New employees forms after hiring an employee

When you hire a new employee, your next step is to complete the required forms, including Form W-4 and Form I-9.

You have gone through the hiring process, made a job offer and the candidate accepts it. Now what? The next step in adding an employee to your business is to complete the critical new employee forms that are necessary to satisfy the federal and state paperwork requirements imposed on employers.

Once these mandatory new hire forms are completed, you can then set up personnel files and orient your new employee.

Federal Form W-4 is required for withholding

The federal Withholding Allowance Certificate, Form W-4, must be completed so that you know how much federal income tax to withhold from your new employee's wages.

The importance of having each employee file a Form W-4 cannot be overstated, so make its completion a priority.

Taking stock of your payroll withholding obligations will help you understand how Form W-4 should be completed and how you should use it in doing payroll.

You may find yourself in a situation where an employee doesn't file the form. To cover your bases, if for some reason an employee does not file Form W-4, you must withhold tax as if the employee had claimed no exemptions.

In addition, you should be aware that if a married employee does not claim his married status on Form W-4, the employer must withhold on the basis of the "single employee" withholding tables. Since the withholding rates for single employees are higher than those for married workers and since the amount of tax withheld from a given wage payment decreases as the number of exemptions claimed increases, it is important that you ask all employees to file a certificate.

State use of Form W-4. Form W-4 has another important function: in many states, a copy must be sent to a state agency as part of the required information about new hires.

In addition, many states have a state form that must be filed for withholding purposes. Consult our income tax withholding map for information regarding your state.

New hire reporting information

Federal law requires all employers, even those with just one employee, to report all new hires to the appropriate state agency. In turn, these state agencies must turn over the information to a national directory of new hires, maintained by the Department of Health and Human Services. The information will be used primarily for two purposes:

• to help prevent unemployment compensation fraud
• to track down parents who owe child support.

What does this mean to you as an employer? Fortunately, the process isn't very burdensome. The information that you must submit is information that each new employee must submit when completing Form W-4.

Specifically, you must report each employee's name, address, Social Security number, and your business's name, address, and federal employer identification number. You must also include the date of hire, which is the date an employee first performs services for pay. The easiest way to do this is to use a copy of the Federal W-4.

Under the federal law, reports must be submitted to the appropriate state agency within 20 calendar days of the date of hire, although some states may require shorter reporting windows.

Reports must be sent by first class mail or electronically. If you have employees in more than one state and you file your reports by mail, you must report in each state. However if you file electronically you can designate, to the Department of Health and Human Services (HHS), one state where you will report all new hire information.

Where do employers file the reports? In many states that had programs in place before the federal law was enacted, reports were filed with the agency that administers the state unemployment compensation program or the agency that has responsibility for child support enforcement. Since enactment of the law, reporting should be made to the state's new hire directory. Consult your state's labor website for new hire reporting information.

Form I-9

Under the Immigration Reform and Control Act of 1986, all employers are required to verify the identity and the eligibility to work in the United States of all employees hired after November 6, 1986, using the Immigration and Naturalization Service Form I-9, "Employment Eligibility Verification Form."

Once completed, the form is not sent to the government, but you must keep it in your files in case an INS inspector ever wants to see it.

Provided the employee has the right documents, completing the form shouldn't take more than a minute or two. The form must be completed on the day of hire, or within three business days of hire. Employers and employees may sign the forms electronically and retain them in an electronic format.

Properly delivering notices. You can use first-class mail to deliver the notice to employees or deliver it electronically (as long as the DOL’s electronic disclosure safe harbor requirements are met).

Whatever method of delivery you choose, the notice must be provided free of charge.

When does this requirement take effect? Employers must provide individuals employed as of September 30, 2013, with the notice by October 1, 2013. Beginning October 1, 2013, employers are required to provide the notice to new hires.

Penalty for noncompliance. On September 11, 2013, the Department of Labor issued guidance that there is no penalty or fine imposed under the law for failing to provide the notice to employees by October 1, 2013.

Notice must include certain information. To satisfy the notice requirement, the following must be provided in a written format, in language that an average employee can understand:

• Information making the employee aware of the exchange option, with a description of the services provided by the exchange and contact information;
• Information that the employee may be eligible for a premium tax credit if the employee purchases health care coverage through the exchange and the employer plan’s share of the cost of benefits provided under the plan is less than 60 percent of the costs; and
• Informing the employee of the potential loss of the employer contribution to a health benefits plan offered by the employer (which may be excludable from federal income tax), if an employee purchases health care coverage through the exchange.

Model notices available. To be certain that you meet the notice format and content requirements, you can use a model notice provided by the DOL for employers. Two model notices are provided—one version for employers who offer a health care plan to some or all employees and one for employers not offering a health care plan.

You can modify the model notices to meet your business’s needs as long as the required content is included.