Hiring Your First Employee

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Help Wanted: st Employee Hiring Your 1 Hiring, taxes, payroll, legal compliance & recordkeeping Presented by: Bronwen Madden, Coordinator, SBTDC hosted by MSU-WP Deanna McNew, Area Manager, Penmac Staffing Thursday, October 23, 2014 - 1:30 PM to 4:30 PM (CDT)

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Housekeeping • Mobile devices • Restrooms • Break • Respect • Interactive process

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Sponsors Penmac Staffing http://www.penmac.com Ozarks Small Business Incubator (OzSBI) http://ozsbi.com Small Business & Technology Development Center (SBTDC) Hosted by Missouri State University – West Plains (MSU-WP) http://wp.missouristate.edu/ucp/SmallBusiness.htm U.S. Small Business Administration (SBA) http://www.sba.gov

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Introductions • Participants • • • • Name Company Position Desired Outcome • Presenters • Bronwen Madden, Coordinator, SBTDC hosted by MSU-WP • Deanna McNew, Area Manager, Penmac Staffing

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Seminar Outline • Registration Form • Seminar Agenda • • • • • Hiring Taxes, Payroll, and Legal compliance Q&A Resources Handouts • Evaluation

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Part 1: Hiring

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Who Are You Hiring? • • • • Employees Independent contractors Statutory employees Non-statutory employees http://missouribusiness.net/article/doing-business-in-missouri-hiring-employees/#tips

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Contractor Vs. Employee An Independent Contractor An Employee Operates under a business name Performs duties dictated or controlled by others Has his/her own employees Is given training for work to be done Maintains a separate business checking account Works for only one employer Advertises his/her business' services Invoices for work completed Has more than one client Has own tools and sets own hours Keeps business records http://www.sba.gov/content/hire-contractor-or-employee

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Ten Tips to Hiring Effectively 1. Define the Job: duties, responsibilities, skillsets, and outcomes 2. Plan Your Employee Recruiting Strategy 3. Use a Checklist for Hiring New Employees 4. Recruit the Right Candidates When Hiring an Employee 5. Review Credentials and Applications Carefully 6. Prescreen Your Candidates 7. Ask the Right Job Interview Questions 8. Check Backgrounds and References 9. Consider Candidates that Complement your Team’s Existing Strengths 10. Use Effective Employment Letters

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Expanding the Employee Pool • Advertise in a variety of media (web, print, radio, job fairs, college recruitment, etc.) • Register with the Missouri Career Center http://jobs.mo.gov to find matches • Connect with professional and academic associations for potential candidates Example: Many industry associations will have private job board for members only • Request names of potential candidates from within local education institutions Example: Recruit from the Honors College or school’s Student Success Center • Include statements on your business’ commitment to diversity and provide diversity training to current employees Example: Missouri State University is an Equal Opportunity/Affirmative Action/Minority/Female/Veterans/Disability Employer and Institution. • Work with staffing agencies and consider employees who have held part-time positions • Establish an employee referral program

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The Interview Process • The Invitation: Provide information on the interview location, who will be involved, and your process; use caution if leaving a message to not jeopardize current employment and maintain confidentiality • Prepare: Develop a standard set of interview questions to be asked of all applicants; focus questions on required qualifications • During the Interview: Ask about abilities, not disabilities • • • • • Introduce everyone to the applicant and offer water Keep your poker-face and speak in a normal tone Look directly at the applicant and try to be at eye-level; be aware of cultural bias If the applicant misunderstands a question, ask the question in a different way Close the interview by thanking the applicant and describe your process and timeline • Afterwards: Notify applicants of the outcome, even those who are not offered the job

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Interview Questions DO ASK ABOUT: DO NOT ASK ABOUT: Tell me about yourself Race Describe a time when something went wrong at work and how you dealt with it. Color How would your boss describe you? Religion What role do you usually play in a team? National origin Where do you see yourself in five years? Birthplace Tell me about a favorite project you worked on and why it’s your favorite. Age Do you have any questions for me? Marital/family status Sex Disability http://www.eeoc.gov/laws/types

