Before a new employee starts work and receives their first paycheck, there are some forms you are required to have the employee complete. These forms must be on file for every new hire for an employer to comply with federal and state laws.
Here we will cover all of the forms a new employee must complete, the general purpose of each form, along with any notable details that each form documents.
Register as an Employer With the IRS
Before you start the process of hiring employees, you must first register with the U.S. Internal Revenue Service (IRS) as an employer by getting an Employer ID Number (EIN). This is an identification number that almost all businesses must have for payroll tax reports and payments. You can get an EIN quickly by applying online.
Once you have your EIN, you'll need to join the IRS Electronic Federal Tax Payment System (EFTPS). This will allow you to deposit employment taxes from employee withholding and from your business through a secure online portal. You can also use the EFTPS to schedule payments ahead of time and set up notifications or alerts, to help manage the different due dates associate with payroll taxes and other employer tax responsibilities.
Now you're ready to start gathering the forms and other registrations you'll need for your new employees.
Form W-4 for Federal Income Tax Withholding
Also called the Employee's Withholding Certificate, Form W-4 is used to determine how much to withhold for tax purposes during each pay period. You can download and print the form or order multiple copies from the IRS.
All new hires must complete Form W-4 before receiving their first paycheck. As of January 1, 2020, you must use the new W-4 form for both new hires and current employees who want to change their withholding. Employees hired before January 1, 2020 don't need to complete this form.
Employers should not give employees advice on how to complete this form, but you can direct them to an IRS article with answers to frequently asked questions, which includes a Tax Withholding Estimator (calculator).
Employees may change their W-4 form as often as they like. For example, an employee may receive a bonus and want to change withholding. It is your responsibility as the employer to keep track of the latest change and to make sure employee paychecks reflect the wishes of the employee for withholding.
Even though your role in the W-4 as an employer is minimal, you should be sure to check the employee Social Security number to make sure it's correct. You can use the Social Security Administration's Verification Service.
Form I-9 and E-Verify System for Employment Eligibility
As an employer, it is your responsibility to document the eligibility of new employees to work in the U.S. For this you'll use Form I-9, Employment Eligibility Verification, which must be completed by each new hire. The new employee must provide documentation of identity and work eligibility.
There are two steps to the I-9 process. First, the employee fills out the form and states what identity and work eligibility documents will be used. Then, the employer must look at those documents and make sure they are adequate and appropriate.
You must keep this form in the employee's record, but you don't need to send it to anyone. If an immigration officer comes to your company or wants to inspect your employee documents, the form is your proof that you verified the employee's work eligibility.
Larger employers can sign up for the E-Verify system and use it to check the eligibility of new employees to work in the U.S. The system uses the information on Form I-9 to compare with federal databases.
Job Application Form
Each new employee should complete a job application form, even if this person has already submitted a resume for the job. The job application form contains information about the new employee that can be verified, like previous employers and education. It also includes several statements the applicant must sign.
One such statement the new hire must sign is a verification that the information on the application is true and correct; other statements allow the employer to conduct reference checks and background checks.
Having an application form for every employee protects you as an employer from an applicant making fraudulent claims and allows you to take action if the application form is not accurate.
Register With State Employment Agencies
In addition to complying with all federal employment regulations, you must be in compliance with any state level regulations, as well. States may differ in the specific forms and requirements, but an overview is provided here with information about how to follow through with state forms.
Start New Hire Registration System
Employers must register new employees with their state's new hire notification system; this registration allows the state to collect child support payments from these employees, if applicable. The U.S. Department of Health and Human Services has information about how to register new hires with your state.
State Employer Registration
Each state that collects income taxes has requirements for employers to report and pay those taxes. For states that have an income tax, you will need to deduct these taxes from employee paychecks and send the withheld taxes to the appropriate state agency.
Contact your state's taxing agency for information on how to register as an employer in the state. The state agency will also give you information on withholding forms and requirements for reporting and paying withheld amounts.
State Unemployment Tax
You may also need to register with your state's labor department to pay state unemployment taxes. This tax is paid by employers (not employees) into a fund that pays employees if they are laid off. Payment rates are based on the number of employees and experience of comparable businesses. Contact your state's labor department for more information.
State Workers' Compensation
State workers' compensation pays employees who are injured or become ill on the job. You must register with your state's workers' compensation agency and pay into the fund. Contact your state's workers' compensation agency for more information.
Get Workplace Posters
Every business that has employees must have certain federal workplace posters displayed in a place where employees gather, like a break room:
- A Family and Medical Leave Act poster (for employers with 50 or more employees)
- An OSHA (Occupational Safety and Health Act) poster, for all employers (some states have their own plans and posters)
- A Fair Labor Standards Act poster from the U.S. Department of Labor, for all employers
- A Notices to Workers with Disabilities Act/Special Minimum Wage poster from the Department of Labor, for employers who have workers with disabilities
- An Employee Polygraph Protection Act poster from the Department of Labor
You can order these publications from the U.S. Department of Labor (DOL) or check out this DOL eLaws poster advisor to help you figure out which notices you must post at your workplace.
Provide Your Employee Handbook
All employers should have an employee handbook, or policies and procedures manual. All new employees should receive a copy of this handbook and should sign that they have read and understood it. The employee handbook becomes a legally binding document for both you and your employees.
A good employee handbook is more than just a guard against disgruntled employees, unmet expectations, or potential lawsuits; for new employees, it can also be a first-stop resource for important company information, which can reduce the burden on human resources.
What to Do With New Hire Paperwork
In most cases, you don't need to return the forms to anyone, but they must be on hand because they may be part of an audit by a state or federal agency. When these forms are completed, you should keep them in a specific location, available to employees and others who need to see them.
The U.S. Department of Labor (under the Wage and Hour Division) has specific requirements for employee records that must be kept on all employees.
The IRS has recordkeeping requirements for employment taxes.
Federal, state, and local agencies can audit your employee records for a variety of reasons, so keeping records is important.
Frequently Asked Questions (FAQs)
Are Employees Paid for the Time They Spend Completing New Hire Paperwork?
In most cases, yes, under the Fair Labor Standards Act you must pay employees for the time they spend in orientation or training, and for filling out new hire paperwork, assuming they complete the forms during working hours or on company time. If the employee conducts any activities related to the hiring process that are voluntary, or on their own time, the company does not need to pay for these.