Depending on your company’s needs and the nature of your work, you could have several types of employees and workers working for you at the same time. Employers must understand the different employee classifications to decide which kind of employee to hire for each role. 

Additionally, businesses need to classify and compensate employees properly to remain compliant with labor laws.

What is an Employee? 

An employee is hired by a person or business (i.e., the employer) to do a specific job. According to the IRS, someone is your employee if you can control what work will be done and how it will be done.

Employees are either exempt (not entitled to overtime) or non-exempt (typically hourly employees who must be paid overtime). Learn more about exempt and non-exempt employees.

5 Types of Employees

As an employer, you should be familiar with the five most common types of employees:

• Full-time employees
• Part-time employees
• Seasonal employees
• Temporary employees
• Leased employees

1. Full-time Employees

A full-time permanent employee works an average of 40 hours a week and is eligible for benefits. Since the Fair Labor Standards Act (FLSA) does not legally define part-time or full-time employees, employers can decide how they classify full-time vs. part-time employees based on the number of hours worked.

According to the Affordable Care Act (ACA), employers with more than 50 employees must offer healthcare coverage to full-time employees and their dependents. To determine if your company falls under this law, you’ll need to calculate your full-time equivalent.

2. Part-time Employees

Part-time employees work less than 40 hours per week. While there is no legal requirement, many employers classify those working less than 35 hours as part-time.

Part-time employees are typically paid by the hour, which means they must be classified as non-exempt (i.e., eligible for overtime pay for any hours worked beyond 40 hours each week). 

Additionally, regular part-time employees are considered permanent but may not be eligible for benefits (or all the same benefits) as full-time employees. However, because the ACA requires employers with more than 50 employees to offer health insurance to at least 95% of their employees who work an average of 30 hours a week, some part-time employees could be eligible for health insurance.

3. Seasonal Employees

As the name implies, seasonal employees are hired based on the needs of a company during a given time of year. They work 120 days a year or less for the employer, and these days don’t need to be consecutive.

For example, retail stores often hire seasonal help during the busy holiday seasons, while amusement parks recruit additional team members during the warmer months.

You do not need to offer health insurance to seasonal employees. They may, however, be eligible for unemployment benefits. This depends on state laws, as many states have reduced or eliminated unemployment for seasonal workers due to insufficient funds. Generally, an individual has to meet their state’s requirements for: 

• Wages earned,
• Time worked during a certain length of time, and 
• Reason for unemployment before receiving benefits.

Note that seasonal workers do earn toward their future Social Security benefits.

4. Temporary Employees

This type of employee is hired temporarily, often for a set period of time such as six months. A temporary job may involve:

• Working on a specific short-term project (with work ending when the project is complete),
• Acting as a substitute for a permanent employee on leave, or
• Filling an open-ended position that potentially leads to permanent employment (i.e., temp to hire).

Note that temporary employees can be hired full-time (scheduled for 40 or more hours per week) or part-time (scheduled for less than 40 hours per week).

Employers may choose to hire temporary workers directly or go through a staffing agency. Temporary employees typically don’t receive company-paid health insurance or other fringe benefits offered to regular employees.

If you opt to hire temporary employees, you must understand the 1000-rule, part of the Employee Retirement Income Security Act (ERISA). This law makes part-time workers eligible to participate in employer-sponsored benefits, such as healthcare or retirement plans, if they’ve worked at least 1,000 hours or approximately 20 hours per week within a year. Companies that fail to comply can face hefty penalties and possible lawsuits.

The bottom line: Beware of hiring temporary employees who work the same hours as your regular employees without a set end date.

5. Leased Employees

A leased employee is hired and paid by a staffing agency (the employer) and performs services for another organization (the recipient company). These employees are typically leased for a year or longer.

The staffing agency pays a leased employee’s salary, provides any benefits, and handles all other HR matters associated with their employment. The recipient company does not compensate or administer benefits to leased employees, meaning they do not have to report leased employees on their taxes.

Leasing employees is an effective solution for companies that experience seasonal demands, lack the resources to recruit talent independently, or need temporary positions filled. Many staffing agencies specialize in specific industries and can help you find top talent quickly.

Which types of employees are best suited for your organization? Perhaps you have certain jobs or projects more fitting for contingent workers, such as independent contractors? Check out nine tips for hiring independent contractors.

