Setting Up an HR Dept from Scratch pt 3
By VICKY BROWN
Can you believe it – so far we’ve covered Staffing, Employee Classifications, Background Checks, Setting up Payroll and Compliance/Record Keeping. We’re in the home stretch – we’ll finish up with New Hire and Term documents; and Employee Benefits.
You’re going to find yourself dealing with lots of forms and documents. But the ones you will need most often are the documents that go in the new hire and termination packages.
Let’s start with the New Hire package. First off, the offer letter.
This lays out the elements of the offer: hire date, pay structure, position title, supervisor.
It serves as the confirmation of the offer
If the position is non exempt (meaning eligible for overtime) ,you have to also complete and include the Wage Theft Notice.
Keep in mind, this document is for non exempt employees only.
The package for exempt employees won’t have the Wage Theft Notice.
The employment application is an important legal document ,It gathers relevant information about the candidate, and provides an overview of the company’s hiring policies
And remember, asking for salary history is a no-no
Then the background check notices and authorizations.
Now we get to the tax forms – there are 2, one for the Feds and one for the state
It’s important to have the employee complete both, because each entity has their own withholding tables and categories
The I-9 form is the federally required authorization to work in the US. All employees must complete this form on their first day of employment
You’ll need a personal profile or something similar, to collect important information on the candidate, such as emergency contacts etc.
As a courtesy, include a listing of the current year’s pay dates. The company’s pay dates are also stated on the required employment posters – so this is an optional notice
It’s also a nice idea to include the holiday schedule, the policy on PTO such as vacation, sick and personal days; and you should use this opportunity to give them a copy of the company handbook or personnel policy
The next group of documents are required by the state of CA
In addition to information on the paid family leave program, there’s information on the specifics of workers compensation rights, in the Time To Hire Pamphlet -and details on California’s disability program
And finally, notices outlining the rights of those who have been sexually harassed, or are victims of domestic violence, sexual assault or stalking, are included
If your workers comp insurance company provides a Medical Provider Network (or MPN), you must also include the MPN information
And it’s a great time to distribute the Cal OSHA required Injury and Illness Prevention Program
And finally, don’t forget the Affordable Care Act required, Marketplace Notice.
On to the termination package – far fewer documents. You’ll need a cover letter, telling the person what is in the package. Their final check – and yes, you have to pay them everything on termination. A Change of Relationship Notice – they’ll need this for filing unemployment (and yes, it’s required that you give it to them). And if they had benefits, there would be COBRA information.
Now hopefully, if your team is small enough, all the COBRA maintenance may run through the insurance carrier. But if you have 20 or more employees, you’ll have to either do it in house or contract with a company to administrate it for you.
And speaking of benefits…
“… many times a company will say – oh, just give me a copy of your bill for your individual policy and we’ll reimburse you for that amount. The problem with this approach is that the feds consider that money, not a reimbursement, but taxable income”
One of the great ways to up your retention rate with your team, is to offer benefits.
First off – are you required to offer benefits to your employees. If you have under 50 people, the answer is no – it’s not a requirement.
Now, while you aren’t required to provide coverage, the fact is – in today’s hyper competitive environment for talent, medical insurance has become a given. And, I think you’ll find that as you are recruiting, the subject will come up over and over again. So, what are your options?
Actually there are only 3.
1 – offer group coverage
2 – let your employees get their own individual policies and you cover the cost
3 – don’t offer anything
Now, we’ve already talked about how #3 is a bad option. But surprisingly, option #2 is the second worst alternative. That’s because, many times a company will say – oh, just give me a copy of your bill for your individual policy and we’ll reimburse you for that amount. The problem with this approach is that the feds consider that money, not a reimbursement, but taxable income.
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That’s right – to them, it’s just additional salary and has to be taxed on both the employee and employer side. You see, group plans have special protection under the IRS, that’s why your employee can pay part of their premium out of their salary and it won’t be taxable income to you or them. But paying for someone’s individual policy isn’t protected, so it does have a tax load associated.
Now, there is a way to reimburse employees for their individual policies without making that reimbursement taxable. But – I’ll leave that explanation to your broker.
Oh and by the way – what’s a broker, and how much do they cost? Well, I’m happy to say a broker is a licensed insurance agent that is a specialist in the benefits insurance arena (just like your business insurance broker is an expert in business insurance); and again, just like your business insurance broker – your benefits broker won’t cost you a thing. They’re paid by commission from the insurance companies. So, basically, it’s free expert advice and help. I always recommend getting a good broker as the first step in offering benefits. Sure, you can try to go it alone and do something online – but things can get really complicated, really fast. It’s always great to have a professional on your team. And, they can answer employee questions as well.
The (what I call ) big 3 of insurance offerings are medical, dental and vision. But there are loads of other options: Long term and short term disability, life insurance, retirement plans, flexible spending accounts, transportation subsidies, health savings accounts, ID theft insurance, prepaid legal – even pet insurance. See, that’s why you really do need a broker – they can help you plough through the thicket, and make the right choices for your team.
Now keep in mind – this is just the low hanging fruit. There are a myriad of other things to manage – employee reviews, salary planning, the employee handbook, safety and OSHA requirements, employment posters – yep, I know. The list is long. What can I say – personally, I think you should get help. And, of course, I think that help should be in the form of an expert HR consultancy like ours. But – this isn’t a sales pitch. So, I’ll just say – congratulations. You’ve taken on a lot, but I’m sure you can do it. It will just take a touch of radical organization, and I absolutely suggest you take advantage of every available learning opportunity.
Welcome to the party!