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Reference Checks • • • • • • Always check references (more than one), especially from former supervisors Advise the applicant as a courtesy Develop a set of reference questions and use for each candidate Identify yourself and your reason for calling Ask job-related questions Find out what kind of work relationship the reference had with the applicant (first hand observation of performance is most valuable) • Refrain from asking illegal questions (same as from the interview) • Can ask about attendance, but not ask about use of sick leave, medical leave, or worker’s compensation • Live Scan Fingerprint Screening from the Department of Justice (more common for inhome supportive care businesses, education institutions and youth organizations)

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Screening & Evaluating Applicants • • • • Communicate to the Search Committee what qualifications are deemed most important Prioritize qualifications to assist in decision-making Decide what qualifications can be evaluated from the application materials Narrow your pool of applicants to those best qualified: • • • • • • • • Brief phone interviews Pre-interview reference checks Supplemental application Work sample request Resolve differences of opinion regarding a candidate’s qualifications through discussion Retain all applications and screening documentation until the process is completed Notify applicants who are no longer under consideration Consider applicants that have the National Career Readiness Certificate (WorkKeys)

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Workforce Training Assistance • On-the-Job Training (OJT) Training provided at a worksite by an employer; trainee is an employee of the participating business and trainees receive wages and/or benefits while learning a new skill. • Work Ready Missouri Program Individuals receiving Unemployment Insurance (UI) Compensation receive occupational worksite training on a part-time basis for up to six weeks. Local Contact: Steve McCann, Business Services Missouri Career Center – West Plains, MO Phone: (417) 256-3158 Cell: (417) 293-8653 Email: smccann@scwib.org

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Break: Back in 15 Minutes

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Part 2: Taxes, Payroll and Legal Compliance

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Hiring Steps Overview Step 1. Obtain an Employer Identification Number (EIN) Step 2. Set up Records for Withholding Taxes Step 3. Employee Eligibility Verification Step 4. Register with Your State's New Hire Reporting Step 5. Obtain Workers' Compensation Insurance Step 6. Post Required Notices Step 7. File Your Taxes Step 8. Get Organized and Keep Informed

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Step 1. Obtain an Employer Identification Number (EIN) • Before hiring your first employee, you need to get an employment identification number (EIN) from the U.S. Internal Revenue Service • The EIN is often referred to as an Employer Tax ID or as Form SS-4 • The EIN is necessary for reporting taxes and other documents to the IRS • The EIN is necessary when reporting information about your employees to state agencies • Apply for EIN online or contact the IRS at 1-800-829-4933

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Step 2. Set up Records for Withholding Taxes • Keep records of employment taxes for at least four years • Send Copy A of W-2 form to the Social Security Administration by the last day of February to report wages and taxes of your employees for the previous calendar year • Send copies of W-2 forms to your employees by Jan. 31 of the year following the reporting period • Types of withholding taxes you need for your business: • Federal Income Tax Withholding • Federal Wage and Tax Statement • State Taxes Obtain a Missouri Withholding Number from the Department of Revenue. • Obtain Missouri Unemployment Tax from the Department of Labor and Industrial Relations. • If you already have a Missouri Tax Identification (ID) Number, you can add withholding tax to your existing number by contacting the Department of Revenue

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Tax Forms Federal Internal Revenue Service Forms: http://www.irs.gov/Forms-&-Pubs Form SS-4 Form W-4 Form I-9 IRS Employment Identification Number Federal Employment Tax Withholding Federal Employment Eligibility Verification State Missouri Department of Revenue Forms: http://dor.mo.gov/forms Form W-4 Form 2643 Form 2699 Employee’s Withholding Allowance Certificate Missouri Withholding Number Unemployment Tax Registration

