Understanding Hiring Laws Before Acquiring Your First Employee
As a new startup or entrepreneur, you may have reached a stage of completion towards the formation of your business.
The implementation and undertaking to legally establish your business strategy are coming to fruition through your development plans quite suitably.
With much anticipation, you may be eager to procure employees towards the servicing of your clients and business product.
Before you materialize this portion of your business plan, you should consider the extended legal requirements surrounding the hiring process of any employee in your company.
There are important legal documents and methods that you must practice prior to selecting and securing an operative team of employees.
Generating Employee Records
The Department of Labor has established laws that require your business to possess and maintain written files of the employee data. These records include:
- Personal Information, including employee's full name, date of birth, social security number, mailing address, and occupation;
- Salary and frequency of compensation;
- Payroll deductions from each paycheck;
- Employee work schedule;
- Records of salary payment, including dates and amounts.
Establish Your Filing Method Before Hiring
Additionally, it is mandatory to regularly update and maintain employee records. This can become a very intricate and complex mission. Therefore, it is essential to research the method of human resources and software that is best suited for your business.
Obtain W-4 Forms From New Employees for Tax Reporting and Verification
Withholding the appropriate quantity of taxes from your employee's salary empowers your business to meet legal tax requirements with the State and Federal governments.
Employer Identification Number
Did you obtain an Employer Identification Number (EIN) during the formation stage of your business? This is an important requirement for you as the startup or business owner if you are hiring employees. State and Federal tax forms will require an EIN from your business, essentially with:
- Reporting an employee's withholding to the IRS;
- Transferring tax funds to the IRS;
- Paying Unemployment Insurance Tax and FICA;
- Completing State Income Tax forms for an employee, when applicable.
Reporting Your New Employee to the State
Based on average State laws, as a business owner, it is a requirement to report your new employee to the state within 20 days of hire. Most states use this information to ensure the employee is:
- Compliant with any unemployment funds being dispersed;
- Meets and child support law requirements.
Furthermore, practicing this method of reporting safeguards your legal compliance and reporting requirements.
Obtain I-9 Forms Verify Employee's Legal Authorization to Work
Although the I-9 Form is not a requirement for submission to the State or Federal governments, it should be obtained for your records in the event that authorities need to examine the employee's identity and eligibility to work in the United States. The instructions for the I-9 Form explain which documents and records are needed in order to complete the forms legally and successfully.
Labor Law Posters
Based on State and Federal laws, it is a requirement to place labor law notices in areas of your worksite that are readable and accessible to your employees. It is essential to ensure that your newly hired employees have access to these areas where the notices or posters are displayed.
Purchase Worker's Compensation Insurance
While the State of Texas has no requirement for most private employers to obtain Worker's Compensation Insurance, it is noteworthy to understand whether your business is an exception. The Posey Law Firm, PC specializes in Labor and Employment Law, helping new business owners understand their requirements. Laws requirements vary by state, dimension or size, and the industry of your business. Therefore, it is imperative to understand which laws apply to you as the business owner prior to hiring your team.
Securing the legally required documents and information from your new employee stems from State and Federal laws in place. Moreover, it is crucial for your newly established business to remain compliant and supported by professional organization management in its early stages. Consult with a business attorney that is acquainted and well-versed in business law in advance of hiring employees to build your establishment.
ABOUT THE AUTHOR: Jake Posey
Jake Posey, at The Posey Law Firm, PC, has a powerful network of affluent and experienced lawyers and legal team experts to help you meet the requirements of employee hiring practices that will best protect your company.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.