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Employee Onboarding - A Complete Guide

A quick, yet thorough snapshot of what employers need to know when hiring and onboarding new employees. Use the sidebar to jump ahead to specific sections. And find our Employee Onboarding Kit at the bottom of the page to seek additional help or get in touch with us.

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    Introduction

    You saw that you had a job that needed to be done at your place of business. You publicized the opening, sorted through the applicants, interviewed the top candidates, and finally made an offer. Good news: they accepted it! Now you just need to start getting your new employee up to speed as a valuable part of your business.

    Right?

    Sure. But before your new hire rolls up their sleeves to tackle their first project, you need to manage their onboarding. Onboarding isn’t the most exciting part of hiring someone. It involves a lot of paperwork, and each form comes with its own quirks and legal requirements.

    But the stakes are high, and while forms don’t usually speak to people on a spiritual level, avoiding prosecution is an excellent motivator in its own way. So whether you’re assembling a checklist for a large HR department or a solopreneur hiring an employee for the first time, here’s a complete guide to onboarding new employees.

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    Verifying eligibility to work

    If you are hiring an employee, it is the business’ responsibility to ensure that the person in question is eligible to work in the United States. The form for this is the I-9.

    Who is eligible?

    There are several categories of people who are authorized to work in the US:

    • Citizens
    • Noncitizen nationals of the United States
    • Lawful permanent residents
    • Aliens authorized to work

    You may not discriminate based on which of these categories an applicant belongs to. Any category is just as eligible for work as any other. The purpose of the I-9 form is to ascertain the eligibility. Hiring someone who is ineligible to work is a huge no-no as far as the federal government concerned, so consider this process just another one of those actions you take to keep your business running safely and smoothly.

    The new hire’s responsibilities when filling out the I-9 Form

    Section 1:

    The employee is responsible for filling out their name, address, date of birth, and Social Security number (if using E-Verify). For permanent residents, the form also requires their Alien Registration Number or USCIS Number. Authorized aliens will need to share their Alien Registration Number/USCIS Number, foreign passport number, or form I-94 admission number. They are also responsible for signing and dating the form.

    There is a sample I-9 available in Spanish that can be used as a reference. Employees must still fill out the English language form, however, except in Puerto Rico.

    Section 1 is due no later than the first day of employment.

    Section 2:

    Employees are also responsible for producing documentation that proves both their identity and their authorization to work. You can choose to present one document from List A, which provides proof of both identity and work authorization (a passport is the most common example), or one each from List B (identity) and List C (authorization). Within these guidelines, employees are freely able to pick which documents to use; employers may not specify which acceptable documents an employee must provide.

    There are alternative documents that are acceptable for minors who do not yet have suitable forms of identification.

    This documentation must be provided within three business days of beginning work. This means that, if your employee’s first day of work (including onboarding and training) is on Monday, these documents must be provided on or before Thursday. If they begin on a Thursday, the documents would be due on or before the following Tuesday.

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    Your responsibilities as an employer when filling out the I-9 Form

    Section 1:

    It is the employer’s responsibility to provide the proper forms and to look over Section 1 to make sure it was completed fully and properly before moving on to Section 2. It is illegal to ask an applicant to fill out Section 1 before they have accepted a job offer, so make sure you are tackling these tasks in the correct order.

    Section 2:

    Here it is the employer’s responsibility to examine the documents provided and determine to the best of your ability whether they are genuine. (You don’t need to be a detective, just look them over to the best of your ability.) On determining that they seem legitimate, you will fill out Section 2 with the relevant information from the document or documents yourself.

    Keep in mind that you must examine the provided documents physically. Asking for photocopies or photographs is insufficient. For remote employees, you can hire an agent or notary public to fill out Section 2 on your behalf.

    Section 3:

    This section only applies to current employees with a change to their authorization (usually an extension) or to re-hiring employees within three years of the last time the I-9 was completed. It does not apply to onboarding brand new employees.

    Overall:

    Although it is the employee’s responsibility to manage much of this process, any consequences for missed deadlines or incomplete forms comes down on the employer. If your new employee fails to complete the necessary tasks on time, this is considered valid grounds for immediate termination.

    Copies of every employee’s I-9 must be kept by an employer (either on paper or in electronic format) for at least three years from their hire date or at least one year after their termination date, whichever comes later.

    Withholding income taxes

    Withholding federal income taxes

    Everyone in the US who works for a wage, salary, or stipend (including both citizens and noncitizens) pays federal income taxes. Independent contractors handle taxes on their own, and may ask a client to provide a 1099, which covers “miscellaneous income.” Employees, on the other hand, typically rely on their employer to arrange for their estimated taxes to be withheld from their paycheck. This is the purpose of the W-4 form.

    Your responsibilities as an employer regarding W-4 forms

    You are responsible for providing a W-4 for your employee to fill out, whether in electronic or paper format. You should also provide a copy of Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens, to any employees who fall under that category. You may also want to direct employees to the IRS Withholding Calculator. Unlike the I-9, the W-4 can be completed in Spanish if this is more convenient for your employee.