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Step 3. Employee Eligibility Verification Verify an employee's eligibility to work in the United States • Complete Form I-9, federal employment eligibility verification • Employers are required to keep the I-9 on file for three years after the date of hire or one year after the date of the employee's termination, whichever is later • Employers can use information taken from the Form I-9 to electronically verify the employment eligibility of newly hired employees by registering with E-Verify (http://www.uscis.gov/e-verify)

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Step 4. Register with Your State's New Hire Reporting • Report newly hired and re-hired employees to a state directory within 20 days of their hire or rehire date • Missouri Department of Social Services: http://dss.mo.gov/cse/newhire.htm You may use one of the following reporting methods: 1. Mail the W-4 or equivalent form to: Missouri Department of Revenue, PO Box 3340, Jefferson City, MO 65105-3340 2. Fax copies of the W-4 or equivalent form to: (573) 526-8079 3. Electronically report employees via Secure File Transfer. If you are interested in reporting employees via Secure File Transfer, please contact Child Support at 1-888-663-6751

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Upon First Payroll, Employers Must: • Withhold state income tax and federal income tax at a percentage determined by salary and exemption information stated on the form W-4 • Withhold 6.2% of the employee's salary for Social Security taxes • Withhold 1.45% of the employee's salary for Medicare taxes • Pay the Social Security and Medicare taxes to an approved banking institution on the 15th of the month • File required payroll reports with the Department of Revenue and the Department of Labor and Industrial Relations on a quarterly and annual basis; and issue W-2 reports to employees at the end of the year

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Step 5. Obtain Workers' Compensation Insurance Carry workers' compensation insurance coverage through a commercial carrier, on a self-insured basis or through their state’s Workers' Compensation Insurance program. Ryan McKenna, Director, Labor and Industrial Relations Commission John J. Hickey, Director, Workers’ Compensation 3315 W. Truman Boulevard, Room 131, P.O. Box 58 Jefferson City, MO 65102 (573) 751-4231 | Fax: (573) 751-2013 workerscomp@labor.mo.gov http://labor.mo.gov/contact-labor

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Missouri Workers' Comp. Ins. Requirements • Required to carry workers’ compensation insurance if you have five or more employees, unless you are in the construction industry, then you must carry workers’ compensation insurance if you have one or more employees • Employers that don’t have the required number of employees or who have employees in the exempt categories may “elect” to come under the law and carry workers’ compensation insurance • Exempt employers that decide not to purchase workers compensation insurance or to selfinsure remain exposed to civil lawsuits brought by employees who are injured during work • Sole proprietors and partners are not themselves covered unless they elect to be covered; close family member-employees and members of a limited liability company are presumed to be covered unless they opt out http://labor.mo.gov/DWC/Employers

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Step 6. Post Required Notices Display posters in the workplace that inform employees of their rights and employer responsibilities under labor laws http://labor.mo.gov/content/mandatory-posters Posters Required by the State of Missouri 1. Notice to Workers Concerning Unemployment Benefits (MODES-B-2) 2. Workers' Compensation Law (WC-106) 3. Discrimination in Employment (MCHR-9) 4. Missouri Minimum Wage Law (LS-52) 5. Employer's Employing Workers Under the Age of 16 List (LS-43) 6. Discrimination in Housing (MCHR-6) 7. Discrimination in Public Accommodations (MCHR-7) Posters Required by the Federal Government 1. Employee Polygraph Protection Act (WHD 1462) 2. Employee Rights under NLRA 3. Equal Employment Opportunity is the Law (EEOC-P/E-1) 4. Fair Labor Standards Act: Minimum Wage (WHD 1088) 5. Family and Medical Leave Act (WHD 1420) 6. Job Safety and Health: It's the Law Poster (OSHA 316512-06R) 7. Uniformed Services Employment and Reemployment Rights Act

