Your company is growing. You now require more people to get your work done. This is often a scary prospect for some business owners. It means hiring employees and following all the rules associated with that decision. Employees are an asset to any growing company, but knowing how to manage the paperwork necessary to properly compensate and care for them is essential to running a business smoothly.
Considering you’ve got the incorporation of your company under your belt, the next step is to entertain the idea of hiring W-2 employees. There are key rules to know when interviewing, on-boarding and retaining new workers. Below we discuss 10 of the most important rules for your knowledge and application.
- Do not discriminate by race, gender or disability: Law prohibits employers from choosing between prospects based on certain attributes such as race, gender and disability. When interviewing a potential employee, consider the person as equal to another except based on skill and attitude. If an interviewee feels that discrimination has taken place, the company can be fined or sued by not hiring that person — so long as their qualifications equal that of the competition.
- Do not ask about age, religion, or gender identity in interview: It is against the law to also judge the qualifications of an individual based on age, religion, or gender identity. It is a general rule that these are pieces of information that should not be asked of the prospect in the process of hiring. Many companies find a way around this caveat by asking legal information that give away the true age, religious beliefs, or gender identity of a person. To counteract such acts, companies are required to inform interviewees that information revealing such personal details is optional.
- File a W-4, Verify Identity and Work Status: The difference between a contractor and an employee is that employees become registered with the federal and state governments as taxable and gainful workers for a company. Therefore, it is necessary to keep a completed and signed W-4 (available from the IRS) on file. In that process, you will be required to verify the new employee’s identity and work status. This is usually done with a US issued driver’s license and running a check on the worker’s social security number. While it is possible to hire an employee that is not a US citizen, there are additional procedures to follow to initiate the hiring process.
- Conduct a background and credit check only with written permission: Potential hires go through many steps in a hiring process, including a common background and/or credit check. The key here is to inform them of your intent to research their criminal and credit history and get a signed consent to pull the information. Simply walking into a courthouse and pulling the records, which are usually publicly available, is a breach of confidentiality when employment is being considered. By giving advanced notice, it is also possible to get an explanation of any activity that may raise red flags to a corporation.
- Pay for and schedule drug testing upon written consent: Most companies conduct drug testing on new hires for the purposes of promoting a drug-free work environment. However, it is required by law that companies pay for and schedule the drug test with a facility local and reachable by the new worker. In addition, the drug test must be done with the new hire’s consent. However, it is allowable to deny employment if the new hire refuses to complete the drug test or does not pass it as a “clean” employee. Since this is common practice, it is an expense that a company should consider in the overall hiring process since on occasion new hires do not pass and the cost must be incurred again for another new hire test.
- Provide employment policies and get signed agreement: All companies should have an employee manual with policies and procedures related to scheduling, contacts, dress codes, payment and conduct in the workplace. This manual protects both the employee and the corporation from misunderstandings over aforementioned topics. This manual should be read in its entirety and signed by the new hire as a sign of agreement to abide by the policies and procedures outlined. It is recommended that they sign or initial each page. This manual can contain sensitive or personalized information like salary or hourly wages, commission structures, and specific accommodations agreed upon. For that reason, the time and expense of customizing a manual for each employee may be an ongoing expense.
- Identify tax write-offs for disabled or military veterans: Companies often include in their hiring decision the tax credits that come for hiring a person who has been disabled or is a military veteran. There are even benefits for hiring someone who has been on a state assistance program. Investigating the advantages is clearly a great commitment to eliminating discrimination in the workplace. Therefore, it is legal to ask these questions on a hiring survey so long as the information is optional for the potential hire to provide. Keep in mind that the person who receives this information must keep it as sensitive and not share it with managers or other employees.
- Determine if applicant needs accommodations to conduct work: The disabled individual can still be a viable employee by making accommodations for an ailment or disorder. This could be as simple as creating an ergonomic work area or as complicated as becoming wheelchair accessible. It is a service to the community to spend the extra dollars to hire such individuals and, therefore, should be considered in the overall budget. Keep in mind that it is against the law to discriminate against a disabled individual when their qualifications are equal to or greater than that of another potential hire.
- Enroll in Workman’s Compensation for withholding: It is a federal policy that all companies contribute to Workman’s Compensation at a state level. This protects the employee in the case of injury on the job. Learning the requirements of your particular state will go a long way to ensure you are fully compliant with state and federal statutes.
- Withhold state and federal taxes and familiarize yourself with filing deadlines: The biggest responsibility you have is to properly withhold monies earned by employees at the federal and state level to cover the taxes for each agency. This money is deposited either on a monthly or quarterly basis and ensures that employees do not owe the governments at the end of each fiscal year. You can find the federal tax rates on the IRS website.
While there is certainly more to know about business, these 10 key rules will go a long way to ensuring that your hiring process is painless and error-free. Keep in mind that the more employees you hire, the greater the need for a Human Resources professional. Consider hiring the essential employees to cover such things as on-boarding and taxes.
If you’d like to access additional info about managing your company, take a look at our resources on Managing Your Company for more useful information.
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