Written by Kandi Chapman, President at MBI Worldwide
Congratulations. You’ve started your own business. Now comes the time to hire your first employee. It’s not as simple as putting a “Help Wanted” sign in the window or taking out an ad in the newspaper. In fact, one estimate shows it costs about $4,000 to recruit, hire and train a new employee.
Your first step is to partner with a Consumer Reporting Agency that offers employment-screening services to conduct a thorough and compliant employment background check. MBI Worldwide is an accredited screening company and will quickly become your trusted source for employment screening. MBI offers training and education in best practices and hiring strategies.
Make sure the employment background check that you order more than verify previous employment history. Employment screening reports should also include a drug test. Make sure the drug screening company you use is staying compliant with all hiring regulations. It is now legal to use marijuana in some states, so be aware of the laws in relationship to the particular state that you are hiring in.
During the interview process there are some things off limits. Employers cannot ask about an applicant’s age, sexual orientation, marital status, religion or race. Questions about a person’s physical or mental impairments can only be asked if an applicant needs special accommodations for performing the job. There are a handful of federal laws to keep in mind.
Title VII of the Civil Rights Act of 1964, which covers discrimination or harassment on
the basis of race, religion, sex or creed.
The Age Discrimination in Employment Act of 1967.
The Americans with Disabilities Act of 1990.
The Family Medical Leave Act of 1993.
You can read more about these laws on the Equal Employment Opportunity Commission’s site.
Double check the candidate’s references. Remember there are things you have to be careful of asking during your research. Keep questions specific to the candidate’s job performance and information provided on the application or during the interview. You can not ask a reference about race, age, disabilities, national origin, religion or marital status.
Establish a salary and figure out whether the new hire will be a full-time or part-time employee. According to the U.S. Department of Labor part-time status goes to people who work 20 hours or less per week. Full-time is considered 30 or more hours. Categorizing an employee comes next. Doing it incorrectly can lead to fines and possible criminal charges against you. Choose one of the following categories.
Common-law employee: Someone who works for you, but you retain the right to control things like when and where the person works, the equipment used and where supplies are purchased.
Statutory employee: That’s an employee by statute and is allowed to report income and expenses as a business. The most common employees in this category are its officers, but it also includes such employees as:
- A full-time traveling salespeople who solicit orders from wholesalers, restaurants, or similar establishments on behalf of the company. The merchandise sold must be for resale (for example, food sold to a restaurant) or for supplies used in the buyer’s business.
- An agent-driver or commission-driver engaged in distributing meat, vegetables, bakery goods, beverages (other than milk), or laundry or dry cleaning services
- A home worker performing work on material or goods furnished by the employer
Statutory nonemployee: Direct sellers and licensed real estate agents who are treated as self-employed for all federal tax purposes fall into this category.
Independent contractor: This person works for themselves and often for more than one company. As an employer, you’re not required to deduct taxes or provide the same benefits as standard employees.
There are a dozen different records that must be maintained on each employee. You can learn more though the Department of Labor. But there’s a summary of the records needed.
- Employee’s full name and social security number
- Mailing address, including ZIP code
- Birth date, if the employee is younger than 19
- Sex and occupation
- Time of day and day of the week when employee’s workweek begins, hours worked each day, and total hours worked each workweek
- Basis on which employee’s wages are paid (weekly, bi-monthly, and so on)
- Regular hourly pay rate
- Total daily or weekly “straight time” earnings for each workweek
- Total overtime earnings for each workweek
- All additions to or deductions taken from employee’s wages
- Total wages paid each pay period
- Date of payment and the pay period covered by the each payment
Paperwork is needed for filing taxes too. Keep this list handy. If you need more details, visit the Internal Revenue Service.
- A W4 form to withhold the proper amount of federal income tax from a full- or part-time employee’s pay, once a year to your state and federal governments
- A W2 form to the Social Security Administration and a share of a full- or part-time employee’s Social Security payroll taxes (FICA) once a year to your state and federal governments
- An I-9 Employment Eligibility Verification form for every new hire
- Taxes on 1099 workers (independent contractors) either quarterly or once a year to the federal government
- The same forms must also be submitted to the your state’s department of labor or taxation
- Proof of worker’s comp insurance. Such a policy indemnifies a business against its legal liabilities towards accidental or fatal injuries sustained by employees during working hours. Although this is required by federal law, the administration of this benefit is at the state level.
- State and federal unemployment taxes, but only if (1) they pay wages to employees totaling $1,500 or more in any quarter of a calendar year, or (2) they employed at least one person during any day of the week during any 20 weeks in a calendar year, regardless of whether or not the weeks were consecutive. In some states, this is tied to a worker’s status as part time or full time, but you should contact your state workforce agency to learn the exact requirements.
You can read the specifics from the Small Business Administration. It’s important to follow these guidelines and stay in compliance with federal and state laws.
Also, check out MBI Worldwide’s Stay Sharp, HR Blog weekly, to stay current in legislation updates and HR trends!
Categorized in: Work
This post was written by Elevate, Inc.