Hiring Your First Employee?
Summary
Hiring your first employee is an exciting milestone, but navigating employment laws can feel overwhelming. This guide breaks down key legal steps—from classification and payroll to contracts and compliance—so you can expand your team with confidence.
First Step: Prepare Before You Hire
Before you even post that job listing, you need to make sure your business is properly equipped:- Get your EIN in order: your federal Employer Identification Number is essential. If you don’t already have one, it’s time to register with the IRS.
- Employee vs. Independent Contractor: This distinction is important and getting it wrong is like using a climbing harness incorrectly – potentially disastrous! Remember: control over how, when, and where the work happens generally points toward employee status. Don’t try to “save money” by misclassifying employees as contractors; the penalties can be steep.
- Make sure you post a pay range, benefits, and application deadlines on your job posting.
- Also, you cannot ask about age-related information on initial job applications, with limited exceptions for age requirements based on legal or safety needs. This includes age-identifying information such as date of birth or graduation dates or dates of attendance at an educational institution.
- Lastly, you may not require an employee or applicant to disclose a social media username or password, require that the applicant or employee add anyone to a social media account, or suggest or require an applicant or employee to change privacy settings associated with a social media account.
Your Route Map: Employment Documentation
Clear documentation serves as your route map for the employment relationship:- Detailed job descriptions matter. They’re not just for recruiting, they help set expectations and can protect you legally if performance issues arise.
- Offer letters and employment contracts should clearly outline terms including compensation, benefits, job duties, and at-will employment status.
- Know your non-compete limitations. These clauses are being increasingly restricted across states. Colorado, for example, only allows them in very limited circumstances, while California essentially prohibits them entirely. Don’t include unenforceable provisions that give you a false sense of security.
Know The Employment Laws
Just as weather dictates hiking conditions, employment laws create the environment in which you operate:- Federal requirements include minimum wage standards ($7.25 federally, but often higher at state levels), overtime rules, and anti-discrimination laws.
- State-specific elements vary significantly. Colorado, for example, requires sick leave for all employees, while Wyoming has fewer state-specific requirements beyond federal law.
- Local ordinances may add additional layers, as some cities have their own minimum wage or paid leave requirements.
Payroll and Benefits
Setting up proper systems is important to protect your business:- Establish payroll systems that accurately track hours, calculate taxes, and provide proper documentation.
- Understand mandatory benefits. Workers’ compensation insurance is required in most states, and depending on your size, you may have ACA healthcare responsibilities.
- Consider competitive benefits beyond the basics. In the outdoor industry labor market, benefits like flexible schedules, industry pro deals, or paid adventure time can help attract talent!
Onboarding and Policies
Finally, create clear protocols for your expanding team:- Employee handbooks aren’t just for corporate giants. Even with just one employee, documenting policies on conduct, time off, safety, and communication expectations provides clarity and protection.
- Training matters. Ensure your employee understands safety procedures, harassment policies, and operational expectations from day one.
