Hiring Tips for Small Businesses
Whether you are an owner of a small company looking to hire your first employee or a large corporation with thousands of employees, there are some key items that you should be thinking about when hiring employees. Some pieces pertaining to new hires are required by the federal government and others are simply in your company’s best interest to perform.
One of the first things you must do when hiring a new employee is complete Form I-9. The federal government requires that Form I-9 be completed by a new employee and the employer no later than the first day of employment. This form is required in order to verify the identity and employment authorization of individuals hired within the United States and must be completed by both citizens and noncitizens. You may access the most current version of Form I-9 and instructions explaining how to properly complete this form via the U.S. Citizenship and Immigration Services website located at https://www.uscis.gov/. When completing the form, the employee must provide the employer with two forms of identification. Acceptable forms of identification are denoted on the form. Common forms of identification are a Driver’s License and a Social Security Card or Birth Certificate. There are some types of identification that will exhaust the need for a second form of identification. The most common identification document of this nature is a U.S. Passport. As such, if a new employee presents a U.S. Passport, it is considered sufficient identification documentation and a second form of identification will not be required.
Another document which requires completion by a new employee is Form W-4. A new employee must complete this form in order to ensure that their employer withholds the correct federal income tax from their pay. The IRS recommends a new Form W-4 be completed each year and when personal or financial situations change though it is not required. With this in mind, it is possible that an employee could complete this form multiple times throughout the year. The current Form W-4 is accessible via the Internal Revenue Service’s website located at https://www.irs.gov/.
In addition, I would like to draw your attention to the following items which I believe are in your company’s best interest to consider when thinking about federal, state and local government regulations with regard to employees.
- Employee Classification: Be sensitive to how you are classifying employees. If you misclassify an employee as an Independent Contractor (self-employed) to avoid things like Worker’s Compensation Insurance and employee payroll taxes, you could be liable to pay back payroll taxes and benefit costs on top of fines and penalties. It is critical that business owners correctly classify individuals providing services as employees or independent contractors. The Internal Revenue Service (IRS) provides business owners with guidance on how to properly classify individuals via their website located at https://www.irs.gov/.
- Compensation: The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime, recordkeeping, and youth employment standards for employees. It sets federal minimum wage standards for eligible nonexempt workers and requires overtime pay at a rate not less than one and one-half times the regular rate of pay after 40 hours of work in a workweek. Many states also have minimum wage laws, therefore, employers are subject to both federal and state law though the employee is entitled to the higher of the two minimum wage standards in the event the minimum wage standards differ between federal and state. Ensuring compliance with regard to pay under FLSA is critical. In order to learn more about FLSA regulations, you may visit the United States Department of Labor website located at http://www.dol.gov/.
While I’ve noted some of the critical pieces that employers should be thinking about when hiring a new employee, there are other variables that should be considered like an Employee Handbook where things like company policies, expectations and employee benefits are denoted. Many successful small business owners understand how important relationships are to their business. In the event a small business does not maintain a dedicated Human Resource team on staff, it is important to note that there are resources available which offer partnership to small businesses relating to payroll, company policies, recruiting, technology, employee benefits, etc.
I hope you have found this article helpful. In the event you have questions or wish to discuss further, you are welcome to contact me directly by phone at (952) 476-7103 or email at Rachael_Myers@copelandbuhl.com.
Rachael Myers is the Human Resources Manager at Copeland Buhl & Company. She has over 10 years of human resources experience and is a certified human resources professional.