Key Employer Responsibilities and Compliance When Hiring
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Employer Responsibilities When Hiring: Key Compliance Requirements
Hiring an employee is an exciting step for any business owner, but it also comes with a significant set of legal responsibilities. Whether you are a small business owner or managing a large team, understanding the requirements for hiring, documenting, and verifying your workforce is essential to stay compliant and avoid legal pitfalls.
When hiring a new employee, you must comply with both federal and state laws. These laws are designed to ensure that employees are legally authorized to work in the United States and are paid fairly for their work.
Here are the key requirements:
Federal Hiring Requirements
W-4 Form: Employers must collect a completed W-4 form from employees to determine federal income tax withholding. Employees must complete this form upon hiring, selecting their filing status and any additional withholding preferences. Employers use this information to accurately deduct the appropriate amount of taxes.
Employees can update their W-4 form at any time to adjust withholding based on changes in income, marital status, or other factors. Employers must retain a copy for their records but do not submit it to the IRS unless requested.
I-9 Form: All employers must complete Form I-9 to verify an employee’s identity and authorization to work in the U.S.
The I-9 form is a mandatory requirement for all employers, used to verify the identity and employment eligibility of anyone hired to work in the U.S. This form must be completed for every new employee (regardless of whether they are a U.S. citizen or a noncitizen), and it must be submitted within three days of the employee’s start date.
Section 1 of the I-9 form asks for personal information and documentation that proves the employee's identity and right to work in the U.S.
Section 2 requires employers to review documents such as passports, driver’s licenses, and Social Security cards to confirm the employee's eligibility to work.
Failing to complete or properly maintain I-9 forms can result in penalties and fines.
E-Verify: Some states require employers to use E-Verify, a federal system that confirms employment eligibility. E-Verify is completed electronically through the official U.S. Department of Homeland Security website. Employers must enroll in the system and use it to verify employment eligibility online. There is no paper version of E-Verify; the entire process is digital.
New Hire Reporting: Federal law requires all employers to report new hires to their designated state agency within a specific timeframe to help enforce child support and prevent fraud. New hire reporting can be completed either electronically or by paper, depending on the state. Most states offer an online portal for faster processing, but some still allow mail or fax submissions. Employers should check their state's designated new hire reporting agency for specific submission methods and deadlines.
State Hiring Requirements
E-Verify Mandatory States: The following states require E-Verify for all employers, regardless of industry or size: Alabama, Arizona, Georgia, Mississippi, South Carolina, Tennessee, and Utah.
E-Verify Required for Certain Employers: Some states mandate E-Verify based on employee count or sector (such as government contractors or large businesses).
Additional State-Specific Requirements: Many states have their own labor laws requiring additional documentation, such as state tax withholding forms, workers’ compensation insurance verification, and industry-specific compliance regulations.
Staying Compliant
Staying on top of hiring regulations is crucial to avoiding legal risks. Instead of navigating these changing requirements alone, let an HR professional help keep your business compliant. Reach out today to take hiring compliance off your to-do list!
