February 28, 2021
Hiring 30 May 2019
Onboarding: Employee Statuses and Important Forms
Dillon Chen

When hiring employees, there are a few things you should keep in mind before and after you begin onboarding them. To help you out, here are some of the common processes and forms that you should be aware of:

Before Hiring

You’ve just about to hire your new employee and you are super excited to get them started but there are a few legal documents that you, as an employer, need to complete before they start the job. 

Conduct background checks

A background check is a great way to verify the identity of your new employee. A background check can also verify their past employment and any criminal records.

Every state is different when comes to what questions you can ask your employees. To make sure you are not breaking the law, check out this government background checklist.

Pass out non-compete/non-disclosure agreements

An NDA is a legal document that prevents you and your employers to not disclose any information that has been shared. An NDA is not required if you are not planning on sharing any confidential information with your employees. However, if you plan to share any type of information to your employees you may consider an NDA

For example, if you were to hire a marketer to help grow your company, you might have to share the contact lists that you have worked so hard to obtain. It would be hard to know that if one day that employee leaves the company and uses all the information to benefit themselves. 

Review Anti-discrimination laws and Ensure Equal Employment Opportunity

Review all anti-discrimination laws to make sure your business is treating everyone fairly. You will want to check these laws every time you hire someone new so that you can be aware of what’s happening and prevent any problems that may occur. 

Some businesses are required to report data to the EEO Commission. If that is the case then you will want to make sure you get the demographic information from your employees.

After Hiring

Now that you've decided to hire an employee, here are some important forms and employee status information you should be aware of. These will affect things such as taxes, benefits, and more!

I-9 Form

Form I-9, officially the Employment Eligibility Verification, is a United States Citizenship and Immigration Services form. It is used to help employers verify the identity and legal authorization to work of the employees they hire.Companies should keep a copy of I-9 and supporting documents on file to protect themselves from hefty fines. Not having a properly completed I-9 form can result in fines of $110 to $1100 per I-9, so it’s important to make sure I-9’s are being completed accurately and on time for every new employee. 

1099 Vs. W2

Is the candidate going to be hired as an employee or an independent contractor? This answer will determine how you give them their pay and which type of government form you give to them at the end of the year for tax time.

Typically if you hire an employee (either salaried or hourly) under an employee agreement delivered via offer letter or contract, they will be considered a W-2 employee. You will withhold taxes from each payroll and pay a portion of their social security, Medicare, unemployment, workers comp, etc. Besides taxes, you will also pay for employee benefits such as insurance.

1099 contractors are paid on a non-salary basis. Generally used for a specific role or task, contractors are self-employed and you do not withhold taxes from their paycheck. On the positive side, you do not have to pay any benefits that are available to your W-2 employees.Misclassifying employees can have severe penalties for your company. Common financial penalties include:

  • Reimbursement for wages you should have paid an employee, like overtime and minimum wage

  • Back taxes and penalties for federal and state income taxes, Social Security, Medicare, and unemployment

  • Payment for misclassified employees’ workers’ compensation benefits

  • Providing employee benefits, including health insurance, retirement plans, etc.

Withholding Taxes

Employees should fill out a W-4 when they start working at your company. This is important so that you as the employer knows how much to withhold from the employee's paycheck for federal income taxes. The form includes information such as

  • Marital Status

  • Number of allowances

  • Additional deduction amounts

Sign up for Your State's New Hire Registration System

As an employer, it’s your responsibility to register new hires within their state. Most states have a common system for this type of registration.  The majority of the information needed is already collected when your new employee fills out the W-4 forms. 

Even though it may take some extra time to fill out, it’s not a huge burden on Employers and it’s very easy to do. Find your state on the New Hire Reporting site to know what you need to do in your state. 

Exempt vs. Non-exempt Status

This status is used to determine whether an employee is eligible for overtime or not. The basic indicator is whether the employee makes at least $455/week ($23,660/year). 

It’s important to know whether an employee qualifies for exempt vs. non-exempt status so that their pay is calculated correctly.

No matter what your employment status/type is, or what sort of onboarding documents you need to fill out, everything can be easily managed through ProSky Pathways. Pathways allow you to set goals and milestones for employees based on their interests and skills, but also around the company needs. Having a pathway in place will be beneficial to your employees and company, no matter if they are salaried or contract employees.