Hiring Your First Employee

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  Employee Performance Review

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It’s a big day for any business when you go to hire your first employee. For many small businesses, the first hire comes after an owner’s lengthy struggle to build her business and increase her revenues enough to feel confident supporting another person.

Besides being a celebration-worthy milestone for your business, becoming an employer brings a whole new set of responsibilities and legal compliance obligations. Both because of the responsibility, and because each person make a big impact on a small organization, you need to choose your people well. That means your task begins with recruiting.

Hiring and Selection

• Before you interview anyone, create a job description with a specific set of duties and responsibilities. Even for the most basic jobs, a detailed job description will ensure you and your employee have a clear understanding about the job and what you expect. Also inclue any physical or skills requirements such as being able to lift a certain amount of weight or being able to crawl on hands and knees. Encourage your candidates to read the job description and agree to it as part of the hiring process.
• Develop a recruiting plan. Think about how to reach the kind of person you want to hire. You might make use of job boards, advertising, help wanted signs, fliers, social media, school career centers or networking with colleagues and friends. Referrals often produce the best candidates. If you are advertising, consider what kind of publication your target candidate reads or what websites he most likely visits. Center your recruiting approach to the type of candidate you want to attract.
• Require candidates to complete a job application. Even if you don’t need a standardized application form to keep track, job applications help prove fair hiring practices because they ensure that at least in part, you treat all applicants the same way.
• Ask open-ended, behavioral questions in your interviews. “Tell me about a time when you’ve handled an angry customer,” will get you more information about a candidate than “Have you ever handled an angry customer?” Focus your questions on how a candidate conducts himself on the job and if his skills match your job.
• Never discuss race, age, ethnicity, marital status, children, plans to have children, national origin, religion or sexual orientation. Exploration of these topics can constitute discriminatory hiring and put you in violation of federal and state civil rights laws. Keep your interview centered on the job and your candidate’s ability to perform it.
• Don’t make notes that visually describe a candidate.
• Use appropriate diagnostic tools such as a skills checklist or a writing sample. These can help you better assess a candidate’s suitability and also document a hiring process focused on ability and performance.
• Make any job offer contingent on a successful background screen. Because you are liable for the conduct of your employees and especially if you’re hiring someone who handles cash or takes care of people – a background check will protect you from making a poor hire. Obtain a background check authorization release before proceeding and ensure you give your candidate notice of his rights under the Fair Credit Reporting Act and any state laws on pre-employment background checks.
• Issue written job offers for office-based and professional positions. Include job description, pay, benefits and commencement date. Disclose that employment is at-will. Leave a line for candidates to sign their acceptance of the offer terms.

Compensation

• Review U.S. Department of Labor guidelines on whether the position you’re offering is Federal Labor Standards Act (FLSA) exempt or non-exempt. As a rough rule, managerial and administrative positions are exempt and often salaried, while labor and service positions are non-exempt and paid hourly. However, always check federal guidelines to determine whether you can pay salary or must stick to hourly compensation.
• Decide whether or not to offer benefits. Although employers are not required to offer benefits, if they offer then to one employee, then they must be consistent among all employees of the same classification. Accordingly, if you offer health insurance to one full-time employee, you must offer it to all full-time employees. If you extend benefits to one part-time employee, then all must be eligible. Check your state department of labor for any requirements or variations specific to your jurisdiction.
• Decide on a payment method. Employers must comply with state and federal laws on payroll deductions. That means you’ll either need to get ensure you deduct federal and state income taxes, Medicare and Social Security withholdings or select a payroll service to do it for you. Some payroll services cater to small business and will run one and two person payrolls. Your accountant or bookkeeper may also be willing to help you with payroll compliance.
• Create a timekeeping system such as a timesheet or time clock for an hourly employee. You’ll need accurate records both for completing payroll and for compliance with state wage and labor laws.
• Review your state’s overtime regulations. California, for instance, requires any hours in excess of eight in a day to be paid overtime and also for the seventh consecutive day of work – even if an employee works less than 40 hours.
• Establish regular paydays and stick to them. Some states including California, have penalties for late paychecks.

Orientation

• Begin employment with any tests required to see if an employee can physically perform the work. For example, if your job requires a person to be able to lift 40 pounds, have your new employee lift a test weight before commencing with work. Make sure such a requirement is in your job description or company policies.
• Familiarize your employee with your workplace including her workspace, the restroom and a place where she can take breaks.
• Show your new employee the work that needs to be done, how to do it and any equipment or tools required.
• Provide safety equipment if the job has physical dangers. Federal law holds employers responsible for health and safety.

Legalities

• Get an Employer Identification Number (EIN) from the Internal Revenue Service if you haven’t already done so.
• Establish a payroll tax account with your state tax board.
• Report payroll taxes quarterly to both your state and the IRS.
• Ask your employee to sign a non-disclosure agreement if your business relies on intellectual property or trade secrets.
• · Purchase worker’s compensation insurance through a qualified broker. Make sure your plan meets state requirements.