Many entrepreneurs are the master and ringleader of a one-person circus when they start out. After a certain point, growth becomes limited because you can’t handle any more work on your own.
That’s when it is time to hire an employee. Sounds simple, right? Depending on your line of work, it may not be a simple as it seems. Here are some of the legalities to consider when hiring an employee.
Tax Reporting Laws
Before you add an employee to the payroll, you need to know exactly what is required of your business in regards to holding taxes, and any other deductions that need to be submitted to the government. Failing to do so can not only cost you and your employee valuable time and money but may result in a costly audit that will take you away from other parts of your business. After all your hard work to get where you are today, it would be a shame to lose it all because you failed to dot every i and cross every t.
Contractual Laws
A contractual law is different from tort law, which is generally what you see on court shows. Contractual law speaks of being legally bound by a contract. It is important to have everything with your new employee in writing, to ensure that both sides are clear on the agreement.
While spoken agreements are legally viable in court, the burden of proof is on whoever is bringing forth a charge. That means, if a verbal agreement goes south and there were no witnesses present, it won’t be enforced in court. According to Brownstone Appellate Law Firm, there’s always the option to pursue an appeal, but it is best to take precautionary measures.
Contractual agreements may outline things like wages, hours, expectations, non-compete clauses, and non-disclosure agreements. It is important to get legal advice while drafting the document. The employee should have a legal representative review it as well.
Employment Laws
Before you start getting someone to work for you, you must know the basic employment laws of your area. What is minimum wage? Can the person legally work in your country? It’s also essential to know about the different issues that could arise during the hiring and employment process. There are laws relating to discrimination against employees that relate directly to which questions you can ask in an interview. If an employee becomes pregnant, you may be required to pay for their leave.
Worker’s Compensation
Before hiring an employee, make sure you are well versed in the tedious world of worker’s compensation. Many entrepreneurs overlook this aspect of their business if the job doesn’t require manual labor. However, if an employee trips over a broom in the office and sprains their wrist, you may find yourself in a heap of trouble. Knowing the ins and outs of worker’s compensation will help you effectively report and mitigate blowback if something occurs.
Employee Termination
Hopefully, you never have to terminate your employee. However, if the time comes, you need to do your due diligence to find out what is required of you. If you do not follow proper protocol for your region, you could end up in a dispute in court. If you have just cause, you will have to prove it through records of taking the appropriate disciplinary steps or a direct violation of your contract. If you do not have just cause, you may be required to pay severance in lieu of notice.
You can add a little room to work with by adding an expiration date to your contract with the employee. Upon expiration, you can choose whether or not to renew.
The legalities of hiring an employee can be complex. If in doubt, hire a human resources expert or lawyer to guide you through the process.
