Hiring employees is a big step for any small business. Doing it right and complying with all state and federal laws and regulations is no small task and should be taken seriously.
Here are the main items to cross of your checklist:
Hiring without Violating any Laws
The recruiting, interviewing and hiring process alone is a minefield of potential legal problems.
As you may know, you are prohibited from discriminating against any applicant based on race, color, religion, sex (including pregnancy), national origin, age (40 or older), disability or genetic information. To learn more about prohibited employment policies, including advertising and hiring, see this publication, straight from the U.S. Equal Employment Opportunity Commission. If in doubt, this would be an area to consult an attorney.
Another often encountered issue is the use of background checks in making hiring decisions. Be aware that you cannot use everything you can possibly find about your potential employee. For more insight, see this Small Business Owner Background Check Guide.
Employment Eligibility Verification Form I-9
After you made the decision to hire a particular employee, you must complete Form I-9 to verify the employment eligibility and identity of that employee. The form does not have to be filed anywhere, but you must maintain the completed form in your files for three years minimum or one year after you fired the employee. There may be an inspection, in which case you have to produce these documents promptly, within three days.
New Hire Reporting
Within 20 days after the employee started working, you must report your new hire to the New York State Department of Taxation. It can be done on paper, Form IT-2104, to be mailed to New Hire Notification, P.O. Box 15119, Albany, New York 12212-5119 or you can do it online: www.nysnewhire.com.
Payment of Wages
There are lots of laws dealing with when and how to pay your employees.
Make sure you know how frequently you have to pay your employees (Article 6 of the Labor Law is a starting point) and maintain records that show the hours worked, gross wages, payroll withholdings and net wages paid each employee. This information also has to be given to the employee along with each payment (aka paystub).
Be very careful before deducting any money from an employee’s paycheck (other than tax and other withholdings authorized by law). Unless the employee agreed to the deduction in writing, it is illegal.
When you hire someone and then again each year before February, you have to give the employee a notice setting forth the basic terms of his or her employment, such as the amount of pay, the regular paydate, the employer’s information and so forth. For exact requirements, see the Department of Labor’s Guidelines. Also, the Department has very helpful forms to illustrate what information has to be on the paystub and what information must be in the annual notice. See here for a sample paystub andhere for a sample annual notice for an hourly employee.
Tax Withholding, Wage Reporting, Unemployment Insurance
For your own mental health, get a payroll service or a dedicated payroll department to deal with all required withholding and wage reporting requirements. Just briefly, you must withhold federal, state and local tax, pay the withheld tax to the government, pay employment insurance, pay Social Security and Medicare Taxes (FICA) and the Federal Unemployment Tax (FUTA). For detailed info on the New York State obligations, see the NYS Department of Taxation and Finance’s Publication 50, Employer’s Guide to Unemployment Insurance, Wage Reporting, and Withholding Tax, and for your federal obligations, see Publication 15, Circular E, Employer’s Tax Guide.
You must register for unemployment insurance, which can be done online. Once registered, you actually pay the insurance along with your quarterly state tax reporting on Form NYS-45.
Worker’s Compensation and Disability Insurance
You have to get worker’s compensation and disability insurance for each employee you hire. Workers’ compensation insurance provides help to employees injured or killed on the job. Disability Insurance provides help to employees who get sick or disabled off the job and unrelated to the job. You can get both insurances from a private insurer or from the NYS Insurance Fund.
For New York requirements as to posters in the workplace, see here: New York Posters
For federal posters, see here: Federal Posters
Not every poster applies to every business. Make sure you understand the requirements.