    Employees who take more allowances will generally see a higher refund, while employees who take fewer allowances will receive more money in their regular paycheck. It’s generally considered a good practice for employees to fill out the form to resemble their actual owed taxes as closely as possible, neither under- or overestimating the amount of taxes to be owed. Under normal circumstances, though, you cannot dictate your employee’s choices regarding their tax withholding. It is a good practice to inform them that they can be subject to a $500 fine if they are found to be withholding too little “with no reasonable basis.”

    If your employee fails to fill out a W-4, you are obligated to withhold federal income taxes from their pay as though they were single and without any allowances.

    W-4 forms must be kept by the employer for four years, even if an employee fills out a new one in the interim.

    Unusual circumstances with W-4 forms.

    There are a few situations in which your responsibilities regarding W-4 forms might be different.

    Exemptions

    Some employees who earn lower wages are exempt from the need to have federal income taxes withheld from their paycheck. These are people who both owed no federal income tax last year and who reasonably expect to owe none this year. However, people who are exempt still need to fill out a W-4. This exemption is only good for one year, and the employee in question will need to fill out another W-4 for the next calendar year, regardless of whether or not they still meet the requirements for exemption.

    Lock-In Letters

    If the IRS determines that an employee has been withholding far too little without a good reason, they may send you a lock-in letter, requiring you to withhold taxes at a certain rate even if the employee’s W-4 indicates they would prefer to withhold a lower amount. (You are free to follow their W-4 if it requests withholding more than the lock-in letter requires.) If you allow employees to change their withholding amounts electronically, you will need to lock your employee out of this system. Employees with a lock-in in effect will need to call the IRS directly if they would like to change their withholding based on a change in circumstances, such as marriage or the birth of a child.

    Invalid W-4s

    If an employee changes the W-4 (such as crossing out the wording indicating that the information is true) or tells you that the information on it is false (not the smartest move ever, but it has happened), you need to tell the employee that the form is invalid and that they should fill out a new one. If the client refuses to do so, treat it as though they have no form, and withhold as though they were single and childless.

    Withholding state and local taxes

    Every state handles this a little differently. Some states, like South Dakota and New Hampshire, have no state income taxes at all. If you operate out of one of these states, you can ignore this entire section, because your responsibility in this area is to do nothing at all, so sit back and enjoy your extra fifteen minutes of free time.

    Other states have income tax rates ranging from lower than 3% to higher than 13%. Many states also tie local or regional taxes into the same system, which is why you’ll sometimes hear the acronym SALT, for “state and local taxes.” Each state operates its own system, and covering the paperwork for each of them is beyond the scope of this document.

    If you’re in New York state (hello, neighbor!), state income taxes are withheld using the IT-2104 form. Luckily, it’s a simple form, which you can have your employee fill out at the same time as their W-4. In most cases, all you need to do is check off Box B and send it off to the Department of Taxation and Finance.

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    Setting up payroll systems

    There are still some businesses that operate primarily with paper checks. These days, though, many employees appreciate the option to participate in direct deposit instead. This frees them from the hassle of going to a bank or check cashing establishment and gives them the ability to have their money go straight into a particular account.

    Assembling direct deposit forms

    There is no mandated form for direct deposit, so most businesses either end up making their own or using a template that works for them. Luckily, all direct deposit forms require the same information. The first part is the authorization, giving you permission to deposit money directly into their account.

    The second part is the detailed explanation of where that money will go. What amount or percentage will go into any given account, the account and routing numbers, etc. For employees who don’t do much electronic banking, you can encourage them to bring a voided check with them, which will have both of those numbers for the associated checking account.

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    Regarding payment systems

    You, as an employer, can decline to offer direct deposit and require that all of your employees receive a paper paycheck. (They may not love it, but you’re within your rights to do so.) What you’re not allowed to do is require all your employees to sign up for direct deposit.

    Why? Some people are not able to open a bank account due to past credit history. Still others have had bad experiences with banking and choose not to work with them. Whether by necessity or choice, around 7% of Americans have no access to banking services.

    And even among those employees who bank, not all may feel comfortable giving a person they’ve just met even limited access to those accounts. It doesn’t matter whether you consider your office “paperless,” you are still required to provide a check to those who prefer it.

    Systems for managing cash

    Please don’t pay your employees in cash. Even if you track your expenses religiously, it looks suspicious and is likely to land you in a giant pile of auditors.

    If you are hiring employees who are likely to receive cash tips, you will need to decide in advance how those are paid out and distributed. Don’t wait until after a server or hairstylist has worked for you for a week before informing them about how a significant chunk of their income will be managed.

    Collecting Equal Opportunity data

    If you have 100 or more employees, you are required to record information regarding their race, ethnicity, and gender, alongside their job categories. This is to help detect discriminatory practices that might otherwise have gone unnoticed. While the EEO-1 Survey only needs to be completed annually, it’s best to collect the data on hiring. If you have fewer than 100 employees but are likely to grow to 100+ within a year, this is something you’ll need to plan to collect in the near future.