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Step 7. File Your Taxes If applicable, file IRS Form 941, Employer's Quarterly Federal Tax Return New and existing employers should consult the IRS Employer's Tax Guide to understand all their federal tax filing requirements. • Online: http://www.irs.gov/publications/p15 • PDF: http://www.irs.gov/pub/irs-pdf/p15.pdf

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Step 8. Get Organized and Keep Informed Maintain a healthy and fair workplace Provide benefits Keep employees informed of company policies Set up recordkeeping Tax Recordkeeping Guidance Labor Recordkeeping Requirements Occupational Safety and Health Act Compliance Employment Law Guide (employee benefits chapter) Apply Standards that Protect Employee Rights Comply with standards for employee rights Equal Employment Opportunity Commission Fair Labor Standards Act Follow statutes and regulations for minimum wage, overtime, and child labor http://www.dol.gov/compliance/guide

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Keep Record of Employee Details • • • • • • Name and Social Security number Dates a worker was hired and separated Dates on which a worker performed some services The location where services were performed The amount of remuneration paid each worker The hours of each day in each pay period an individual worked in non-covered employment, and nature of the work • Wages, including commissions, bonuses, prizes and gifts. Also, tips received by a worker from persons other than employer, if such tips are reported to the employer for Social Security purposes • Copies of all hiring documents and tax forms (W-4s, I-9, etc.)

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Occupational Safety & Health Administration (OSHA) • Employers must furnish a place of employment free from recognized hazards and comply with occupational safety and health standards • Right to file a complaint with OSHA and request an inspection • Employers or Employee Rep given an opportunity to accompany an OSHA inspector • Employees must not be discharged or discriminated against for filing safety and health complaints • Citation alleging violations may be issued to the employer; citations specify a time period within which the alleged violation must be corrected • OSHA citations must be prominently displayed at or near the place of alleged violation for three days or until it is corrected, whichever is later, to warn employees of these dangers • Free assistance in identifying and correcting hazards and in improving safety and health management is available to employers, without citation or penalty, through OSHA-approved Missouri Department of Labor on-site inspections: labor.mo.gov/DLS/WorkplaceSafety/free_onsite_sharp.asp • Consult the OSHA Small Business Handbook: osha.gov/Publications/smallbusiness/small-business.html

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Occupational Safety & Health Administration (OSHA) Contacts Kansas City Area Office 2300 Main Street, Suite 168 Kansas City, Missouri 64108 (816) 483-9531 (816) 483-9724 Fax Toll Free:1-800-892-2674 St. Louis Area Office 1222 Spruce Street, Room 9.104 St. Louis, Missouri 63103 (314) 425-4249 (314) 425-4255 Voice Mail (314) 425-4289 Fax Toll Free: 1-800-392-7743

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The Affordable Care Act • Notify employees of the Affordable Care Act • Businesses with over 50 full-time employees (FTEs) are required to offer health insurance • Small Business Health Options Program (SHOP) is available for employers with 50 or less FTEs https://www.healthcare.gov/small-businesses/employers • May qualify for the small business health care tax credit with less than 25 FTEs • Insurance providers cannot turn you down due to health status or pre-existing conditions • Open enrollment for 2015 starts on November 15 QUESTIONS? Call 1-800-706-7893 (TTY: 711) Monday-Friday 9 a.m. – 7 p.m. ET

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Questions & Answers

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Hiring Resources U.S. Department of the Treasury, Internal Revenue Service (Circular E), Employer's Tax Guide http://www.irs.gov/pub/irs-pdf/p15.pdf U.S. Small Business Administration, Hire Your First Employee http://www.sba.gov/content/hire-your-first-employee U.S. Department of Labor (DOL) Compliance: http://www.dol.gov/compliance Missouri Department of Labor Resource Guide for Employers http://labor.mo.gov/sites/default/files/pubs_forms/4466-AI.pdf Missouri Business Portal http://www.business.mo.gov/hire.asp Doing Business in Missouri: Hiring Employees http://missouribusiness.net/article/doing-business-in-missouri-hiring-employees

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