The average cost of a bad hire is 30% of that person’s first year earnings as per the United States Department of Labor. This can be a huge loss to the company especially if the employee hired was for a very high position. To minimize the risk of such losses, we must consider the legal and technical aspects of hiring a full-time employee or contract employee.
Ensuring compliance, smooth onboarding, and a seamless offboarding process is crucial for an employer. This blog dives into the key aspects you need to understand before hiring any employees for your organization:
Technical Considerations for Employers
- Contracts: Employment Contracts vs. At-Will Employment Contracts: The former is less common in the tech industry but is accompanied by non-compete clauses that result in legal action and penalties when breached. In the latter, the employee or the employer can terminate the employment relationship anytime. This offers flexibility but limits the company's ability to legally prevent a full-time employee from leaving.
- Payroll: Setting up a payroll system that accurately calculates wages, deductions, and taxes is essential. You must factor in federal, state, and sometimes local tax withholdings. Consider using a payroll service provider to simplify the process.
- Benefits Administration: Offering benefits like health insurance, paid time off, and retirement plans is attractive to employees. However, administration can be complex. Explore options like Professional Employer Organizations (PEOs) or employee benefit platforms to streamline management.
- Timekeeping: Accurately track employee hours, especially if you have hourly employees. This can be done through time clocks, online timekeeping systems, or manual methods.
- Technology: Provide necessary equipment and software for employees to perform their duties effectively. This might include computers, phones, internet access, and specific software programs.
- Trade Secret Protection: Identify and protect your company's confidential information (trade secrets) through clear policies and non-disclosure agreements. This prevents employees from disclosing the trade secrets of one company to another.
Legal Considerations for Employers
- Federal and State Labor Laws: The Fair Labor Standards Act (FLSA) sets minimum wage and overtime pay standards. Additionally, each state may have labor laws regarding minimum wage, overtime, meal breaks, and sick leave. It's crucial to stay updated on relevant regulations.
- Tax Withholding: As an employer, you're responsible for withholding federal income taxes, Social Security, and Medicare from employee paychecks. You'll also need to pay employer-side payroll taxes.
- Formalities: Upon hire, collect required documents like I-9 forms to verify work authorization and complete new hire reporting for state and federal agencies.
- Employee Classification: Distinguish between exempt (salaried) and non-exempt (hourly) employees. This classification determines overtime eligibility and other legal rights. Misclassification can lead to hefty fines.
- Non-discrimination Policies: Implement clear policies prohibiting discrimination based on race, gender, religion, age, disability, or other protected characteristics.
- Employee Contracts: While not mandatory, offer employment contracts outlining expectations, compensation, and termination terms.
- Workplace Safety: Provide a safe work environment and comply with Occupational Safety and Health Administration (OSHA) regulations.
- Employee Benefits: While benefits are not mandatory, offering options like health insurance and retirement plans can enhance employee satisfaction and retention.
- Employee Handbook: Develop a comprehensive employee handbook outlining company policies, benefits, and expectations.
Seeking Help in the Complexity of Processes
Navigating the legal complexities of employment can be overwhelming. Consider consulting with a Human Resources professional or employment lawyer for guidance specific to your business. If you want to eliminate the hassle of hiring a full-time employee, Contact CirrusTalent.
As experts in staffing sales across the US and LATAM, we understand and address both technical and legal aspects so that you can ensure a smooth onboarding process for your US/LATAM-based full-time employees. At CirrusTalent, DEI Strategy, Compliance, and a positive work environment are key ingredients for a thriving business.