A client with a new software business approached us recently for some general employment advice. With a startup company, he didn’t have the benefit of a human resources professional, or even a personal assistant, to tell him what need to be filed or registered in the event of a new hire or an employee termination, or any of the myriad ways he needed to manage his employees in order to be in compliance with state and federal law.
As we started to describe basic Fair Labor Standards Act Compliance, the need for Workers’ Compensation coverage and the number of employees a company needs to have before worrying about harassment and discrimination policies, he interrupted. “Do you have a checklist with all of this stuff in one place? I’m a scientist, a list guy. I need to see it all written down.” We didn’t, and we still don’t have a comprehensive list of all the possible issues that will face every employer. However, in an attempt to give this client a “basics” guide to the things he needs to think about as a new employer, we prepared this. It’s a pretty good starting point for employment compliance for small (fewer than 15 employees) businesses.
1. Correct Classification.
a. Is a worker an independent contractor or an employee? (generally speaking, if you set the schedule, provide the tools/materials, provide training and oversight/control, and the person works solely or primarily for you, he/she is an employee)
b. Is the employee exempt or non-exempt from overtime/minimum wage requirements of the FLSA? (assume non-exempt unless the employee is paid in excess of $100k or has very autonomous/creative management or executive role – always seek legal advice where there is doubt)
i. For both exempt and non-exempt employees, understand the law on deductions from paychecks (deductions for lost property, uniforms etc can be problematic);
ii. For non-exempt employees, understand the overtime rules (which can be infinitely more complex than they look)
2. New Employer Checklist
a. Complete DOL form 1-A (to establish company as an employer for payment of unemployment insurance)
b. Obtain Workers Comp (for 3+ employees)
c. Have Employee Manual and Employee Covenant Agreements (confidentiality, non-solicitation and non-competition provisions) prepared
d. If you’ll use independent contractors, have a master form of Independent Contractor Agreement prepared (key provisions are work-for-hire and non-solicitation/non-competition; responsibility for payroll taxes)
3. New Hire Checklist.
a. Background check/reference check
b. I9
c. W-4 and G-4
d. Mandatory new hire reporting (http://newhire-reporting.com/GA-Newhire)
e. Signed Employee Covenant Agreement (or Independent Contractor Agreement)
f. Signed acceptance of Employee Manual
g. Completion of benefits paperwork (if any)
4. Termination
a. Have business-related reasons for termination documented (a written disciplinary history is ideal)
b. Provide employee with Separation Notice (including a truthful reason for termination)
c. If employee is troublesome or may have a claim against the company, consider paying a small severance in order to obtain release of claims (always consult with counsel)
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Eadaoin Waller is a Georgia attorney, focusing her practice in corporate law.
Her firm, Andersen, Tate & Carr, P.C., works with all manner of clients in business and personal matters, providing “big firm” sophistication with suburban law firm attention and service.
Website: www.atclawfirm.com
Blog: www.andersentatecarr.wordpress.com
Copyright © 2013 Eadaoin Waller & Andersen, Tate & Carr, P.C.
Related articles
- Employee? Contractor? For taxes, it matters (business.financialpost.com)
- New Crackdown On Using Independent Contractors (forbes.com)
