What Should I Know When Hiring My First Employee?
Hiring your first employee is an exciting milestone, but it comes with important legal and compliance responsibilities. As a business owner in Pennsylvania, you must take key steps to ensure compliance with state and federal regulations.
Employee Classification
It is crucial to correctly classify your new hire as either an employee or an independent contractor. Misclassification can lead to serious legal consequences. Employees are entitled to benefits like workers’ compensation and unemployment insurance, while independent contractors are not. The distinction between the two is based on several factors, including how much control you have over the worker’s tasks and schedule. Misclassifying an employee as a contractor can result in hefty fines and penalties.
Paying Your Employee
You must comply with Pennsylvania’s minimum wage laws, which follow the federal minimum wage of $7.25 per hour. There are also overtime laws that require you to pay time-and-a-half for hours worked over 40 in a week. Ensure you are familiar with federal and state wage laws to avoid wage disputes.
Payroll taxes are another critical aspect of hiring your first employee. You are responsible for withholding federal, state, and local income taxes as well as Social Security and Medicare taxes. Failure to withhold and pay these taxes can result in penalties. Many small business owners choose to use payroll services to manage these obligations.
Employee Benefits
In Pennsylvania, most small businesses are required to provide workers’ compensation insurance. This insurance covers medical expenses and lost wages if your employee is injured on the job. Even if your business has only one employee, you must carry workers’ compensation insurance. Failure to do so can result in fines or even criminal charges.
You should also consider whether to offer additional benefits, such as health insurance, retirement plans, or paid time off. While these benefits are not always required, offering them can help you attract and retain talent. If you decide to offer health insurance, you must comply with the Affordable Care Act (ACA), which sets certain requirements for employers offering health plans.
Equal Opportunity Employment
Under federal law, you cannot discriminate against employees or job applicants based on race, color, religion, sex, national origin, age, or disability. Pennsylvania law adds additional protections for employees, such as prohibiting discrimination based on sexual orientation or gender identity. Be mindful of these laws when writing job descriptions, conducting interviews, and making hiring decisions.
Workplace Safety
Even small businesses must comply with workplace safety regulations. The Occupational Safety and Health Administration (OSHA) requires employers to provide a workplace free from recognized hazards. If your employee is working in an environment where safety is a concern, such as construction or manufacturing, you may need to provide specific training and equipment. Creating a safe workplace not only keeps your employees protected but also shields your business from liability.
Onboarding Your Employee
The onboarding process is a great opportunity to set the tone for your employee’s experience. Make sure you have all the necessary paperwork in order before your new hire’s first day. You will need to have your employee fill out a W-4 form for tax withholding purposes and an I-9 form to verify their eligibility to work in the United States. You must keep these documents on file as required by law.
Providing an employee handbook can also be helpful. This document outlines your company’s policies, procedures, and expectations. It can serve as a reference for your employee and help prevent misunderstandings down the line. Make sure your handbook includes information on important topics like workplace behavior, attendance policies, and how to request time off.
Setting Up Payroll
One of the most time-consuming tasks for new employers is setting up payroll. This involves paying your employees and ensuring that the correct taxes are withheld. If you are unfamiliar with the process, you may want to invest in payroll software or hire an accountant. Payroll mistakes can lead to tax penalties, so getting this part right from the start is worth it.
A Philadelphia Business Lawyer at Sidkoff, Pincus & Green P.C. Helps Protect Your Workforce
Hiring your first employee can feel overwhelming, but having the right legal guidance will make the process smoother. Speak with a Philadelphia business lawyer at Sidkoff, Pincus & Green P.C. about how we can help you. Contact us online or at 215-574-0600. Located in Philadelphia, we proudly serve clients in Pennsylvania and New Jersey, including South Jersey.