Do you have questions about employee classification or need guidance on which type of workers to recruit? Contact BlueLion’s HR experts at 603-818-4131 or info@bluelionllc.com today, and we’ll be happy to help you navigate all of the above!

The information on this website, including its newsletters, is not, nor is it intended to be, legal advice. You should contact an attorney or HR specialist for advice on your individual situation.

Background checks are a critical step in the hiring process for employers across all industries, for all positions. They verify that a prospective employee is honest, reliable, and qualified for the job and a good fit for the company. Additionally, they can help reduce your liability as an employer.

There are different types of background checks employers may request. While most are conducted pre-employment, some companies run certain background checks throughout the life of employment due to legal mandates or for cause.

Below, we’re breaking down 11 kinds of employment background checks, what the reports involve, and why they are important. 

Criminal History

The criminal history is most often what we think of when we hear the words “background check.” Employers perform this check to ensure the prospective employee doesn’t pose a threat to customers or the workplace. Many also pull criminal history reports prior to a promotion, transfer, or other change in the employment agreement.

A criminal background check typically includes record searches of: 

• National criminal databases
• County criminal courts
• Federal and state criminal records
• Sex offender registries
• Domestic and global terrorist watch lists

Why employers need to do it: It can reduce your liability and prevent claims of negligence against your organization for hiring or retaining an employee who commits workplace violence or some other act that results in harm to a person (e.g., sexual assault) or property (e.g., theft).

Employers should also know their state laws regarding criminal background checks, as different states use different methods (e.g., name-based check and employment history check, or national fingerprint-based check).

Although employers are not required to run a terrorist list check on potential employees, those who find a match on the federal listing of Specially Designated Nationals are required to report it to the Office of Foreign Assets Control. Consult your attorney to determine your legal obligations.

Employment History

As the name implies, an employment history check confirms a candidate’s prior work experience. This allows employers to get a comprehensive view of the applicant’s job stability, integrity, and loyalty to past employers. It could also raise questions about gaps in employment history and/or short spells at other companies.

Hiring managers can can contact previous employers to verify:

• Job start and end dates
• Titles held
• Salary
• Job duties or description
• Reason for termination or leaving the company

Why employers need to do it: Unfortunately, many lie and embellish their past work experience on their resumes and during interviews. Employers should verify that the candidate is being honest about their prior job history, skills, and experience before making a job offer.

Education History

An education history check confirms the applicant’s level of education and where they received their education. This is another area where many prospective employees list academic degrees they never obtained or educational institutions they never attended.

Why employers need to do it: The Fair Labor Standards Act (FLSA) states that some positions classified as exempt require employees to have advanced or specialized education. If the FLSA challenges the exemption, the employer must prove the worker has appropriate credentials, which can be validated by an education verification check.

Professional References

Ask job applicants for professional references, then actually reach out to them! This type of check gives you an opportunity to: 

• Ask about the candidate’s past performance.
• Fact-check anything the candidate included on their application, resume, or during their interview 
• Learn what kind of co-worker the candidate would be.

Use open-ended questions with references and keep it conversational in order to obtain more useful details.

Why employers need to do it: Speaking with a prospective employee’s professional references provides a third-party, personal insight into their character and ensures they’ll fit into the company culture.

Drug Screening

Drug screening, which tests if alcohol or drugs are present in the person’s system, is required in industries like truck driving and aviation. Employers perform drug tests to ensure employees are in a healthy state of mind, unimpaired, and capable of performing their jobs safely and effectively.

Drug screening is often done both pre-employment and periodically throughout employment for certain industries and positions. Note that drug tests typically require prior notice and can only be performed with permission.

Common drug screening methods include:

• 5-panel or 10-panel urinalysis
• Hair testing
• Breathalyzer

Why employers need to do it: Aside from following legal requirements, drug testing keeps your employees, customers, company, and community safe. 

Sexual Offender Registry

Every company should perform a sexual offender registry check on all potential employees to ensure they don’t hire someone with a past history of sexual offenses. A sex offender registry search is a crucial background check for any employee, but particularly for positions working with minors, schools, education, or day cares.

Why employers need to do it: Conducting sex offender registry checks reduces your organization’s risk of workplace sex offenses or violence. If your company does not perform this background check, it could lead to accusations of negligent hiring or retention lawsuits.

