Frequently-Asked Questions
Hiring Employees
- I plan to hire my first employee. What do I need to do?
- How do I find qualified employees?
- How do I know what to pay my employees?
- What is OSHA?
- What is workers compensation insurance and where do I get it?
- Can I save money by hiring people as independent contractors instead of employees?
- Where can I find information on employment laws that may apply to my small business?
I plan to hire my first employee. What do I need to do?
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You will need to obtain federal and state tax identification numbers and an
Unemployment Insurance (UI) Employer
Account Number, obtain workers compensation insurance,
determine what other kinds of insurance may be needed, arrange for tax withholding
and payment of payroll taxes, and file business tax returns. You also need to
consider human resources issues, such as recruitment, interviewing, selection,
preparation of an employee manual, whether you will use an employment contract,
and benefits you will pay your employees.
For detailed information, review the Checklist for Hiring an Employee in A Guide to Starting a Business in Minnesota. This free book is available from the Small Business Assistance Office of the Department of Employment and Economic Development. See our online order form, or call the 24-hour order line, 651-556-8425 (Twin Cities metro calling area) or 1-800-310-8323 (outside the Twin Cities calling area).
It will be helpful to obtain assistance on human resources issues from qualified legal counsel before beginning the recruitment process.
How do I find qualified employees?
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Before beginning your search for employees, determine specifically what you want them to do, based on the needs of the company. Written job descriptions can help identify the specific knowledge, skills and abilities you need. Think about whether the company needs full-time or part-time workers. Use recruitment sources that are likely to produce qualified candidates. In addition to word of mouth, consider using trade associations and placement offices of local colleges and universities. MinnesotaWorks is the largest available database of Minnesota job seekers. Access to MinnesotaWorks is free. Advertising in print media and online may be appropriate when seeking a broader range of applicants. Existing employees can also be good sources of qualified candidates for other jobs within the company. Assess the market to assure your proposed salary or wage levels are competitive. The Minnesota Salary
Survey, published by DEED’s Labor Market Information Office, provides estimates of wages and employment by occupation. Interview and screen applicants with care. Business
Services Specialists are available to assist employers. The more you learn about each applicant's experience and skills, the more likely you are to make a good hiring decision.
How do I know what to pay my employees?
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Minimum wage levels are established by both federal and state law. Wages or salary above the minimum wage is a matter of negotiation between the employer and the employee. Wage and salary levels are based on a variety of factors, including skills required for the job, the skills and experience of the individual, wage levels for other positions within the company, and competitive factors such as the availability of skilled labor in the market area. Trade associations often have salary survey data that can be used as a reference. Your accountant can provide information on typical cost ratios and profit margins in your industry, and help you determine the impact of the hire on the company's profitability.
What is OSHA?
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The Occupational Safety and Health Administration (OSHA)
establishes and enforces workplace safety standards. All
businesses must provide their employees with a workplace
that is free from recognized hazards that may cause death
or serious injury. A poster advising employees of their
rights under OSHA must be placed in the workplace. In
Minnesota, OSHA responsibilities are administered by the
Occupational Safety and Health Division of the
Minnesota Department of Labor and Industry. OSHA offers
information and conducts inspections to assure compliance with OSHA regulations.
OSHA also offers a safety consultation program to help employers improve their
safety and health record, lower the cost of accidents, and reduce OSHA-issued
citations and penalties. The
Minnesota Safety Council is a private nonprofit organization that offers training and consultation to members on workplace safety issues.
What is workers compensation insurance and where do I get it?
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Workers compensation insurance provides compensation to
employees who have a work-related injury or disease. Generally,
all employers are required to carry workers compensation
insurance.
The Minnesota Department
of Labor and Industry offers information regarding the rules and requirements
in providing workers’ compensation insurance. In Minnesota, workers compensation
insurance is sold through open competition, which means insurance companies establish
rates and compete for business. There are several thousand insurance agents in
Minnesota who are licensed to sell workers compensation insurance. All workers
compensation insurance policies provide coverage mandated by law; only the price
and quality of service varies. Shopping for insurance can save money. Other factors
to consider in choosing a carrier are claims servicing, safety counseling and
the carrier's reputation. Employers who are unable to obtain workers' compensation
insurance on the open market because of their size or type of risk may purchase
it through the state Assigned Risk Pool. Insurance agents can provide information
about this type of plan.
Can I save money by hiring people as independent contractors instead of employees?
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Perhaps. Hiring a skilled independent contractor to perform a specific job can be a way to get a job done without investing in the costs associated with recruiting and retaining an employee to do the same work. It is extremely important, however, to be certain that the individual is legally an independent contractor and not an employee. A business owner who hires someone as an independent contractor who subsequently is determined to be an employee can incur substantial costs and penalties.
Before determining whether a worker is an employee or an independent contractor, it is advisable to consult with knowledgeable legal counsel or with the appropriate federal or state agency, e.g., the Internal Revenue Service, Businesses with Employee information; the Minnesota Department of Revenue's, Course Guide: Employment Taxes and Employer Issues and Responsibilities; the Unemployment Insurance (UI) Program, Employer Questions; and the Minnesota Department of Labor and Industry, Workers' Compensation Insurance and Occupational Safety and Health information.
Detailed information on whether a worker is an employee or an independent contractor can be found in A Guide to Starting a Business in Minnesota. This free book is available from the Small Business Assistance Office of the Department of Employment and Economic Development. See our online order form, or call the 24-hour order line, 651-556-8425 (Twin Cities metro calling area) or 1-800-310-8323 (outside the Twin Cities calling area).
Where can I find information on employment laws that apply to my small business
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Employment law can be complicated to understand and follow and it
is recommended that you seek assistance from qualified legal counsel.
However, you may find the following resources helpful in understanding
what requirements you are subject to as an employer.
The Minnesota Department of Employment and Economic Development’s Small Business Assistance Office offers a free book, An Employer’s Guide to Employment Law Issues in Minnesota. This Guide book outlines information including the hiring process, non-compete agreements, wage and hour issues, worker’s compensation, and more. This book is available online or by calling the 24-hour order line, 651-556-8425 (Twin Cities metro calling area) or 1-800-310-8323 (outside the Twin Cities calling area).
The U.S. Department of Labor (DOL) has developed several tools to help small business owners and workers understand and comply with federal employment laws, including its own Employment Law Guide. This Guide describes DOL’s main laws and regulations in plain language for employers needing introductory information to develop wage, benefit, safety and health and nondiscrimination policies for their businesses. The Guide is available in English and Spanish online or by calling 1-866-4-USA-DOL.
The DOL also offers employment law online tools including elaws Advisors, an interactive web-based tool that helps employers and workers understand and comply with federal employment laws. This interactive website mimics the interaction a person may have with an employment law expert. DOL also offers a Compliance Assistance website where employers can access a wide range of information and resources on DOL’s rules and regulations.
Employers can always find answers to questions on a range of federal employment and regulatory issues by calling the U.S. Department of Labor at 1-866-4-USA-DOL. DOL can provide assistance in more than 140 languages on issues including job loss, business closures, pay and leave, workplace injuries, safety and health, pension and health benefits, and reemployment rights for National Guard members, veterans and reservists.