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Hiring an Employee: What Businesses Need to know
Monday, February 20, 2012 • 1:45pm
Since opening your business you have been chief cook and bottle washer. You have now decided that you need to hire someone to assist you. Below is some basic information regarding what the law requires.
1. Determining whether the person hired is an independent contractor or an employee
The first determination you must make is whether the individual providing services to your business is an employee or an independent contractor. In general, if you control what the individual does and how the individual performs his or her tasks, this individual is likely an employee. Other factors that are considered are whether you reimburse the individual for expenses and provide him or her with tools or supplies. If so, these factors would further favor treating such an individual as an employee.
Business that cannot determine whether an individual is an employee or an independent contractor can contact the IRS and file a Form SS-8 (available at http://www.irs.gov/pub/irs-pdf/fss8.pdf). The IRS will then make a determination as to the individual’s status.
2. Paying an employee
Before hiring someone you must obtain a federal Employer Identification Number. Employers are required to make withholdings for income tax, Social Security, Medicare, and unemployment. New Jersey law further requires that employees be paid at least $7.25 per hour. In New Jersey, most employers are required to pay wages at least twice during each calendar month, on regular paydays designated in advance by the employer. Employees leaving or terminated for any reason must be paid all wages due not later than the regular payday for the period in which the termination occurred.
Where employees work in excess of forty hours in a seven-day workweek, they must be paid time and a half. The only exception to this requirement is where the individual is employed in an executive, administrative, or professional capacity.
3. Workers compensation
Private employers must have workers’ compensation coverage or be approved for self-insurance. An employer must post a Workers’ Compensation notice in the workplace. This form may be obtained from the employers’ insurance carrier.
4. Forms and information
State and federal law requires employers to post various notices and provide employees with certain information. The New Jersey Department of Labor and Workforce Development’s Employer Poster Packet may be obtained at http://lwd.dol.state.nj.us/labor/employer/content/ employerpacketforms.html. One who accesses this link may obtain additional information regarding requirements under state and federal law.
5. Terminating the relationship
Unless it enters into a contract with the employee, an employer may terminate its employees at any time, and for any reason, for cause or for no cause at all. However, in New Jersey, an employer may not terminate an employee because of his or her age, gender, race, ethnicity, national origin, mental or physical disability, marital status, sexual orientation, gender identity or expression, atypical hereditary cellular or blood trait, or liability for military service.
In addition, an employer may not fire an employee because he or she complains about or testifies regarding discrimination in the workplace. In New Jersey, an employer may not fire, demote or harass an employee who “blows the whistle.” This term refers to employees who disclose or threaten to disclose, or object to or refuse to participate in an activity that is either illegal or contrary to a public policy concerning public health, safety, or welfare or the protection of the environment.
Andrew Moskowitz is a partner at Pashman Stein in Hackensack, where he focuses his practice on employment law. He represents both employees and employers. He also advises on and litigates non-compete matters and handles commercial and general litigation cases. You can reach Mr. Moskowitz at amoskowitz@pashmanstein.com.