Consumer Credit Report

You may not think of this type of background check initially, but a credit report is often run for candidates applying for positions that require financial responsibility. This helps an employer determine if the applicant can be trusted to handle money and finances.

A credit history report is pulled from one of the three major credit agencies: 

• Experian
• TransUnion
• Equifax

Employers need to be aware that:

• Credit checks can only be performed with express permission from the individual being tested.
• Some states and cities have made it illegal to base hiring decisions on credit scores.

Many Equal Employment Opportunity Commission (EEOC) and state laws prohibit the use of credit reports. Employers should only pull credit checks for positions where credit scrutiny is critical and you can present a compelling business reason for it.

Why employers need to do it: Credit reports are important for positions that require significant financial responsibility. 

Driving Records

Driving records are an essential background check for any employee who will operate a company vehicle at any time or who will drive personal or rental vehicles on company business.

A driving record check will include:

• Driver’s license status
• License class
• Expiration date
• DUIs
• Traffic law violations
• License suspensions or cancellations

What you’ll need from the candidate: 

• Full name (as it appears on their driver’s license)
• Date of birth
• Social security number
• Address
• Driver’s license number
• State of issue
• Express permission to conduct the check via signed release that complies with the Fair Credit Reporting Act (FCRA)

Why employers need to do it: Employers requiring employees to drive for their jobs need to prove any applicant or current employee has a safe driving history.

Professional License & Certificate Verification

Confirm that a candidate has the required professional credentials or any additional credentials they claim to have. Again, many people try to bolster their resumes and job applications with accomplishments. 

A professional license and certification check can be used across industries and position to:

• Verify if a degree or credential was received.
• Confirm the date awarded.
• Identify any false information included by the applicant.

Why employers need to do it: Avoid hiring unqualified individuals or promoting employees who haven’t truly earned it. Not to mention, certain occupations require specific licenses and certifications, so your company needs to verify that employees keep up with those requirements.

Social Security Number Trace

In some cases, employers may even need to confirm an applicant’s identity and personal information. A social security number trace also verifies if someone is eligible to work in the United States. 

This report matches info from their I-9 to the Department of Homeland Security and Social Security Administration’s records to ensure you hire people who are legally authorized to work in the country.

Why employers need to do it: Make sure the candidate is who they say they are. 

Social Media & Internet Check

While not an official background check, scoping out a potential employee’s social media and online presence helps employers gain a more complete picture of the candidate. A social media check may include browsing the prospect’s profiles on Facebook, Twitter, Instagram, or LinkedIn.

Employers should beware that they can obtain useful information from an applicant’s social media accounts and internet presence, but will need to verify that information is true and accurate. Companies should still conduct a full background check and talk to a candidate’s references.

Why employers need to do it: A person’s social media use could provide insight into their personality, interests, and lifestyle to help determine if they’ll be a fit for your company culture. A complete media search could also save your business time and money down the road.

Whether you are new to hiring and the many types of background checks, or you simply want to ensure your company’s background checks are compliant and thorough, BlueLion can help. Our human resources experts will be happy to evaluate your business and even help you with hiring decisions and processes. Contact us today at 603-818-4131 or info@bluelionllc.com to learn more.

From seasonal work to weekend shifts, certain jobs tend to draw younger candidates—meaning those under 18 years old. If you’re new to employing minors, you may be wondering how you can give young workers a chance while remaining compliant.

Employers who want to hire minors must be sure to follow both federal and state regulations. The Fair Labor Standards Act (FLSA) contains Child Labor Provisions to protect employees under 18. Certain states may have even stricter laws on the subject.

Below, we’re addressing five essential questions about hiring youth workers.

1. What is the youngest age at which a person can be employed?

The FLSA states that 14 is the minimum age for most non-agricultural work. Children generally can’t be employed under age 14.

Of course, there are exceptions. Children of any age can:

• Deliver newspapers.
• Perform on radio, television, or theatrical productions.
• Work in businesses owned by their parents (except in mining, manufacturing, or hazardous jobs).
• Perform babysitting or minor chores around a private home.
• Work on a farm owned or operated by their parent or person standing in place of their parent.

Learn more about the FLSA age requirements.

2. Are there restrictions on when and how long minors can work?

Yes, the FLSA enforces restrictions on the employment of children and minors regarding when and how much they work.

