Laws to Know Before Hiring Your First Employee

Can you tell me what federal or state laws I have to learn about or comply with when hiring my first employee? Is it a good idea to use an HR handbook now?

You need to be primarily concerned with the laws that regulate payroll taxes — employee withholdings as well as employer-paid taxes. Your accountant can easily help you with payroll compliance, or you can outsource your payroll to a payroll service.

You should also study the Fair Labor Standards Act (FLSA), as well as the wage and hour laws in your state. Make sure you have workers' compensation insurance (per your state's workers' compensation law). Companies are required to carry workers' compensation insurance even if they have only one employee. Also familiarize yourself with the Immigration Reform and Control Act (IRCA), since you are legally required to have completed I-9 forms for all employees.

You are not required to offer your employees health insurance or other benefits. However, if you do, you'll need to be familiar with the Employee Retirement Income Security Act (ERISA), and the applicable portions of the Internal Revenue Service.

You don't need an HR handbook if you have only one employee. Just be clear and accurate in your communications. Employee handbooks are advisable when your organization grows, and it becomes difficult to communicate clearly and accurately with all employees.