Hiring a New Employee in the United States: A Legal Guide

When hiring a new employee in the United States, you must have them complete several mandatory forms: (1) Form I-9 (Employment Eligibility Verification) to verify identity and work authorization; (2) Form W-4 (Employee's Withholding Certificate) for federal tax withholding; and (3) State tax withholding forms (varies by state). You may also need to provide new hire reporting to your state agency, workers' compensation information, and any company-specific forms like employment agreements or policy acknowledgments.

You must verify a new employee's eligibility to work in the United States by completing Form I-9 within 3 business days of their start date. The employee must complete Section 1 on or before their first day of employment. As the employer, you must complete Section 2 within 3 business days by physically examining the employee's identity and work authorization documents. Failure to properly complete and retain I-9 forms can result in significant penalties.

Background checks are not federally required for most positions (exceptions include certain roles in finance, healthcare, education, and transportation). However, if you choose to conduct background checks, you must comply with the Fair Credit Reporting Act (FCRA), which requires written consent from the applicant and following specific procedures if you take adverse action based on the results. Many states also have their own background check laws that may be more restrictive, so check your state's requirements.

Probationary periods are not required by federal law but are a common practice. If you implement one, be aware that it doesn't override at-will employment in most states. Even during probation, you must comply with all employment laws including minimum wage, overtime, anti-discrimination, and workplace safety regulations. The length of probation is at your discretion, but typically ranges from 30-90 days. Document your probationary policy clearly in your employee handbook to avoid misunderstandings.

As an employer in the U.S., you're responsible for several payroll taxes: (1) Federal income tax withholding; (2) Social Security and Medicare taxes (FICA) - you withhold the employee portion and match it; (3) Federal unemployment tax (FUTA); (4) State income tax withholding (in most states); (5) State unemployment insurance; and (6) Local taxes where applicable. You must deposit these taxes according to IRS schedules and file quarterly Form 941 returns and annual Form 940 returns. Penalties for non-compliance can be severe.

Under the Affordable Care Act (ACA), employers with 50 or more full-time equivalent employees (FTEs) must provide health insurance that meets minimum standards of coverage and affordability or face penalties. This is known as the Employer Mandate. Smaller employers are not required to offer health insurance, but if they do, the plans must comply with ACA requirements. Some states have additional requirements. If you offer health benefits, you must administer them in compliance with ERISA, HIPAA, and other federal regulations.

The distinction between employees and independent contractors hinges on control and independence. The IRS uses three categories to determine classification: behavioral control (does the company control how work is done), financial control (how payment is structured, who provides tools/supplies), and relationship type (written contracts, benefits, permanency). Misclassifying employees as contractors to avoid taxes and benefits can result in significant penalties, including back taxes, interest, and potential legal action. When in doubt, consult with an employment attorney.