I'm Bringing On My First Employee

I’m bringing on my first employee

Congratulations! Expanding your team is an exciting step. It can also bring up a lot of questions, like:

How do I do this?
Do I need any formal documentation?
What kind of employment policies do I need to have?
What laws do I need to be aware of? What don’t I know?
Should they be a 1099 (independent contractor) or W-2 (employee)? What is the difference?

It’s impossible to know everything at this stage, and the process will vary based on your business and the role the employee will take on. But to get you started, we have some information below for your next steps:

The Job Posting

When you create and put up your job posting, make sure to:

Include an “Equal Opportunity Employment” statement in your job posting
Allow for an opportunity for individuals with disabilities to ask for reasonable accommodations
Avoid asking questions about “taboo” topics – for example, in Illinois you cannot ask an applicant about their salary history
Avoid changing employment “at-will” so that you don’t accidentally create guarantees for employment that make it difficult to end the relationship later on if needed
Be careful when using testing – talk to an attorney before asking applicants to undergo a medical exam, lie detector test, physical fitness test, social media review, credit review, providing proof of a disability, or any assessment testing to make sure you comply with the legal restrictions for the above

Bringing on the Employee

When you are bringing on your first employee, you will need to:

Handle any company processes, like setting up email, sharing relevant information, ordering uniforms or other equipment, and so on
Complete necessary forms right away, like federal and state W-4 forms and the I-9, and get the employee set up with payroll (outsourced HR companies will often handle a lot of this)
Provide the employee with required information, such as safety policies and training, PTO/sick leave policies, HIPAA or other confidentiality policies, and so on
Provide the employee with any other policies or procedures you would like to have in place

A well-drafted Employment Agreement and Offer Letter can help with 3 and 4, as well as:

Ensuring at-will employment (if desired)
Preventing common undesired situations, such as having to pay out 2 weeks of vacation time if the employee quits after the first day.
Protecting confidential information
Making sure your policies comply with the law, like paid leave laws and unusual payment structures
Ensuring you can continue to use assets created by the employee, such as materials they put together and videos with their image, even after they leave.

This is not an exhaustive list, and customization is key because the processes, risks, and liabilities are different for each business. Our first step in every engagement is to send a questionnaire and/or set up a call to discuss your business with you and help us prioritize your biggest concerns or risks for your business. We then work with you to draft templates that you can reuse for future employees.

Employment Agreement and Offer Letter Templates: $3,450

1099s (Independent Contractors)

If you are considering bringing on your future worker as an independent contractor, or if you have an independent contractor already, we recommend that you check out our article describing the legal requirements for independent contractors and employees (here). We always recommend reviewing that distinction first, because it’s very difficult to classify a worker as an independent contractor, and there are penalties for misclassifying workers as independent contractors.

If you decide you would like to bring your new worker on as an independent contractor, we have some tips for you:

Think about the relationship as a relationship between a business (the independent contractor) and a client (you). This can help you think about what requirements and concerns you have and how to manage those, while also highlighting the level of freedom the contractor will have as their own business. If you are getting stuck here, that’s very common – there’s a lot to consider. We can help with this as part of step 2.
We strongly recommend a contract to lay out the relationship described above. Having a well-drafted agreement is essential to ensure you have a strong basis to prove you meet the required minimum thresholds in case you are audited by the IRS or another government agency. It can also address other important issues, such as:

Payment terms: This includes when the independent contractor gets paid, but also:
- Whether the contractor has to send an invoice first (and if so, what does it have to include?)
- What happens if the work doesn’t meet the requirements?
- When/how does the independent contractor get reimbursed for expenses?
Intellectual Property: At the end of the day, who owns what? This is especially important for consultants, computer programmers, and other contractors who might help you develop materials that you want to reuse or give to clients.
Confidentiality: Is there information you want to protect? The independent contractor does not have to keep anything confidential without a confidentiality agreement.
Provisions regarding the independence of the worker: Does the independent contractor need any specific insurance and/or worker’s compensation?
Termination: If the relationship does not work, how can you get out of it? What happens upon termination? What fee should be paid? Does the independent contractor still have any confidentiality obligations, or any other obligations?

The processes, risks, and liabilities are different for each business, so this list may not all be relevant to you and there may be other terms that are. We always start with a questionnaire and/or a call to discuss your business with you and help prioritize your biggest concerns or risks for your business to make sure those are addressed where possible.

Independent Contractor Agreement Template: $3,450