Bringing on your first employee is an important step for many organizations as they grow and need additional support and expertise to continue their mission. As it may mean becoming an employer for the first time if an organization was previously volunteer run, here are some important considerations when hiring your first employee.
Benefits and Compensation
Review the Market and Establish Your Base – Obtain market data for compensation and benefits and determine where you want to align within the market. You can add benefits as you grow and consider focusing first on what is most desired by employees and affordable to your organization. Health insurance and paid time off remain two of the most desired benefits. If offering health insurance is not an option financially, consider other benefits you can afford to offer now, such as other insurances or trending benefits such as paid leaves, flexible scheduling, and student loan repayment. Reach out to benefit and compensation partners to learn more and explore what you can offer based on your financial picture.
Wage and Hour – To avoid one of the biggest employer risk areas, ensure employees are paid correctly as exempt or non-exempt under federal and state wage and hour laws. Review any independent contractors utilized to ensure they are truly independent and not employees.
Benefits – Benefit plans also require compliance, including notices, plan development, etc. More information can be found here: https://www.dol.gov/general/topic/health-plans. Emerging laws mandate specific benefits for paid time off and insurances.
Multi-state – If you have employees in multiple states, compliance is needed for the state and locality in which each employee works. You are required to set up unemployment and tax withholding in each state. Each state and locality may have their own rules/laws around wage and hour, leaves, mandated benefits, etc. Information can be found on Department of Labor and other government websites for each state where you have employees working.
Payroll – Processing payroll requires proper procedures for tax withholding and reporting. New hire reporting is also required to the states in which your employees work. Many payroll vendors can assist with these services.
Safety and health practices – Employers have a general duty to provide a workplace free of hazards, and so safety and health practices must be in place. Even within office settings, developing an infection control plan is critical in our current environment.
There are a myriad of other employment laws on the state, federal, and local level that may apply to your organization. Become versed in those that apply to your organization and reach out for help with additional resources and guidance.
Employee Communication and Notices
Post federal, state, and local employment posters and notices, and for our now more remote world, ensure they are also available online (such as on your website) to both employees and applicants. Many states have these available for download on the state website (including Maine). Other states require notices to be sent to employees upon hire. Municipalities and local areas may have additional posting and notice requirements.
Develop an employee handbook. Developing an employee handbook is a great first step, as this exercise will organize your process of establishing policies and procedures and prompt you to consider your offerings to employees for benefits, compensation, and how you want to operate. An employee handbook can document and communicate to employees your policies for wages, benefits, compensation, leaves, employee conduct and performance management, and other important employment policies on at-will and equal opportunity employment, non-harassment, diversity and inclusion, open door, etc.
Employee Files and Technology
Your employee documents and files all need to be maintained securely and these can be maintained through an electronic method, like a human resource administration (HRIS) system, or on paper with access limited to those with a legitimate need to know. Talk to an IT specialist to ensure data security.
Identify ways to harness technology to make managing the employment life cycle easier and more efficient. Paper may be simpler for one employee, but with growth, technology use is key.
New Hire and Other Documents
At a minimum, employees must complete:
- Form I-9 to document employees are legally eligible to work in the U.S.
- Federal, state and/or local W4s for tax withholding
Records of certifications or licensure may also be needed.
Some organizations may require employees to be background checked or may have state licensing requirements mandating background checks. When utilizing a vendor partner for this service, ensure they are conducted in compliance with regulations including the Fair Credit Reporting Act. More information can be found here: https://www.ftc.gov/tips-advice/business-center/guidance/using-consumer-reports-what-employers-need-know.
Other documents may be required based on the state or locality, including training.
Mission and Values
Finally, as you hire employees, it is important to stay true to why your organization exists. Many nonprofits have a well-established mission and purpose. It is important to link this to values and ways of living at your organization so employees are clear on what you truly value and how what they do aligns with that mission. This can be reinforced in how you run meetings, assign work, collaborate as a team, the benefits you offer, the way you handle change, and how you support the greater community. Strong and positive values, consistently lived, can help attract and retain employees.
While there are added responsibilities and considerations for bringing on your first employee, an organized approach and process at this stage can help eliminate many headaches down the road which can arise from inconsistent or noncompliant processes and procedures. It is also an exciting step to grow and develop your organization. Reaching out to partners with expertise in specific areas, and proper planning as you establish yourself as an employer, can help start you out on the right path and give you peace of mind.
KMA contributed this article to the MANP (Maine Association of Non-Profits) Help Desk FAQ