Real Small Business

If you're ready to add new employees to your company, you'll soon be faced with the need to complete legal and professional paperwork to formalize the hiring process. The purpose of many employment documents is to protect businesses from unnecessary lawsuits and government inquiries. These forms also establish expectations for work relationships with new staff members.

Since it is likely that all of your employees will be required to fill out new hire paperwork, you may want to consider putting together a new hire packet that can be retrieved any time new staff members join the company. After an employee's paperwork has been completed, store it in a file devoted to the new hire. Any additional paperwork the employee completes during his or her tenure with the company can be added to this file over time.

Here are some items to include in these new hire packets.

Offer letter

After negotiating the details of a new position, prepare an offer letter outlining terms of employment for the new hire.

The purpose of this document is twofold.

It serves as official recognition of the offer and protects you from an employee's claim that you made promises that were not delivered.

The offer letter should outline the employee's position, salary and benefit package; additional compensation arrangements such as signing bonuses or stock options; and information about special arrangements you may have made, such as tuition reimbursement, use of a company laptop, or the assigning of a company car. The letter should also include the date, time and location of the employee's first day of work.

Ask the employee to return a signed copy of the offer letter to formalize acceptance of the position.

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New hire agreement

This purpose of this document is to protect the business and its employees from misunderstandings about terms of employment, ownership of work and acceptable standards of behavior.

New hire agreements are legally binding contracts and it's best to hire a lawyer to assist you with the creation of this document. The initial investment in this review will be dramatically lower than the cost of a lawsuit that results from vague wording or missed items. The agreement should be signed by the employee and by you. After the document has been signed, provide a copy to the employee and retain the original for your records.

Within the agreement address that employment with your company is "at will."

This means that your business can terminate the relationship with the employee at any time without cause. It also means that the employee may leave the position at any time.

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W-4 / W-9

The Internal Revenue Service (IRS) requires all employees to fill out an Employee Withholding Allowance form, otherwise known as a W-4. This document confirms an employee's marital status and allowable exemptions. As an employer, you will keep this form on file and use it to calculate the taxes to be withheld from employee paychecks.

IRS form W-9 is a request for Taxpayer Identification Number (TIN) and certification. Use this form in place of a W-4 when hiring independent contractors. By providing you with a TIN and signing the certification section of the form, an independent contractor verifies that his or her wages are not subject to withholding. When you issue payment to this person, you do not need to deduct tax payments from the check; the contractor handles tax payments directly to the IRS.

To download a W-4 or W-9, go here.

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INS Form I-9

The U.S. Immigration and Naturalization Service (INS) requires both citizens and non-citizens alike to fill out an I-9 form, also known as an Employment Eligibility Verification form. This form establishes a worker's eligibility to work in the United States.

To supplement a completed I-9, employees must provide identification supporting their right to work in the U.S. Typically, this can be an American passport, social security card, driver's license or a combination of these items. Details about the forms of identification that are acceptable can be found directly on the I-9 form.

Under the Immigration Reform and Control Act of 1986, employers have an obligation to review these documents for authenticity. To protect your company fully, request the original documents from employees and photocopy them yourself, rather than accepting employees' photocopies. Keep these documents in your files. Having them on record goes a long way toward protecting your business from court cases and inquiries related to the illegal employment of aliens.

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Employee information sheet

An employee information sheet is a record of information an employer may need in the event of an emergency. It includes the names and phone numbers of two people who are close to the new employee. It is preferable if at least one of the two contacts is a family member. The form should also have room for an employee's home address, phone number, date of birth and social security number.

Keep in mind when you design this form that some requests for information may seem inappropriate to new hires. For example, you may be in the habit of sending birthday cards to spouses and children of employees and might therefore decide to request information about marital status and dependents on the form. If this is the case, you might make this field optional and state the reason for requesting the information.

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Insurance Enrollment form

Most insurance carriers will supply their own program enrollment forms to businesses. These forms should be included in the new hire packet. Carriers may also require new plan members to fill out insurance history forms, which the insurance companies also provide.

Instructions for filling out these forms are usually provided on the forms themselves. Most often, two sections need to be completed before the employee can receive coverage-an employee section and an employer section. The employer section requests information about the employee plan number and type, the name of the plan administrator, and the new employee's start date. As the employer, you will be responsible for submitting paperwork to the carrier.

If there is a waiting period before new employees are eligible for insurance, it's a good idea to include both of these items in the new hire packet to ensure an employee's insurance needs are not overlooked.

For copies of this form, contact your insurance company representative.

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Acceptance of insurance

An insurance acceptance form allows new hires to formally accept or reject the company insurance plan. This removes any question of whether or not these benefits are offered to all full-time employees without discrimination, and protects your business from claims that insurance benefits were never offered.

This form should include the employee's name and social security number, a checkbox for insurance acceptance or rejection, and a place for the new hire's signature. If you share the cost of insurance with your employees, this form should also outline the amount of money for which the employee will be liable. File this item with the employee's other paperwork.

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Payroll deduction form

If you will be deducting money from the new hire's paycheck to cover items such as a gym membership, transportation costs, or insurance coverage, you will want to have the employee authorize the deduction in writing. Use a payroll deduction form to outline the purpose of the expense and whether it will be deducted each pay period, once a month or one time only. This page should be signed and dated by the staff member and stored in his or her employee file.

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Sexual harassment policy

While sexual harassment may be covered in your employee handbook, many employers are now making an effort to include a separate document in their new hire packets that outlines the company's position on sexual harassment. Employees are asked to sign the last page of this statement to acknowledge that they have read it and understand it. This statement is then filed with the employee's other paperwork.

The contents of this policy statement should include: a definition of sexual harassment; the process for filing a complaint; and the action that will be taken should anyone in your company be accused of sexually harassing an employee or client. Once again, this document serves as proof that you have informed employees of your sexual harassment policy. It can be used to support your case in the event of a legal problem.

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Employee handbook

An employee handbook is a written document that details your company's employment and human resources procedures for all your workers. It helps new hires get a sense of a company's mission, philosophies and practices. It also spells out all your company's policies, such as hours, paid holidays, vacation time, benefits, salary reviews, etc.

Attach an acceptance form to your handbook that a new hire can sign and return. It should state that the handbook was received and that the employee has read and understands the policies within it. Place this form in the employee's file. This will help protect you from claims that an employee was let go for rules he or she did not understand.

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Small Business Guide


Small Business Guide

Starting Your Own Business - Hiring Staff - Paperwork for New Hires

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