If you manage or own your own business, you likely started out hiring employees based solely on a handshake. As you’ve grown, however, you started realizing that’s not enough, and you’re right.
There is certain paperwork you need to have in place for every employee and they don’t teach you this in business school. (Incidentally, the most successful entrepreneurs we know never went to business school!) Here’s an outline of the paperwork you need, why, where to find it and how to store it.
This form verifies an employee’s identity and right to work in the U.S.
There are three sections of the form: the first for employees to complete, the second for employers to complete and the third, which lists the acceptable documents an employee must present to their employer.
Employers must make sure that new employees have access to the form in its entirety along with the instructions for Form I-9 so that they can complete the form as soon as the employment offer is accepted.
New employees must complete Section 1 of the form no later than their first day of work and must present acceptable documentation no later than day three of work, which is the deadline for employers to complete Section 2 of the form.
Note: The employer cannot specify which documents an employee must produce, as long as it is from the list included in the form.
For a three-page form, there are numerous opportunities for errors (as simple as making sure it’s signed in the right place or the date convention is correct), so it’s important employers read the instructions (all 15 pages!) in its entirety and have their forms periodically audited.
Fines for technical violations range from $230-$2,292 per form violation. Fines for knowingly hiring or continuing to hire individuals not authorized to work, range from $573 to over $20,000.
Completed Form I-9s should be stored in a secure location, separate from personnel files, for three years after the date of hire or one year after date of termination, whichever is later.
For more information on this topic, including forms in Spanish, go to the USCIS website.
This form instructs employers what amount of federal income tax to withhold from an employee’s paycheck.
The form is updated each year; some years have more updates than others. (2020, for example, was a complete revamp.)
While employers aren’t required to obtain new W-4s from employees every year, they are responsible for having new hires complete the form current for that tax year, as well as any state-specific withholding forms, such as New York’s IT-2104.
These forms can be confusing for employees, so many will ask for guidance on completing.
In that situation, give them the entire packet, which contains instructions, direct them to their accountant and assure them that if they want to make a change, they can submit a new form. You can make the change from the new form during the next available pay date.
Store the W-4s in an employee’s personnel file and, as with most personnel-related forms, retain them for at least seven years from an employee’s termination.
Direct deposit form
This form authorizes employers to deposit payroll monies directly into an employee’s bank account.
Your payroll company may provide you with a form you can distribute to employees or you can create your own. Be sure the employee signs and dates the authorization section, permitting you/your payroll company to transfer the monies.
We recommend requesting a voided check so you can confirm the routing and account numbers, as employees sometimes transpose the two and/or write in a wrong number by mistake.
As with the W-4, store these in an employee’s personnel file and retain for at least seven years following termination.
Every employee should receive and sign off on an offer letter that states:
- – Their employment is at-will
- – Their job title
- – Start date
- – Supervisor
- – Rate of pay
- – FLSA status (exempt/non-exempt)
- – Brief outline of benefits
- – The offer is contingent on the successful completion of a background check and/or drug test, if applicable
This offer letter should also be stored in their personnel files.
Employee Handbook Acknowledgement
Every new employee should receive your employee handbook and sign off acknowledging receipt. This acknowledgement should be stored in their personnel file.
Emergency Contact Form
While this form is not mandatory, it is highly recommended in case of an emergency. Be sure to include on the form that the employee need provide only whatever information they are comfortable sharing.
This should also be stored in their personnel file.
For questions on this topic, and support on setting up and managing your employee paperwork and files, contact us at info at enformhr.com.