by Samuel K. Darling, Business Attorney in Everett & Seattle, WA
[Video & Enhanced Transcript]:
Hello, and welcome to an edition of Genesis Law Firm Teaches. Today’s topic: Hiring an Employee in Washington State. This video is an overview of the minimum legal requirements. I’m not going to address every detail that you might need to know. For more information on this and related legal topics, I encourage you to review the resources section of our firm’s website, where you’ll find various legal guides in video and written format.
Step 1: Master Business License
In Washington, the first step in hiring an employee is to properly report your intention to do so on your master business license application. That’s your business license application to the State of Washington, as opposed to your local business license application. In your master business license application, you are expected to indicate whether you intend to hire employees, including any minors. If you didn’t make the appropriate selection at the time you initially submitted your application, you’ll need to re-submit. Re-submitting is not expensive, and it’s fairly simple.
Step 2: I-9 Form
Have your new employee fill out an I-9 form on his or her first day on the job. The I-9 form comes from USCIS, a federal agency responsible for immigration and work eligibility. Completing the form helps the federal government determine whether the new employee may work in the United States. You can obtain an I-9 form and instructions on the USCIS website.
Step 3: W-4 Form
In addition to the I-9 form, ask your employee to complete a W-4 form on his or her first day. This form comes from the IRS website, and it helps you and the IRS determine the appropriate withholdings. The form is self explanatory.
Step 4: Report Hire to DSHS
The next minimum step is to report the new hire to the Washington State Department of Social and Health Services (DSHS). You have 20 days of the date of first employment within which to report the new hire. DSHS will then forward that information to the other relevant government agencies within Washington.
Step 5: Taxes
You need to pay, deduct, and withhold the appropriate taxes for your employee. Employment taxes comprise one category. The employer pays slightly less than half, and then deducts the remaining amount from the employee’s paychecks.
You also need to make sure you are withholding the right amount of money for purposes of federal income tax.
And don’t forget to properly document deductions and withholdings on your employee’s paystubs and W-2s.
At this point, you’re properly worried, because your fledgling business lacks the sophistication to properly implement these tax and withholding requirements. Rest assured, you don’t really need to. Instead use payroll software that does it for you, or hire a payroll service. Almost everybody does. If you currently use QuickBooks, just purchase the relatively inexpensive payroll add-on. It’s simple instructions allow the average bookkeeper to process payroll and produce the required documentation.
As an aside, if you’re beginning to run payroll, that’s often the appropriate juncture at which to make an S corporation tax election. You might want to speak with your attorney or your accountant about this—it could save you a substantial amount in taxes.
Additional Employment-Related Laws to Learn
I’ve just told you what you need to know—the basics of hiring an employee. Now I’m going to talk about additional legal topics most employers should familiarize themselves with. This is not an exhaustive list, but it should help put you on the right track.
- If you’re hiring minors (employees under the age of 18), you should learn about minor work permits. You would also do well to research the laws protecting minors in the work place.
- You should research wage and hour laws. This topic is fairly complex, so expect to spend some time wrapping your mind around it. Certain employees are exempt from wage and hour protections; others aren’t. Find out which of your employees are not exempt, and then learn how to properly calculate their pay. Of note, your probably need to comply with wage and hour laws even if you pay salaries rather than hourly amounts.
- Employers must comply with record keeping and poster requirements.
- Most employees are entitled to periodic breaks. You should know how long those breaks are, how often they occur, and whether you must pay the employee during them.
- You should learn what the Family Medical Leave Act (FMLA) is.
- There are certain questions you aren’t allowed to ask during interviews. Learn what they are before asking them.
- Do some research on reasonable accommodation of disabilities. The principle of reasonable accommodation applies to disabilities of every sort, including relatively small disabilities such as slight vision impairment and pain from repetitive tasks.
- You should learn some of the basics about wrongful terminations before letting your first employee go, because some of the laws may be counter-intuitive to a layperson. For example, a statistical study of your layoffs could be used against you in a race discrimination suit even if you have no racial bias.
- I recommend researching the legalities of employee handbooks. Almost every well run business will adopt an employee handbook at some point. You should know what your handbook should and shouldn’t include.
- Learn when and how to document employee misbehavior and terminations for purposes of satisfying the Department of Employment Security. Proper basis and documentation for terminations could save your business a great deal of money in employment security taxes. That same documentation might also afford protection against a wrongful termination lawsuit.
For more information on this and related legal topics, our firm encourages you to review our website. Or contact us at 866-631-0028 to consult with one of our business law attorneys.