How to Hire Your First Employee a Beginners Guide - pt 2
By VICKY BROWN
Once you’ve decided on ‘the one’, there are a number of things you’ll need to put in place to be sure you’re not only meeting your legal obligations as an employer, but also creating the best onboarding experience you can for your new recruit. After all, you want your company to show up to your new team member as professional, personal, people focused, and a ‘best of’ employer. So to do that you have to have your ducks in a row and come across like you know what you’re doing.
And that starts with the written offer. Now, I know a lot of people talk about employment agreements – but I strongly suggest you stick to offer letters instead. Both an offer letter and employment agreement outline the basic terms of employment – hire date, pay rate, title, job duties etc. But, an offer letter will also have an ‘at’-will’ statement that governs when and how someone can be let go (basically, at any time, for any or no reason).
In contrast to an offer letter’s at will-statement; an employment agreement generally spells out specific reasons for termination. And that makes sense – employment agreements are mostly reserved for the top members of the organization – the ones you want to ensure will stay aboard for a specific period of time, and not just give notice one day. At the same time, you will want to maintain the flexibility of ‘at will’ with most of your employees.
So once you’ve settled on the candidate, determined how much you are going to offer them in pay, and made a verbal offer – then you send them the offer letter. It acts as the written confirmation of what you discussed. Now in addition to the offer letter, you should also send along the background check authorization.
Now, if you haven’t thought about background checks, I suggest you do them. In fact, in many states the offer has to be made before you can ask an applicant about some pieces of their criminal history. Since background reports often provide a wide variety of information, so it’s better to just make a conditional offer of employment, and avoid the possibility of getting dinged for a violation.
A conditional offer is just like a regular employment offer, except it states that the offer is conditioned on receiving satisfactory references which may include a background check.
Now, since background checks fall under the Fair Credit Reporting Act, there are lots of notices and disclosures that the person has to get. Don’t worry – your background checking company will have these for you – you just need to be sure everyone you offer a job to gets all the forms, every time.
There are a lot more details around background checks – if you want to do a deep dive, take a look at this episode.
Once the candidate has signed the offer letter and background authorization – then you should give them the remainder of the new hire package documents. Now different states have different requirements – but there are some documents that are federal, so they apply to all states.
You’ll need an I-9 form – every employee has to complete this form. It confirms they are authorized to work in the US. Believe me, the authorities are not shy about pulling your I-9s and auditing them. So make sure you get this done on time (within 3 days of hire) every time.
Of course there are the tax forms – both the Federal W4 form and most times there are also state tax withholding forms. It’s important to have the employee complete both, because each entity has their own withholding tables and categories.
Then there are things specific to your state – for instance, in California some of the notices we have to provide include information on the paid family leave program, the specifics of workers compensation rights, the Time To Hire Pamphlet, and details on California’s disability program.
Again, different states may have different notices – just be sure you know what they are for your location, and they are included in your new hire package. And yes, California employers can get details on what’s required in this episode.
“… A conditional offer is just like a regular employment offer, except it states that the offer is conditioned on receiving satisfactory references which may include a background check.“
And finally, don’t forget important information about your company. The employee handbook, the list of pay dates, the holiday schedule and time off policies. Remember, this is the time to give your new employee a solid overview of your company, what you offer, and what you expect.
Now, once they start – it’s time to get serious about onboarding and training. The goal of a good onboarding is to acclimate your new team member into the vibe, rhythm and sensibility of your company – all while giving them the tools they need to be as successful as possible. A good way to think of onboarding is as a 3 step process – the required stuff, the stuff that will make their life easier, and the stuff that will help them excel.
The required stuff includes the mandatory HR documents, a tour of the office, introductions to the rest of the team, and training on their job duties.
Then there is the stuff that’ll make their life easier, like an org chart; how to use the phone system, your security practices, what’s the meeting cadence in the company, and what’s expected; what technology stack does the company use, what’s housed where and how will they get.
And finally, a great onboarding process sets the employee up to be engaged, and bring their best self to work from day one. That means you have to make sure they understand your mission, vision, values and goals. And hearing all that, along with a welcome message, directly from the head of the company shows they’re not just a faceless number – they matter, and their contribution is important, and you understand that.
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OK – onward to payroll. Yep, you will have to pay them.
When it comes to setting up payroll for your company, there are two ways you can go. You can do it yourself – either using software or without software or have someone do it for you like your accountant or an outsourced service.
Whatever you do, if you decide to do it yourself – use the software. It will help keep you on track, and away from IRS penalties for non payment of payroll taxes. Listen, the payroll process is way to complex to try to shove into this episode. So I’m going to refer to you a handy dandy episode on How to Set Up Payroll for your Small Business – so check it out for details.
Now, there are other things you are required to have, in addition to payroll. Generally you have to carry workers compensation insurance; you have to have either state provided or private company provided disability insurance (again, in most states); and depending on your size, you may be required to have medical benefits for your employees.
What, you aren’t thinking about benefits? Well, I suggest you at least give it a minute or two of your time. It doesn’t have to be too intense – all you need is a good group insurance broker. Now, this insurance broker will probably be different than your property / casualty (or P&C) insurance broker. But they will be just as helpful.
Your broker is paid by the insurance company, so you get their services at no cost to you. They can help design a plan that’s right for your company, both size and culture. Get quotes on what the various options would cost; and manage the enrollment process for you.
In such a tight labor market, don’t underestimate the value having medical benefits can bring when you’re trying to land that ideal candidate.
Now, of course there are other things to think about for your new employee – when and how will you do performance reviews; what kind of training or development will you offer; do you have a career path in mind – these are just some of the things that will set you, and your new employee, up for success.