Hiring Your First Employee? Don’t Forget These Six Essential Tips
If you have started your own business and are looking to hire your first employees, it can seem as though there are countless hoops to jump through to make sure you are doing everything correctly. Fear not! This blog post will take you through the ins and outs of things you might want to consider when hiring your first employee, and how Carbon Law Group can assist your business’s needs as you continue to grow.
1. Get an Employer Identification Number (“EIN”):
- The IRS requires every business with employees to have an EIN. An EIN is a unique nine-digit number that acts as a business’s social security number, which can be used on tax returns and other documents a business submits to the IRS. The IRS requires businesses to have an EIN so that the business can be identified for tax purposes.
- Obtaining your company’s EIN is one of the many services that Carbon Law can provide when you are forming your entity.
2. Register with your State Employment Development Department
- No matter the state, when you hire an employee you need to make sure you pay employment taxes.
- If you use a payroll service provider, you should be able to find one that registers for you every time you onboard an employee.
- We like Gusto (referral link), but there are many others out there you can explore
3. Define Your Employees’ Roles:
- For growing businesses, it is common to have employees that operate in different roles throughout the day based on what’s needed. However, before you bring on an employee it is critical to understand your company’s needs and how this new employee can meet these needs.
- It is important to contemplate this employee’s day-to-day responsibilities as well as how their position will continue to help your company grow. Additionally, you must determine what educational/professional background will best assist you in meeting your goals.
- A well-written job description should:
- include the essential functions that an individual must be able to perform, with or without reasonable accommodation, to be qualified for the job;
- take into account the strategic goals of the employer and the applicable hiring department, including any upcoming changes that may impact the role; and
- cover any gaps or core skills that are missing from the applicable hiring department.
- help an employer clearly communicate the expectations to its prospective employees what their duties and responsibilities are and provide the basis for employee performance reviews, goal setting, development plans, bonuses, and salary increases.
- is also essential to prevent increased litigation risks by undermining the employee’s position in wage and hour, discrimination claims, and incorrectly classifying for exemption status under the federal Fair Labor Standards Act (FLSA).
- Some of the most serious class action lawsuits have been the result of an employer’s misclassification of non-exempt employees as though they were exempt from California overtime. Carbon Law has the professional knowledge to help you make the correct classification for your prospective employees and avoid potentially costly lawsuits.
4. Prepare for the Recruiting and Screening Process:
- It is important to minimize exposure to discrimination claims by appropriately handling candidate:
- employment applications;
- job interviews; and
- background checks.
- Now that you have made it to the vetting process, it is not only important to determine whether a candidate has the necessary skills to perform their job, but also whether they would be a good fit for your company’s values and culture. As your company continues to grow it is important to stay true to the values and missions that you have set out to accomplish. Making sure that you are hiring individuals that reflect these same values will be crucial to the long-term success of your company.
- What to ask:
- How their education/experience will apply to this role?
- Areas where they have struggled in the past and how they have approached these areas
- Why are they interested in working for your company?
- What are they hoping to learn?
- Do they work better in teams or by themselves?
- What not to ask:
- Check out Pankaj’s video on this topic
- Exercise caution when describing the job. Avoid promises of job security, future promotions, or other statements that arguably alter the at-will character of the position. It is permissible to be positive and describe the company’s expectations and anticipated future of the role but avoid over-selling the position or making guarantees.
- Limit pre-employment inquiries, including interview questions, to job-relevant information. Avoid trying to make personal connections. Doing so may reveal information about the candidate that is inappropriate for consideration in employment decisions, such as their membership in a protected class, family status, or participation in lawful outside activities.
- An employer must communicate expectations (such as a policy against salary history inquiries) to recruiters and other third parties involved in the pre-employment process, and ensure that any pre-employment testing, such as skills, physical strength, and drug tests, complies with applicable law, keeping in mind that some tests may only be allowed after making a conditional offer of employment and will require the prospective employee’s written authorization.
5. The Offer Letter/Employment Agreement:
- Once you have found your ideal candidate, it is now time to offer them a formal employment offer. This offer should outline their responsibilities, pay rate, and expectations of the employee going forward. It is important to note that there should be provisions set in place for possible promotions or raises based on an employee’s performance. The employment offer should also emphasize that the relationship between the employee and the employer is “at-will.”
- The employee agreement could also be a valuable tool for laying out agreements over a trial or orientation or probationary period with the employee, agreements over any tests or background checks the offer is contingent upon, and any requirements related to sign-on bonuses.
- The offer letter/employment agreement can also help preserve an employer’s competitive advantage by creating enforceable agreements that:
- protect trade secrets;
- protect confidential information; or
- impose covenants not to solicit.
6. Consider an Employee Handbook:
- Creating an employee handbook can seem like a daunting task for an employer. Some employers have few, if any, written policies in place when they begin the process. Although there is no federal law requiring private employers to provide handbooks to their employees, there are numerous reasons for employers to do so, including:
- A handbook provides an opportunity to formally welcome new employees, introduce the organization and explain expectations.
- Grouping various employment policies together in a handbook makes it easier for an employer to ensure that each employee receives copies of all relevant policies.
- A handbook is a centralized place for employees to look for answers to common questions such as how often employees are paid.
- Handbooks and signed acknowledgments can effectively assist in an employer’s legal defense.
- The employee handbook should contain the standard procedures and company policies that employees need to know about for their work. These handbooks are especially valuable because they bring uniformity to the expectations and requirements of working at your company. It helps set the tone for employees going forward and will serve as a foundation for your company’s practices as you continue to grow.
How we can help
It is difficult to navigate through the numerous legal requirements to draft an employee handbook that truly reflects your business’s needs and comply with all the applicable laws. Carbon Law can assist your business to create an employee handbook that complies with applicable current laws, uses a positive and professional tone that matches your Company’s culture and uses plain language to explain your company’s policies and procedures to your employees.