Teens aged 14 to 15 are generally allowed to work a limited number of hours outside of school in non-hazardous jobs. Work hour limits include:

• School Days & Weeks: 3 hours/day and 18 hours/week
• Non-school Days & Weeks: Up to 8 hours/day and 40 hours/week
• Between 7 a.m. and 7 p.m., or from 7 a.m. to 9 p.m. from June 1 through Labor Day

The FLSA does not limit the number of hours or times of day for workers 16 years and older.

Youth under 18 may not work in hazardous jobs (e.g., excavation, manufacturing explosives, mining, and operating many types of power-driven equipment).

3. Are there different state laws about employing minors?

Yes, laws about employing minors vary by state regarding:

• Minimum work ages
• Hours of work
• Types of employment allowed
• Required documentation for minors

According to the Department of Labor (DOL), if the state law and the FLSA overlap, the rule which is more protective of the minor applies. The same concept goes for minimum age requirements: If a state has a higher minimum age requirement, the employer must follow that standard.

Consult your state’s DOL to be sure you remain compliant when employing minors.

4. Is there a minimum wage for minors?

Yes, the FLSA states that employers must pay a youth minimum wage of $4.25 an hour to employees under 20 years of age only during the first 90 consecutive calendar days after their initial employment. This 90-day period starts with the minor’s first day of work for the employer.

After 90 days of employment or when the worker turns 20 (whichever comes first), the employer must pay them the minimum wage.

If the state or local law requires a higher minimum wage and makes no exception for employees under age 20, the higher wage applies.

Learn more on the FLSA youth minimum wage fact sheet.

5. Do employers need to obtain work permits or age certificates for youth workers?

While the federal government does not require work permits and proof-of-age certificates, many states require them for workers of certain ages. Again, check with your state’s DOL counselors for requirements.

Most states issue age certificates. The DOL will issue age certificates if the state does not provide them or if the employer requests that the minor provide one.

Employers who don’t obtain this documentation could face a fine, so it’s crucial to keep up with these regulations and adequately protect your minor employees and your company.

Are you considering hiring youth workers for additional help around the workplace but want to make sure you have all your ducks in a row first? We’ll help you create a fun, safe, and compliant work environment for young people. Contact BlueLion today at 603-818-4131 or info@bluelionllc.com for guidance and tips on employing minors.

Are you in the process of hiring your first employee? Congratulations! Reaching the point where you are ready to start growing your team is an exciting time in any company’s journey.

When you bring on people, however, you also have more responsibilities and requirements to fulfill. Not to worry—we’re sharing 11 steps you should take to prepare for your new hire below.

1. Get an Employer Identification Number.

One of the first things you should do when hiring your first employee is obtain an employer identification number (EIN). Your EIN is required on tax returns and other IRS forms.

Getting an EIN number is a fairly simple process, thanks to the IRS’s easy online application. You don’t even have to file a Form SS-4 anymore!

2. Have your new employee complete and return all necessary forms.

Every new employee should fill out two essential forms, a W-4 and an I-9.

W-4, Withholding Allowance Certificate

Employees use the W-4 form to tell you how many allowances they are claiming for tax purposes. You will then withhold the correct amount of tax from their paychecks.

You don’t need to file this form with the IRS, but you should have employees fill out a new W-4 annually in case they want to change their withholdings.

I-9, Employment Eligibility Verification

Employers must verify that every employee they hire is eligible to work in the United States by having them complete a Form I-9, as required by the U.S. Citizenship and Immigration Services (USCIS). 

You don’t have to submit the I-9 form to the USCIS, but you must keep it on file for three years and make it available for inspection by officials of Immigration and Customs Enforcement (ICE).

Note: Completed I-9 forms should be kept in a separate folder for all employees, rather than their individual personnel files.

3. Report each new employee to your state’s new hire reporting agency.

Employers must report information on all new employees to their local new hire reporting agency. This program is meant to locate parents who owe child support.

To find your state’s agency, visit the Office of Child Support Enforcment’s New Hire Reporting page.

4. Post required notices.

When you hire your first employee, you must also post notices with information on worker rights. Several federal agencies and state departments of labor (DOL) have specific requirements, so be sure to check both to find out which posters you need to display.

• Check out the Department of Labor’s Poster Advisor for federal requirements.
• Find your state DOL for state requirements.

