Employment Law Issues for Growing Companies and Entrepreneurs
With the complex federal, state, and local employment regulations that apply to all businesses, the human resources industry is growing to meet the demand. The hiring process can easily overburden a corporation, involving everything from tax withholding and worker’s compensation insurance to non-discriminatory employment standards and immigration considerations. The key factors that any developing company should take into account are highlighted below. This list can be a helpful supplement to the advice of an employment lawyer, which is
Requirements for Insurance
Companies made up solely of independent contractors and non-employee proprietors are exempt from the worker’s compensation, liability, and health insurance obligations that apply to employers. While having liability insurance is usually a good idea and may be required by local law, employers are required by federal and state law to have the following insurance:
Employee Health Insurance
Employers may not make employees contribute more to the policy than 9.86% of their household income, and the insurance must cover about 60% of medical expenses. Even though a lot of businesses are exempt from the ACA, they may still decide to offer health insurance.
Worker’s Compensation Insurance
Worker’s compensation insurance is a legal requirement in every state for all businesses, even those with just one employee. This insurance shields you from lawsuits from employees who are hurt while “on the job” by paying for their medical bills and missed wages.
Employers are required to contribute to the state’s disability and unemployment program in some states, including California. Employees who suffer a non-work related injury and are temporarily unable to work are covered by this insurance. In addition, most employers are obligated to contribute to the state unemployment program in order to cover the costs of laying off workers.
Although insurance can be pricey, businesses must at the very least get worker’s compensation insurance and sign up with the unemployment and disability programs in their various states.
Financial, Tax, and Immigration Considerations
A range of federal and state immigration, wage, and hour laws are applicable to most employers, particularly those pertaining to overtime protections and tax withholding requirements. In general, the following actions are required by the company after recruiting an employee:
- Determine whether the employee is hourly or salaried, and an “exempt” or “nonexempt” worker
- Pay the employee the federal/state minimum salary and appropriate overtime
- Determine whether the employee is subject to the Fair Labor Standards Act
- Complete IRS Form W-4 and any state tax documents for each employee designating his or her tax withholding
Fill out Form I-9 for Immigration
Businesses, no matter their size, must adhere to these standards with every new hire. Additionally, almost all employers are required by federal and state legislation to post specific employee notices, including a list of employee wage rights, in a visible location within the workplace.