    Collecting other personal information

    There is no single guideline or requirement for collecting personal information on employees, but doing so is certainly useful. This could include:

    • Identifying information, such as the employee’s full legal name and social security number.
    • Health and safety information, including serious allergies, physician, required medical accommodations, and emergency contact information.
    • Job information, like their title and pay rate or salary.

    Depending on your industry, there might be be other information worth tracking. Licenses and certifications, languages spoken, and other key skills. 

    Creating a specialized form for this will ensure you don’t forget to collect any key data on your new hires.

    The benefits of employee background checks

    Employers who conduct background screening greatly reduce the risk of employee theft, fraud and embezzlement. Background screening may reveal past criminal behavior and save your company thousands of dollars by helping you prevent a bad hire. Additionally, it is important that you protect your employees and clients from sex and violent offenders. Background screening sends a message to your employees, vendors, and clients that you are serious about safety.

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    Explaining the job and pay

    Your new hire should have been given information about the position and the pay rate more generally throughout the application process but then quite specifically when they received an offer letter. Still, it makes sense to go over this written information for two reasons. One is to make sure that both the job description and the pay are 100% clear to the employee. The other is because some of this information is required by law.

    Creating a job description

    A good job description will obviously vary from one position to another, but should definitely include the following things:

    • The functions of the job, which can either be process oriented (speak with clients on the phone and update their contact information in Excel) or product oriented (keep all client information up-to-date).
    • Reporting relationships. This should include both who the employee reports to, and who reports to the employee.
    • The schedule or expected hours for the job. Depending on the role, this could be a strict 8-5 with a mandatory one hour lunch at noon, a vague preference for around 45 hours a week, or a statement that the hours are irrelevant so long as the assignments turned in, which typically requires around 20 hours weekly.
    • FLSA status, meaning whether the employee is considered exempt or non-exempt.
    • The requirements for the job, including skills, credentials, and physical abilities.

    Creating a wage notice

    In New York State, employers are legally required to provide a wage notice to all new employees in both English and the employee’s primary language. This notice must include

    • Pay rates, including overtime
    • How payment is calculated: Hourly? Daily? On commission?
    • The payment schedule, such as the 7th of every month, or every other Friday.
    • The official name of the employer and any other names the business uses.
    • The contact information for the employer, including phone number and main address.
    • Any allowances taken as part of the minimum wage, which may include tips, meals and lodging deductions

    Even if you’re not required by law to provide this information, it’s a good practice that can save you from having to look up a lot of information regarding wages each time an employee has a question.

    Explaining policies, procedures, and codes of conduct

    While there are many parts of training and orientation that can wait for a while, the basic rules for the workplace are not among them. Not only do you not want employees inadvertently breaking rules in their first few weeks, but providing straightforward expectations right away also helps put new employees at ease. It’s challenging enough just trying to absorb new names and new job responsibilities without trying to decipher unspoken behavioral requirements.

    Creating an employee handbook

    If you have an employee handbook, this should be the go-to source of information. If you haven’t assembled one yet (and many small but growing businesses put off this step for far too long), consider creating one sooner rather than later. If you’re at 10 employees, a handbook becomes a key document for your business to have. At 50, you’ll want to have your handbook reviewed by an employment lawyer to make sure you’re hitting all the right notes.

    Employee Handbook Roadmap - Complete Payroll

    If you’re feeling hesitant, there are templates available to help guide you through the process. But keep in mind that an employee handbook can make more challenging aspects of managing a business, like discipline and terminations, much simpler. Reviewing the handbook with your new employee (and having them sign a form indicating that they received all the information in it) means that “But nobody told me that was the rule!” is no longer a reasonable excuse.

    Get help with your employee handbook

    Introducing people, places, and things

    After all that paperwork, this is the fun part of onboarding! Introductions should include:

    • People: The folks they’ll see on a regular basis, but especially teammates, direct reports, and any support staff they should know. Don’t forget about key employees at other locations who work remotely.
    • Places: The grand tour. Where will the employee be working? Where is their supervisor located? Where are the exits, the bathrooms, the break room, the employee parking spots? Where’s the nearest coffee or fast food place? Whatever seems pertinent.
    • Things: The equipment they’ll be working with, ID cards, supplies, etc. This also includes digital “things,” like passwords and software.

    While this whirlwind introduction takes place as part of the onboarding process, it will generally take weeks or months for new employees to truly understand the lay of the land. It’s worth it to consider assigning a mentor to your new hire, someone who isn’t their boss but can answer their questions and provide guidance over the longer term.

    Get help with employee onboarding

    What does this all mean?

    Mostly paperwork. A lot of paperwork. Luckily, you don’t have to create or even gather all these forms on your own. Our free, downloadable NYS Employee Onboarding Kit has what you need to get started. And if you need more hands-on help, Complete Payroll is your friendly neighbor HR expert. Get in touch to see how we can help you get your next employee set up for success.

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