Business
Owner's Manual
Employer Guidelines
The decision to hire employees has significant implications.
You need to determine first whether you really need help and
whether your business can support an additional employee. In
addition to financial concerns, there are a number of managerial
and legal issues to consider. This section helps you identify
some of those issues. If you need help finding qualified employees,
use the Services Directory and
look under "Employer Guidelines."
SOURCES: Prepared with the assistance of Benetar, Bernstein,
Schair & Stein, New York, NY and the New York State Business Group
HIRING
Before you begin the hiring
process, think carefully about what you are looking for. Do you want full-time
or part-time help? What responsibilities will your employee have? What training
or experience is relevant and what personal qualities are important? What
kind of references will be necessary?
It's a good idea to write
a job description and to use a job application form, which you can buy at
a commercial stationery store.
Note: Many
stores still sell outdated application forms that contain questions now prohibited
by anti-discrimination laws. Disregard any form more than two years old and
use the information below as a preliminary guide to whether the questions
are permissible. If you're unsure, check with the New York State Division
of Human Rights at 212-961-8400 or an attorney.
Also visit the New York State Department of Labor web page "Looking
For Workers".
Employees vs. Independent
Contractors
Not everyone who works
for you is necessarily an "employee" for purposes of withholding tax, workers'
compensation, or unemployment insurance, among other issues. The difference
between an "employee" and an "independent contractor" is therefore an important
one. In general, the more control over the manner and means by which the
workers does his or her job — hours, place of work, ownership of tools,
etc. — the more likely it is that the employment relationship will be
deemed that of employer-employee. If you have questions on this issue, you
should consult an attorney or tax advisor.
Child Labor
New York has detailed
rules governing the employment of minors (under 18). These rules specify
the types of working papers that are required, permissible and maximum hours
and days that may be worked in any week, the type of work that minors may
perform, and the circumstances in which parental consent is necessary. The
requirements may differ depending on the job involved and the minor's age.
For more information, call the New York State Department of Labor, Division
of Labor Standards at 212-352-6981 and ask for the booklet Laws
Governing the Employment of Minors.
Other Issues
Finally, before you begin
interviewing candidates and checking references, you should keep these issues
in mind:
- Form I-9. The Immigration
Reform and Control Act ("IRCA") prohibits discrimination with respect to
hiring and discharge because of national origin or citizenship status and
requires employers to complete the I-9 Form (available from the Immigration
and Naturalization Service) for all employees, generally within three business
days following the start of employment.
- Pre-employment Inquires.
Various federal and state anti-discrimination laws prohibit employers from
making certain inquiries in an employment application or during a job interview,
which would directly or indirectly reveal protected classifications (e.g.,
race, age, sex, religion, disability, national origin, etc.) For example,
it is unlawful to ask an applicant to state his/her date of birth, country
of origin, etc. Prior to an offer of employment, you may not require that
an applicant produce a document, such as a driver's license, that would
reveal such protected characteristics.
- Medical Testing. The
federal Americans with Disabilities Act ("ADA") protects qualified individuals
with disabilities (including psychiatric disabilities) and prohibits employers
from requiring medical examinations or making medical inquiries of applicants
before an offer of employment has been made. Even after an offer is made,
the results of such examinations or inquiries must be kept in a separate
file, not in the personnel file.
- Drug Testing may be
permissible after an offer of employment has been made, depending on a
number of factors including the industry, how the testing is conducted
and whether the employees are unionized. This is a complicated area, and
you should check with an attorney if you are considering implementing a
drug testing program.
- Arrest/Conviction
Record. It is generally unlawful to refuse employment based on an individual's
arrest record or to ask questions about that record prior to employment.
Employers with 10 or more employees may not deny employment to applicants
on the basis of prior criminal convictions, absent a "direct relationship" between
the offenses and the job or "an unreasonable risk" to people or property.
- Credit Reporting and
Background checks. Recent amendments to the federal Fair Credit Reporting
Act have imposed strict notice and disclosure requirements on employers
planning to obtain a consumer report on a job applicant from a consumer
reporting agency. For example, an employer must notify the applicant and
obtain his or her written authorization. That notice, moreover, must be
in a separate document — not part of the employment application. If
you are considering using such reports in your hiring process, you should
consult with an attorney to learn about the other restrictions imposed
by law.
WAGES & PAYROLL
Below are some of the
key issues involved in paying your employees. You can learn more about these
issues and download facts sheets and required notices from the Employment
Standards Administration at the U.S. Department
of Labor site.
- Minimum Wage. You must
pay the federal rate unless your business is exempt from the requirements
of federal law. Minimum wage rates must be posted.
- Overtime Pay. Employers
generally must pay all "non-exempt" employees overtime pay (time and one-half)
for all hours actually worked over 40 in the work week. For this purpose,
lunch breaks, paid sick-days, holidays, vacations, and other time off are
not considered hours worked unless the employer has a different policy.
Note: The following classifications of
employees are "exempt," provided they are paid on a salary basis: bona
fide executive, administrative and professional employees, outside salespersons,
and certain computer-related employees (e.g., systems analysts, programmers,
software engineers). More information is available by calling the Department
of Labor, Wage, and Hour Division at 212-264-8185.
