Tuesday, July 2, 2013

New Hires at Startups: A List of Documents Required to Hire Employees in New York

When searching for early helpers for your startup – you look for people who are determined, committed and can really make a contribution to your team.  Once you have decided who to hire, you should be prepared to complete a variety of forms and take multiple steps to comply with applicable federal and state employment-related laws.  Here, we attempt to summarize some of the employment forms new hires should fill out after they sign their offer letter and before they start working for you.  Disclaimer: this is not an exhaustive list, only a compilation of certain documents required federally and in NY state.  Keep in mind that this information changes periodically.  We encourage you to consult with your attorney and/or accountant for the updated documents.

Here it goes:

1.  At least a week prior to hiring your first employee, set up payroll.  ADP is great for small businesses.  

2.  You will need to register for and obtain unemployment insurance and workers' compensation insurance.  You can get workers' compensation insurance (it covers on-the-job injuries) from a private insurance company or through the New York State Insurance Fund.  Also, you will need to get disability insurance that covers off-the-job injuries and illnesses.  New York is one of a handful of states that requires all employers to get off-the-job disability insurance coverage for their employees.  This requirement applies even if you have only one employee, starting at the beginning of the second month of employment.

3.  On the first day, ask your new employee to fill out the W-4 Form.  Make sure you know your new employee's full name and social security number.

4.  On or before the commencement of employment (but after the acceptance of the job offer), ask your new employee to fill out Section 1 of the I-9 Form so that you can verify their employment eligibility.  This Form is updated annually, so make sure you use the most recent one.  The I-9 Form is meant to verify the identity and employment authorization of your potential employees, so all U.S. employers must fill it out.  Once the employee completes Section 1 of the Form I-9, you have three days from the day of actual hire to fill out Section 2 of the Form.  The Form must be handwritten and must be based on original documents, NOT copies.  You must keep the Form in your files for three years.  Here are links to some more information about the Form I-9: instructions and guidance.

5.  If you use investigative consumer reports to vet employees, you must have the potential hire fill out a Federal Fair Credit Reporting Act (FCRA) Consent.

6.  At the time of hire, and before/on February 1st of each subsequent year of employment, you must provide employees with written notice of several pieces of information, under NY Labor Law Section 195 (the Wage Theft Prevention Act). The employee must sign this notice, which includes: (i) employee’s rate of pay; (ii) whether the employee will be paid by hour, shift, day, week, month, salary, piece, commission or otherwise; (iii) whether the employee will claim any allowance as part of minimum wage (e.g., tip, meal, and lodging); (iv) employee’s regular pay day; (v) official name of the employer and other names used for business; and (vi) employer’s main address and phone number.  This notice must be in English and in the language identified by each employee as his/her primary language.  There are sample notices for different types of workers (hourly wage, annual wage, etc) here.
7.  Employers must provide their employees with a wage statement/pay stub on each payday that lists hours worked, rate of pay, how the employee is paid (by the hour, shift, day, week, commission, etc.), employee’s gross and net wages, itemized deductions, itemized allowance and credits claimed by employer, if any (tip, meal, lodging, allowances, credits, etc.), employee’s name, employer’s name, address and phone number, and dates covered by payment.  An example of a wage statement / pay stub is here.   

8.  Once you start hiring employees, it is a great idea to invest in an employee handbook.  Such handbook would have the company policies regarding vacation, holidays, work hours, social media, and personal leave.

9.  The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 requires all employers to report newly hired and re-hired employees to a state directory within 20 days of their hire or rehire date.  You, as the NY employer, have to complete the online form found here within 20 days from the first day the employee performs any service for which they will be paid. This information includes employee name, address, social security number, hire date. And employer name, address, IRS identification number, if dependent health insurance benefits are available to the employee. 

10.  Last but not least, a workplace is required to have federal and state employment posters.  Posters must be placed in a conspicuous place. You can purchase the posters at your local Staples store or online.  You can determine which posters you need by following these links: federal poster requirements and New York State poster requirements.  

Have we forgotten anything?  This list may not be comprehensive, so we welcome any and all additions and corrections you may have.

This article is not a legal advice, and was written for general informational purposes only. If you have questions or comments about the article or are interested in learning more about this topic, feel free to contact its author, Arina Shulga. Ms. Shulga is the founder of Shulga Law Firm, P.C., a New York-based boutique law firm specializing in advising individual and corporate clients on aspects of business, corporate, securities, and intellectual property law.

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