5. Set up a payroll system.

Now that you’ll be paying an employee, you need to find a system to properly manage income and withhold a portion of employee’s income. Your payroll program will withhold state income (if applicable), Social Security, and Medicare taxes and deposit them with the IRS. 

• Learn more about deductions in the IRS’s Employer’s Tax Guide. 
• Check your state’s tax requirements by visiting the Federation of Tax Administrators.

Additionally, make sure you:

• Decide who will administer your payroll system: Will you handle it internally, or hire an external service provider?
• Create a compensation plan for holiday, vacation, and leave.
• Report payroll taxes as needed on a quarterly and annual basis.

6. Prepare for required benefits and taxes.

When you hire your first employee, you will need to provide several required benefits and taxes.

Unemployment Taxes

Register with your state DOL to pay state unemployment insurance and file Form 940 annually to report your annual federal tax. You must file a 940 for:

• Any year in which you paid $1,500 or more in any quarter, or 
• Any year in which an employee worked for you in any 20 or more different weeks of the year. 

These unemployment compensation funds provide short-term relief to people who lose their jobs.

Social Security Taxes

Pay Social Security taxes at the same rate as your employees.

Workers’ Compensation Insurance

Obtain required coverage through a commercial carrier, self-insured basis, or state Workers’ Compensation Program.

Family and Medical Leave Act (FMLA)

Provide eligible employees with unpaid, job-protected leave for specified family and medical reasons with continuation of health insurance according to the FMLA.

Disability Insurance

Required in CA, HI, NJ, NY, RI and Puerto Rico.

7. Put optional benefits in place.

While certain benefits are not required for all employers, they are an important part of recruiting and retaining high-quality employees. Good health, dental, and vision insurance play a significant role in top candidates’ job decisions.

If you do offer certain benefits, you may need to comply with certain laws. Group health plans must comply with federal laws and businesses must offer optional COBRA benefits to employees who are terminated or laid off.

Whether or not your company has to provide group health insurance depends on your full-time equivalent, which measures the number of full-time hours being completed at your company. Check out our five-step guide to calculating your full-time equivalent.

Retirement plans are another important benefit to many candidates. You might choose to offer a 401k or pension plan. If you do provide a retirement plan, you will need to show its compliance with government regulations through IRS Form 5500.

8. Establish workplace safety measures.

Of course, hiring your first employee means considering their health and safety. Be sure to comply with OSHA requirements by:

• Maintaining a hazard-free workplace.
• Training employees to do their jobs safely.
• Notifying applicable government agencies about serious workplace accidents.
• Keeping detailed safety records.

Workplace safety means different things for different types of businesses and work environments. Develop a safety program to keep your team safe. 

If your growing team will be partly or entirely virtual, you have a whole new set of concerns to address. Follow these workplace safety tips for remote employees.

9. Create an employee handbook.

While it may not be mandatory, developing an employee handbook from the minute you start hiring people ensures you’ll be on the right track. 

Your handbook should communicate your business’s employee policies and make it clear that employment is at will unless a worker has signed a written employment contract. You should also have each employee sign a handbook acknowledgement, then store it in their personnel file.

10. Develop a personnel filing system.

For each employee you hire, create a file to keep job-related documents, including:

• Job applications
• Employment offers
• W-4 forms
• Performance evaluations
• Employee benefit forms

Create a separate medical records cabinet, which should be confidential and locked, and another for I-9 forms.

11. Create employee incentive programs.

Many talented candidates are searching for a work culture and perks that improve their lifestyle and finances. Extras like flexible schedules, unlimited PTO, wellness programs, corporate memberships, and company events can help your company establish high morale and performance and retention from Day 1.

Consider these 13 low-cost employee perks as you develop your company’s incentive programs.

Be Prepared When Hiring Your First Employee

If you’re hiring your first employee, it’s likely both an exciting and slightly scary time. You want to ensure everything goes smoothly and you’ve got all your ducks in a row for both your new team member and your business.

Doing these 11 things is a great way to start, but if you’re feeling a bit overwhelmed, we can help! BlueLion will help your processes and procedures are compliant and you set up your new employee for success. Contact us today at 603-818-4131 or info@bluelionllc.com.

The information on this website, including its newsletters, is not, nor is it intended to be legal advice. You should contact an attorney or HR specialist for advice on your individual situation.