Whether you are a small business owner or the manager of a global company’s technician team, onboarding new hires involves more than printing their ID badge and showing them the break room. The onboarding process is a critical time for ensuring that workers are set up for success, and it includes filling out appropriate forms correctly so that employees are compensated properly, treated fairly and made aware of the employment resources available to them.
Because organizations often hire field service technicians as contractors rather than full-time employees, there are important distinctions to understand between the two employment types when completing new hire tax forms and other onboarding documents. But by educating yourself about the basic government regulations regarding employee classification and eligibility, you can develop a legally compliant and smooth onboarding process.
Employee classification laws vary globally — even within the U.S., laws that mandate how hiring and onboarding is carried out differ from state to state. Still, there are some common mistakes employers make simply because they don’t understand the nuances of different classifications. Get familiar with them, and avoid these errors the next time you hire a new tech.differ
Don’t Skip the Formal Offer Letter
You’ve made a job offer, and the employee has verbally accepted the position, so writing a formal offer letter may seem like an unnecessary step, right? Wrong. Some states, like New York, California, Connecticut and Idaho require employers to communicate specific information to employees when they are hired in a formal way.
New York employers, for example, must inform new employees in writing of their regular rate of pay, and in the case of nonexempt employees (including field service contractors), their overtime pay rate. Furthermore, an offer letter spells out the terms of employment, such as it being “at-will,” which could protect employers against some claims of unfair termination. Offer letters also document the terms and conditions of employment discussed during the interview, such as benefits, as well as contingencies, such as passing a background or drug screening. Both you and your new technician must sign the offer letter, which is a legal document, so consulting an employment attorney when developing an offer letter template for your company is smart practice.
Don’t Misrepresent Employees as Contractors
U.S. employees, whether full time or part time, must complete a Form W-4 during the onboarding process, while contractors must complete a Form W-9. But business owners need to fully understand what differentiates contractors from employees. Legally, the distinction rests on the nature of your technician’s job. If you, as the employer, dictate specifics regarding how the work is to be done versus hiring an expert to perform a task as he or she sees fit, that person is likely a contractor.
Furthermore, companies hire contractors for predetermined periods of time, or to complete a predetermined project, always in accordance to a written contract, as the term implies. Employees, on the other hand, follow prescribed instructions regarding their work, and have the expectation of remaining on your payroll regardless of workflow. For clarification on determining which category applies to your new tech, the IRS provides further criteria.
Learn the Differences Between Exempt and Nonexempt Employees
According to the Fair Labor Standards Act (FLSA), exempt employees are paid their salary regardless of how many hours they work, while nonexempt employees can be paid on an hourly or salary basis, and are entitled to overtime pay whenever they work in excess of a 40-hour week. If they regularly earn more than $455 per week, however, they are considered exempt.
Be certain to treat nonexempt employees appropriately — in addition to overtime, some states require that they receive an offer letter that stipulates their wages and overtime eligibility. Field service technicians working on a contractual basis are typically considered nonexempt. In Missouri, for example, they are eligible for overtime pay.
Follow Appropriate Form I-9 Regulations
Chances are you’re already aware that you’re required to have all your new technicians (contractors and freelancers included) complete an I-9 form. Its purpose is to verify the identity and employment authorization of each person they hire, so it’s a critical hurdle to overcome before your employee starts work on day one. But, receiving the completed form is only part of the compliance protocol for employers.
To satisfy all the requirements of employee identity confirmation, be vigilant about requesting originals of the documents required (passport, birth certificate, etc) and make a copy of each document to attach to the completed form. Don’t file the I-9 along with other onboarding documents; I-9s must be kept in a separate folder either for three years after the date of hire or for one year after employment is terminated, whichever is later. Remember, state and federal governments may check for this when they do onsite audits.
In general, employment laws vary from state to state, as well as from country to country, so there’s no one-size-fits-all guide to follow. Across the board, however, the legal environment can be tough to navigate. Large companies and small businesses alike, especially ones without a designated human resources generalist, should consult with an employment attorney for guidance specific to where they are located. A less expensive option is to work with an HR consultant who can set up a compliant HR infrastructure.