March 15, 2022
Ah, hiring employees and firing employees. They both come with the territory of having a successful business that’s ready to grow or change its team. If you’re an entrepreneur, you’ve probably had to handle both tasks all on your own, too.
Without a human resources rep to handle it for you, it’s up to you to hire and fire employees while being legally compliant. If you don’t, it can hurt your reputation and your overall business. We have tips for hiring employees and letting them go with grace in this post.
Hiring and termination laws vary by state, so do your research! We are not a legal firm and cannot give you advice on this, but here are a few basics to keep in mind.
If you already have a team of employees under your belt, you should already have an Employer Identification Number (EIN). If youdon’t have that, you need to get an EIN from the IRS first.
Speaking of the IRS, you also need to know the tax requirements for your business through and through. These vary depending on what state you live in, but make sure you understand:
Also, know the difference between hiring an independent contractor and an employee!
What will your new employee actually be doing? What skills, experience, and qualifications are needed to be considered for the role? Write a clear and specific job posting that also complies with federal anti-discrimination laws, plus any similar state laws.
State anti-discrimination laws may be different where you are, but the U.S. Equal Employment Opportunity Commission (EEOC) has a comprehensive list of its laws online. For example, it’s illegal to reference gender, marital status, race, age, and other details in your ad.
You also can’t show a preference for or discourage someone from applying for your role because of these factors and others. Brush up on the EEOC’s anti-discrimination laws and make sure your job posting is airtight before it goes live.
Time to interview candidates! Remember those anti-discrimination laws we just discussed? You also can’t ask a candidate in an interview about their:
There are exceptions to these laws, though.
If your job has physical requirements that can’t be met even with accommodations, you may be able to discuss those details in your posting and interview. Other details like age, height and weight, financial information, and others can be a gray area though, so we recommend reviewing the Pre-Employment Inquiries section of the EEOC website to be sure.
Once you’ve picked the perfect candidate, you probably want to run a background check to cover your bases. It’s within your legal rights, and we recommend doing it, even if you’re 100% positive that they’re the right person for the job.
Before you run a background check, you’ll need to comply with the Fair Credit Reporting Act (FCRA), which is enforced by the Federal Trade Commission (FTC). The full requirements can be found on the EEOC website , but in a nutshell, you need to:
Hiring is a really exciting time for a business! But you always want to ensure that your hiring practices are fair, transparent, and legally compliant. If you’re bringing independent contractors on board, we have a resource that can help.
In most states, employment is “at-will.” That means employers can terminate an employee at any time for any reason and without warning. Sometimes employers don’t need to establish a “cause,” or reason, for termination either.
This goes both ways; employees can usually choose to leave their job at any time, too. However, it doesn’t mean an employee can be fired for an illegal reason such as their religion, race, gender, or other protected class. Check with your state laws to understand what’s required of you before letting someone go.
Does your employee contract mention at-will employment? What about your employee handbook or the company policy posted in your office?
If you don’t offer at-will employment, now’s a good time to check in on what your contract and other employment-related documents say regarding firing. If you promise job security or require a good reason to fire an employee, your policies and contract should say so.
And then, of course, you must follow these policies when terminating an employee.
Before you have the uncomfortable conversation with your employee, document any violations or wrongdoings that have occurred. Let the employee know and give them a chance to fix their mistakes or improve their behavior.
If these warnings and notices don’t work and you’re ready to speak to your employee and let them go, it’s a good idea to have someone else present to witness it. That may help you avoid potential lawsuits, or at least help navigate them if one does arise.
What do you say when letting someone go? Be brief and straightforward. Keep your emotions out of it, and don’t make it personal. Stick to the facts and be clear. It may be awkward for you, but remember that it will be especially hard on your ex-employee.
If your employee has to take any action for their last paycheck, health insurance, unemployment benefits, or 401(k) options, don’t forget to give them the necessary information and documents.
Similarly, keep your biz secure by collecting any info or items related to your company from your ex-employee. Security badges, name tags, keys, access codes, passwords to systems or programs: all of these should be revoked or changed to protect your business.
Firing is never fun. And what about the intangible stuff that can’t be taken away so easily, like ideas? A non-disclosure agreement (NDA) is what you need in that case.
Not ready to hire part-time or full-time employees yet? No problem. An independent contractor may be a better fit for you and your business. Hiring an independent contractor is not the same as hiring an employee, though. Tax requirements are different, as well as what you can ask of them in your work.
Hiring independent contractors doesn’t have to be complicated! Our Ultimate Hiring Bundle takes care of the nitty gritty details for you. It includes an independent contractor template, an NDA, plus exclusive bonuses that’ll boost your confidence as an employer. Get yours now and start growing your team!
Please note: You will need an employment contract in the state you operate if you hire an actual employee. Please search for an employment attorney to help with this!