- Pay Schedule. New York
labor law generally requires that employees be paid regularly and no less
frequently than semi-monthly. Certain classifications of employees, however,
must be paid more frequently. A "profit-making" business, for example,
must pay manual workers on a weekly basis, unless otherwise authorized
by the Commissioner of Labor.
- Withholding. Businesses
that pay wages to "employees" are required to withhold a percentage of
those wages and deposit them periodically with the government. As a result,
employers must obtain a Federal Tax ID Number. See Tax
planning for more information.
- Deductions from pay.
Generally, New York employers are prohibited from making pay deductions
for things such as brokerage or cashier's cash shortages. Even when deductions
are permissible, they can be subject to garnishment laws prohibiting deducting
more than ten percent of an employee's wages.
SOURCES: Prepared with the assistance of Benetar, Bernstein,
Schair & Stein, New York, NY
INSURANCE ISSUES
Workers' compensation
and disability benefits are required by New York law, and many businesses
offer other insurance benefits to employees as part of the compensation package.
Business life and disability insurance are recommended for many small businesses.
This section explains each type of coverage.
Required Insurance
- Workers' Compensation.
New York's Workers' Compensation Law was designed to provide employees
with compensation for on-the-job injuries regardless of fault, while precluding
them from suing the employer for those injuries. You can obtain this insurance
through a private insurer or call the State Insurance Fund at 1-888-875-5790.
For more information on employer responsibilities, check the Workers'
Compensation Board Web site.
- Disability Coverage. This
coverage is also required of employers by New York State law, commonly
referred to as DBL (Disability Benefits Law), to replace income lost due
to non-occupational disability. Benefits are available for a maximum of
26 weeks in a year. While not required, several insurers permit self-employed
individuals to purchase this coverage for themselves. As with Workers'
Compensation insurance, disability coverage is available through a private
insurer or from the State Insurance Fund.
- Unemployment Insurance.
Employers are required to cover employees for loss of income when they
lose their employment due to circumstances beyond their control. This coverage
is not available from your insurance agent. The unemployment
insurance section of the New York State Department of Labor Web site
has additional information, tips, and downloadable forms. Or call the DOL
at 212-791-1400. A posted notice to employees is required.
- New York State Disability
Benefits. This statutory coverage compensates an employee for loss of income
resulting from an off-the-job injury or illness, for a maximum of 26 weeks
in a 52-week period. Obtain this insurance through a private insurer or
call the State Insurance Fund. A posted notice to employees is required.
Non-mandatory Insurance
Finding affordable health insurance is easier than
you might think. Whether you are a small business
owner, sole proprietor, or a working individual,
there is a special New York City health insurance
option designed especially for you. There is also
a City resource to help you identify the available
plans and to guide you through the enrollment process.
As part of New York City's Human Resources Administration,
the Office
of Citywide Health Insurance Access (OCHIA) provides
impartial guidance to working individuals and small
businesses in need of affordable health insurance.
OCHIA
programs (.pdf)
Most small businesses
recognize the importance of medical insurance coverage for owners and key
employees. As a business grows, a competitive program of benefits can help
a company attract and retain employees.
In the past, smaller employers
have found it difficult to purchase medical insurance coverage with benefits
comparable to larger employers. Most states have legislated health insurance
reform, making it easier for small companies. New York's "community
rating" laws make it possible for firms with as few as two participants
to purchase quality medical insurance for employees.
In general, an insurer
must offer its plans to all employee groups, without regard to age, gender,
occupation, or prior health history. Small groups may not be excluded from
coverage due to any of these factors. Nor may they be charged a higher or
lower rate than other groups for the same plans.
Medical insurance covers
an employee and eligible dependents for expenses incurred because of illness
or injury and pays for doctor and hospital bills, laboratory and X-ray facilities,
and other medical costs. There are several types of coverage generally available:
- Traditional indemnity
plans simply reimburse a participant for covered expenses. Reimbursement
is usually subject to a deductible and coinsurance. As these plans have
become increasingly expensive, their popularity has declined and employers
have embraced managed care plans, which offer access to medical care while
seeking to control cost.
- An HMO (Health Maintenance
Organization) offers its members comprehensive coverage for treatment by
participating hospitals, doctors, and other health care providers. All
treatment must be referred within a network of participating providers,
and treatment by providers outside of the network is generally not covered.
Health care is coordinated by a primary care physician (PCP), sometimes
called a gatekeeper, and usually a member can gain access to treatment
by a specialist through a referral by the PCP. The out-of-pocket cost for
most medical treatment is limited to a small co-payment, such as $10 or
$20.
- Many HMOs now offer
Point of Service (POS) plans, which allow members access to out-of-network
providers, usually at a greater out-of-pocket cost to the patient. For
out-of-network treatment, the patient is responsible for a deductible and
coinsurance and is reimbursed for expenses based upon "reasonable
and customary" allowances. Because these plans are based on an HMO
contract, treatment by in-network specialists requires a referral from
the primary care physician. A few HMOs now offer "non-gatekeeper" plans,
which feature open access to in-network specialists (no referral necessary).
