TOP DRAWER ARTICLE

Hiring Rules
by
HL Carpenter

Thinking of hiring new employees? Be aware of these federal and state requirements:

• Equal opportunity. Federal laws prohibit discrimination in employment decisions based on race, color, religion, sex, age, ethnic/national origin, disability, or veteran status.

• Work eligibility verification. You’re required to obtain social security numbers from your employees, and have them complete Form I-9, Employment Eligibility Verification and Form W-4, Employee's Withholding Allowance Certificate.

• Federal payroll returns. Once your employees begin work, you’ll need to file tax returns reporting wages, federal income taxes, social security taxes and Medicare taxes. The returns are typically due on a quarterly basis. Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, is due annually, as is Form W-2, Wage and Tax Statement.

• State payroll returns. States generally also require quarterly payroll reporting. In addition, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 calls for a report to be filed on newly hired employees within twenty days of the hire date.

• Payroll tax deposits. Depending on the amount of your liability, you may have to deposit federal payroll withholdings on a monthly (or more frequent) basis.

• Workplace safety. You have a duty to provide your employees with a safe workplace and to comply with rules set out by the Occupational Safety and Health Administration.

• Workers' Compensation Insurance. This insurance is usually required to protect both you and your employees in case of injury on the job. You can self-insure, purchase coverage through a commercial carrier, or apply through your state workers' compensation insurance program.

• Workplace notices. Your employees must be informed of certain rights under current labor laws, so you’ll have to post applicable posters or notices in a conspicuous place.

You may be subject to other requirements as well, depending on the type of business you own and where you are located. As always, check with your tax and/or legal advisor to make sure you’re in compliance with all the rules applicable to your situation.

Originally published November 2008.

Last update: December 30, 2009