Hiring Your First Employee

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Many visitors to YourEmployeeHandbook.com are preparing to hire their company’s first “real”, that is, non-family, employee. Hiring your first employee can be overwhelming. You may not know where to begin or what ou must cover in order to avoid potential legal and financial liabilities.

We’ve listed a few of the most critical steps are listed below, however, when hiring for the first time, review your state’s employment regulations with your business advisor and tax specialist to avoid employment pitfalls.

When hiring, first obtain an employer identification number from the IRS. Download the EIN form from the IRS website at www.irs.gov.

With employees, you will have to pay state unemployment compensation taxes. These payments go to your state’s unemployment compensation fund, which provides short-term relief to workers who lose their jobs. Each state has a different way of handling unemployment compensation reporting. The Employer’s Poster Kit included in Your Employee Handbook includes a comprehensive 50-state listing of contact information for state unemployment offices.

You’ill need to withhold a portion of each employee’s income and deposit it with the IRS, as well as making Social Security and Medicare tax payments. The IRS has a special site for employers at www.irs.gov/businesses. Download IRS Publication 15, Employer’s Tax Guide, which is a very helpful guide.

You must also comply with the requirements of the Occupational Safety and Health Act or OSHA to ensure a workplace free of hazards, train workers on safety regulations, notify government administrators about serious workplace accidents, and keep detailed safety records. Rules vary depending on the type of industry. Go to OSHA’s website for specific information on your industry at www.osha.gov. Once you’ve researched OSHA’s requirements, you can use the basic Safety  Program included with Your Employee Handbook to document your safety efforts.

Many federal and state government agencies require you to post notices providing information on worker rights for your employees. For information on the posters you are required to post, visit the Department of Labor website at www.dol.gov or refer to the Employer’s Poster Kit included with Your Employee Handbook.

For each employee you hire, create a file in which to keep job-related documents, such as job applications, employment offers, IRS Form W-4, performance evaluations, and sign-up forms for employee benefits. Medical records should be kept in a separate, confidential file, in a locked cabinet. You also need to keep I-9 Forms, which document an employee’s immigration status, in separate files and save the documents for at least one year after the employee has separated from your company. These forms, and many other HR forms, are available in the Companion Forms publication, included with Your Employee Handbook.

It is also is an excellent idea to provide a copy of Your Employee Handbook to each new (and existing) employee. Make it clear that employment with your company is “at-will”, and provide the new hire with a copy of the Handbook Acknowledgement Form to sign, and return to be held in their file.

These are a few of the critical first steps employers need to take when hiring employees. Following these steps will help reduce or eliminate problems with employee discipline, terminations and lawsuits in the future.

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