- Finally, a PPO, or
Preferred Provider plan, is similar to a POS plan in that a member can
chose between participating and non-participating providers. Because PPO
plans are not based on HMO contracts, members generally have open access
to in-network specialists without needing to obtain a referral from a PCP.
PPO plans tend to be costlier than POS plans.
Small businesses can also
obtain other insurance benefits for their employees on a group basis. These
include dental insurance, long term disability, and group term life insurance.
The benefits of purchasing coverage on a group basis include low cost and
simplified underwriting.
Business Life and Disability
Insurance
-
Individual life insurance
and disability insurance policies are issued on owners, partners, and
key employees for a number of reasons. Generally, these policies protect
creditors, partners, and family members from the financial impact resulting
from the death of the insured, providing business continuity.
- Partnerships typically
insure the lives of each partner as part of a buy-sell agreement so that
the surviving partners can purchase a deceased partner's interest in the
company.
- A disability policy
can also be used to fund the purchase of a disabled partner's interest
in the company.
Note: Remember that a partnership ends on the death of a
general partner. A new agreement is required each time to continue
the business with fewer — or with new — partners. See Structuring
a business.
The Family and Medical
Leave Act (FMLA)
This is a relatively new
law, which many employers do not fully understand. Information, forms, and
the required notice are available from the Family & Medical
Leave Act section of the U.S. Department of Labor Web site or by calling
1-800-959-FMLA.
Employers with 50 or more
employees are required to allow an eligible employee to take up to 12 weeks
of unpaid leave during a 12-month period for his/her own serious health condition,
care of a spouse, child, or parent with a serious health condition, or the
birth or adoption of a child. Leave may be taken as straight time, on a reduced
schedule, or intermittently (for example, once a week).
The employer in most instances,
can require the employee use paid leave (e.g. sick days and vacation time)
as part of FMLA leave. Even Workers' Compensation and State Disability leaves
can be counted against the employee's 12-week leave entitlement.
SOURCES: Prepared with the assistance of the New York State
Business Group
ANTI-DISCRIMINATION LAWS
Federal, state, and local
laws prohibit discrimination with regard to all employment decisions, including
those relating to recruitment, hiring, training, promotions, employee compensation,
and terminations. Equal employment opportunities must be provided to all
qualified applicants and employees without regard to race, color, sex, religion,
national origin, citizenship, marital status, age, disability, or (for employers
in New York City) sexual orientation.
Damages
Damages for violating
these laws can be substantial, including back pay, compensation for pain
and suffering, and, in some cases, punitive damages. Coverage under these
laws varies according to the number of employees in the business. For example,
Title VII applies only to employers with 15 or more employees, whereas New
York's Human Rights Law covers employers with four or more employees.
Discrimination can take
many forms. Employers may be held responsible not only for their own discriminatory
acts but also, in some circumstances, for the acts of one employee toward
another. For example, an employer's failure to take action when he or she
becomes aware of sexually harassing behavior by an employee against another
employee may subject the employer to liability.
Notice Required
Employers are required
to post notice of anti-discrimination laws. These notices are available from
the "Laws & Regs" section
of U.S. Department of Labor Web site.
REQUIRED POSTINGS
All New York employers
are required to post certain notices about their obligations to employees.
For some notices, the requirement to post depends on the number of employees.
Required postings include
federal and state minimum wages, anti-discrimination laws, the FMLA unemployment
insurance coverage, and disability laws. Other examples of required notices
include a smoking policy and policy on sick leave, vacation, etc. (unless
a written notice is given).
For more information on
required postings, see the U.S. Department of
Labor Web site.
ADDITIONAL LIBRARY RESOURCES
The resources described
below are only some of the many items available on this topic from the Science,
Industry, and Business Library. The books listed are all available at SIBL.
Some items can be checked out at SIBL from the First Floor Circulating collection.
Others can be found in the Reference Collection on the library's lower level.
Look in the libraries' online catalogs (LEO for circulating, CATNYP for reference)
to find the exact location of these suggested resources.
Print Resources
The ABC's of EEO For Small Businesses and Supervisors
Effective small business management
: an entrepreneurial approach
Employer's Legal Handbook - Fred S. Steingold
Human Resources for Small Businesses
Human Resources : Mastering Your
Small Business
The Small Business Start-up Guide
Employer Guidelines
Electronic Resources
You can find articles
about employer issues or government information concerning employer regulations
by searching an electronic database or accessing the Internet at SIBL's Electronic
Information Center.
search articles:
- EBSCO Host
- General Business
File / Business & Company Resource Center (Gale)
- Dow Jones Interactive
News Service
- PROMT (Gale)
search government information:
- GPO Access
- USgovsearch
- state and city Web
pages
Other Sources
New
York State Department of Labor
U.S.
Department of Labor
Workers'
Compensation Board
NYS
Unemployment Insurance Section
Family & Medical
Leave Act
Laws & Regulations
( Dept. of Labor )
