There are three general scenarios for a business hiring its first employee in New York State:
- A New York-based business is hiring its first employee overall.
- A company that already has one or more employees in another state is hiring its first employee in New York.
- A foreign company is hiring its first U.S. employee, who will work in New York.
I have represented employers in all of these scenarios. Some of the issues are the same across the board. Others differ.
This post gives an overview of the considerations in each of the situations above. As always, don’t rely entirely on this blog to guide your hiring process. You should seek legal and other assistance to ensure compliance.
First Employee Overall
Some businesses start out with employees. Others are run entirely by the owner(s) until they decide to hire someone to help run the business. Either way, once the first non-owner comes on board, the business (or its owner(s) personally) becomes an employer. Having employees can be great for many reasons, but being an employer imposes many new requirements.
As an employer, you now (in most cases) have to get several kinds of mandatory insurance: workers’ compensation, unemployment, and (in New York) disability. Failure to immediately obtain these insurance coverages can result in significant liability.
Other forms of employee insurance are technically optional. This includes health insurance and life insurance. Many small employers do not provide these benefits, but many others do. Unless you have to offer these to attract the employees you’re trying to hire, these benefits should not be your first concern. Get the statutorily required insurances first. And make sure you comply with the various other notice and recordkeeping requirements that now apply to your business.
Once you are an employer, you also become subject to various notice posting requirements. For example, all employers must post information in the workplace about minimum wage and overtime requirements. Some posting requirements depend on the number of employees you have, either in the state, in the United States, or overall. All of the required notices are probably available online through the various enforcement agencies, but many employers purchase posters from private vendors. In either case, you must ensure that you have all of the necessary (and current) postings up based on your size and location(s).
First Employee in New York
Even if your company already has employees in other U.S. states, New York has its own specific requirements. If you have an employee based in New York, you probably have to satisfy most of these to avoid potential liability.
Insurance
This includes obtaining the disability insurance coverage mentioned above. Whereas most states require workers’ compensation insurance, New York is one of only five states that require this coverage. It provides partial compensation for employees unable to work based on a non-work illness/injury. (California, Hawaii, New Jersey, and Rhode Island have similar requirements.)
Wages
New York also has specific wage notice requirements. Basically, each employee in New York must receive written notice of certain information about their employer and their compensation. The employee must sign and return a copy, and the employer must retain the copy in its files. Moreover, if the employee’s primary language is one other than English, the notice may have to be provided in that language. Finally, changes in compensation or company information may require employers to give employees new notices. I have discussed New York’s wage notice requirements in more detail here.
Upon hiring an employee in New York, you must also notify the state that you have done so. More information about that requirement/process can be found here.
Policies
In the past couple of years, New York has also add written employee policy requirements for the first time. All employers must provide every employee with a copy of a written sexual harassment prevention policy and a paid family leave policy. New York employers must also provide annual sexual harassment prevention training to all employees. New hires must receive a copy of the sexual harassment training materials at the time of hire.
There are some requirements that depend more specifically on where within New York the employee works. Most of these relate to employees in New York City. For example, New York City has a paid sick leave law that requires employers to notify employees of their sick leave rights.
First Employee in the United States
There are some requirements that will apply to all employees in the United States, whether in New York or another state.
Employers must obtain and retain a completed I-9 form for each employee hired after November 6, 1986. This form confirms the individual’s eligibility to work in the United States. In addition to providing information on the form, employees must show documentation establishing their right to work. This may include drivers’ licenses, passports, social security cards, visas, etc. Allowing an employee to work without completing the form in the first 3 days of employment creates significant legal exposure under U.S. immigration laws.
Employees should also complete a W-4 form to enable the employer to make appropriate tax deductions from their compensation. Many states also impose income taxes, and may have their own employee withholding form. For example, New York’s IT-2104 form is available here. Failure to properly deduct income taxes can create problems for both the employer and the employee.
Finally, the Fair Labor Standards Act establishes both a minimum wage (currently $7.25 per hour) and overtime requirements (generally time and half pay for hours worked beyond 40 in a week). Many states, including New York, have similar laws that may impose higher wage requirements (as is currently the case in New York). Some employees, however, are exempt from minimum wage and/or overtime pay requirements. Be sure you know how these (extremely complicated) laws affect your employee(s) before bringing them on board.
Don’t Stop Here
If you are hiring your first employee in New York (or anywhere else), make sure you thoroughly consider all of the legal and financial implications. They are not all mentioned here, but hopefully this is a good place to start. Most business owners should speak to both an accountant and an employment lawyer before adding employees. This is definitely a situation where being proactive can save you considerably in the long run.