insurance:
Employers who operate in California, New York, New Jersey, Hawaii, Rhode
Island, or Puerto Rico are required to carry disability insurance. Disability
insurance provides payment to workers unable to work due to a non-work
related disability, such injury, illness, pregnancy, and so forth.
Step 8: Filing Taxes: Keep in mind that when you
file taxes for your business, there are different rules to follow if you
have employees. To learn about requirements, visit www.irs.gov.
In addition, note that requirements for state and federal tax filing may
vary depending on your industry.
Step 9: Enforce Standards:
By law, employers are required to post labor law requirements in a workplace
common area frequented by workers. Depending on the nature of your business,
this may include posting bilingual state and federal Complete Labor Law Posters. If you operate a business with a virtual office,
mail or email employees requirements, or post requirements in an online
work area.
In general, all employees have rights within the workplace. In addition
to labor laws, employees also have health and safety rights, equal opportunity
rights, and so forth. Conduct the necessary training, and post requirements
so your workers thoroughly understand their rights.
Step
10: Employment Preparation: Once you have completed all the
necessary paperwork and insurance obligations required to hire new workers,
it is time to create and outline the rules, regulations, and standards
that will shape your workplace. For example:
- Recordkeeping: As an employer,
make sure you keep detailed employee records including labor and tax
information, as well as performance and training progress.
- Employee Handbook: Create an employee handbook for your employees
that outlines items such as “at-will” employment (where applicable),
employment classification, benefits, time-off, performance, workplace
safety (see below), employee records, and ending employment.
- Workplace Safety: Create
and implement a workplace health and safety program for workers within
your organization. For more information, visit New
Business OSHA Checklist, or visit www.osha.gov.
Overview:
Although it may seem overwhelming at times, it is relatively easy to get
in compliance with state and federal regulations when hiring new employees.
Make it a point to thoroughly understand and comply with new-hire requirements
from the beginning. As necessary, implement a regulatory checklist to
ensure all of your bases are covered during the new-hire process. The
last thing you want to deal with is regulatory incompliance hurdles when
you are trying to grow your business.
This article is designed
to offer an informative guideline of regulatory requirements when hiring
new employees. For more precise information on individual circumstances,
seek the appropriate legal counsel.
<< Back to New
Business Start-up page
|
|
|
Live Chat
