Hiring Your First Employee? Read This First

  • Published Jun 28, 2021

So you’ve started your business. And whether you worked on your own for a while first or you need help before you open, you’re ready to hire your first employee. While this is certainly an exciting experience, it can also be daunting for those who have never had to deal with the legal obligations, liabilities, expenses, and even paperwork that comes along with hiring an employee.

To help you better understand the hiring process, we’ve put together a list of legal and ethical considerations you should make when hiring your first employee.

1. Perform Background Checks

No matter what position you are hiring for, you should conduct a background check on applicants — or at the very least, those you plan to extend an employment offer to. A typical background check searches for confirmation of prior employment claims, workers’ compensation claims, criminal and incarceration records, drug tests, credit history, and driving record.

If you decide to hire a third party to conduct these checks, you are required by federal law to notify the person you are investigating in writing, and you must also notify them if they are denied the position due to disparaging information in this background check. Make sure that you choose a reputable company that has experience conducting these types of investigations and a history of providing quality checks.

2. Ask Ethical and Lawful Interview Questions

When it comes time to interview the applicants, you’ll need to be careful about which questions you ask during the interview. Whether in a written application or an in-person interview, it is illegal to ask about the applicant’s age, sexual orientation, marital status, religion, or race. Additionally, any questions pertaining to a physical, emotional, or mental handicap can only be asked if the applicant needs special accommodations for performing the job tasks.

The U.S. Department of Labor and the Equal Employment Opportunity Commission can provide more information on federal laws regarding interviewing and employment, including what types of questions you can ask.

3. Check Your Applicants’ References

Before you make the applicant a formal job offer, it’s important to check their references. Ask for at least three references. At least two should be professional and one can be personal. These references should be people who can speak to the applicant’s experience, work ethic, and professionalism while helping endorse the applicant’s character.

When contacting references, make your questions as objective as possible. When speaking to professional references, ask questions that relate specifically to the candidate’s job duties and performance. And re, forms of discrimination that are applicable to interviewing also apply to reference checks, so make sure your questions are ethical and lawful.

4. Gather Your Records Carefully

Before your new employee starts working, you’ll need to complete and process a number of records required by the U.S. Department of Labor. Here are the records that employers need to maintain on each employee for the length of their employment as stated by the Fair Labor Standards Act (FLSA):

  • Employee’s full name and social security number
  • Mailing address, including zip code
  • Birthdate if the employee is younger than 19
  • Sex and occupation
  • Time and day the employee’s workweek begins
  • Hours worked each day
  • Total hours worked each week
  • Basis on which employee’s wages are paid (weekly, bi-weekly, per hour, etc.)
  • Regular hourly pay rate
  • Total daily or weekly straight time earnings
  • 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 each payment

You’ll also need to get your tax paperwork and documents in order, which can include W4, W2, and I-9 forms, proof of workers’ comp insurance, and state and federal unemployment taxes. The best way to ensure that you have all the paperwork you need is to work with a lawyer, tax professional, or HR/business consultant who can help guide you through the sea of paperwork that comes with hiring your first employee.

5. Get the Right Insurance Coverage

All employers (with the exception of those in Texas) who have five or more employees are required to have workers’ comp insurance. There are some other insurance options that you may also consider, such as business liability insurance, disability coverage, and property insurance. Working with an insurance professional can help you ensure that you have the right types of coverage in place to protect your business from unexpected events and circumstances.

Let Us Take Care of Workers’ Compensation Insurance

Having trouble navigating workers’ compensation? We can help. Cerity is pushing the boundaries to bring small business owners an innovative approach to workers’ comp insurance without the hassle or complexity of traditional solutions.

We want to make it easy to get the insurance you need to protect your business. In just a few minutes, you can get a personalized quote for a workers’ compensation insurance policy. And you can start your protection as early as tomorrow.

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The information provided is intended to provide a general overview. This information is not legal advice and should not be relied on as such. Cerity® makes no warranties for the accuracy, adequacy, or completeness of the information provided, and will not be responsible for any actions taken based on the information contained herein. If you have legal questions or need legal advice, please consult an attorney.