Can you believe it — so far, we’ve covered staffing, employee classifications, background checks, setting up payroll and compliance/record keeping. If you’ve gotten this far, give yourself a pat on the back, you’re almost at the finish line.
Today, we’re going to wrap up this HR from Scratch series with new hire and termination packages — documents that mark the beginning and end of an employee’s journey with your company — in addition to employee benefits.
Let’s jump right in with the New Hire package. The new hire package is a collection of documents that provide essential information to your incoming employees. It’s a warm welcome that sets the stage for a positive onboarding experience. The key components of the New Hire package are as follows:
- Offer letter: This document outlines the terms of employment, including salary, benefits, and working hours. If the position is non-exempt (meaning eligible for overtime), you must also complete and include the Wage Theft Notice. The package for non-exempt employees won’t have this notice.
- Company handbook: This guide outlines company policies, mission, procedures, work culture, and expectations.
- W-4 form: This IRS form allows your employee to choose their withholding preference for income tax. There are two forms, one for the Feds and one for the state. Its important employees complete both forms.
- I-9 form: This form verifies an employee’s identity and eligibility to work in the United States. This form must be completed on the first day of employment.
- Emergency contact form: A personal employee profile or something similar is important to gather information about the employee’s designated emergency contacts.
- Direct deposit authorization form (if applicable): This form allows the employee to set up direct deposit for their paycheck. As a courtesy, include a listing of the current year’s pay dates.
The next group of documents are required by the state of CA only and it’s where the Time of Hire pamphlet comes in, it provides necessary information about employees' rights and benefits. Key documents in this group include:
- Paid family leave: This outlines the California Paid Family Leave (PFL) program, which allows eligible employees to take paid time off to bond with a new child or care for a sick family member.
- Workers’ compensation: This document explains the worker’s compensation system in California, which provides benefits to employees who are injured or become ill because of their job.
- Disability insurance: This details California’s State Disability Insurance (SDI) program, which provides benefits to eligible employees who are unable to work due to non-work-related illness or injury.
- Sexual harassment and violence: This section outlines the rights of employees who have been subjected to sexual harassment, domestic violence, sexual assault, or stalking.
- Medical Provider Network (MPN): If your workers’ compensation insurance company provides an MPN, you must include information about the MPN in the Time of Hire Pamphlet.
- Injury and Illness Prevention Program: This is an excellent opportunity to distribute the Cal OSHA=required Injury and Illness Prevention Program (IIPP), which outlines your company’s plan for preventing workplace injuries and illnesses.
- Affordable Care Act Marketplace Notice: The Affordable Care Act requires employers to provide all new employees with a Marketplace Notice, which informs them of their eligibility for health insurance through the Marketplace.
When you provide these essential documents to new hires, you are meeting your legal obligations as an employer but also demonstrating your commitment to employee well-being and informed decision making. Encourage employees to review these documents carefully and ask questions if they need clarification. All this information is to help ensure a smooth onboarding process.
Now, just as the onboarding process marks the beginning of an employee’s journey with your company, the termination process signifies its end. Both stages require careful management to ensure the process is positive and compliant for everyone involved. It's important the termination process is handled with professionalism and respect; key components of employee departures include:
- Cover letter: This letter should clearly outline the reason for termination, the effective date, and any accrued benefits or severance pay that the employee is entitled to.
- Final paycheck: The employee’s final paycheck should include all earned wages, vacation pay, and any other accrued compensation.
- Changes of Relationship Notice (Form DE 275A): This form provides the employee with essential information for filing for unemployment benefits.
- COBRA information (if applicable): If the employee had benefits through your company, they may be eligible to continue their coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA).
Hopefully, if your team is small enough, all the COBRA maintenance may run through the insurance carrier. But if you have 20 or more employees, you’ll have to either do it in house or contract with a company to administrate it for you.
And speaking of benefits…
One of the great ways to up your retention rate with your team is to offer benefits. If you have less than 50 folks on your team, offering benefits isn’t mandatory. It’s optional. But hold on, in today’s hyper competitive environment for talent, medical insurance has become a given. And I think you’ll find that as you are recruiting, the subject will come up over and over again. So, what are your options?
- Group Coverage: You offer a collective benefits package.
- Individual Policies with Company Coverage: In our opinion, this is not the move. Some companies opt for having employees get their own policies, with the company picking up the tab. Simple, right? Well, the feds see it as more than a reimbursement. They label it taxable income, and frankly Uncle Sam gets enough slices of the pie.
- No Benefits: We’ve given this a hard pass in our playbook. It's just a bad option.
Group plans have special protection under the IRS, that’s why your employee can pay part of their premium out of their salary, and it won’t be taxable income to you or them. But paying for someone’s individual policy isn’t protected, so it does have a tax load associated.
There is a way to reimburse employees for their individual policies without making that reimbursement taxable. But — I’ll leave that explanation to your broker.
Wondering what a broker is? And how much do they cost? A broker is a licensed insurance agent that is a specialist in the benefits insurance arena (just like your business insurance broker is an expert in business insurance); and again, just like your business insurance broker — your benefits broker won’t cost you a thing.
The golden nugget? They’re paid by commission from the insurance companies. So, basically, it’s free expert advice and help. We always recommend getting a good broker as the first step in offering benefits. Sure, you can try to go it alone and do something online — but things can get really complicated, fast. It’s always great to have a professional on your team. And they can answer employee questions as well.
The big three of insurance offerings are medical, dental, and vision. However, there are additional benefits you might find beneficial adding to your benefits package (see what I did there?). Anyhow, back to seriousness. Other benefits include:
- Long-term and short-term disability
- Life insurance
- Retirement plans
- Flexible spending accounts
- Transportation subsidies
- Health Savings Accounts (HSA)
- ID theft insurance
- Prepaid legal support
- Pet insurance
This is why we strongly recommend having a broker — they help you plough through the thicket and make the right choices for your team.
Now keep in mind — this is just the low hanging fruit. There’s a forest of tasks ahead — employee reviews, salary planning, handbooks, safety, OSHA requirements, posters, the list goes on. My advice? Consider seeking assistance. While we’d recommend an expert HR consultancy like ours, this isn’t a sales pitch.
Simply put, congratulations on this journey! It might seem like a lot, but with radical organizational changes and a commitment to continuous learning, you’ve got this! And we’ve got you. Welcome to the party!
That’s it for now, until next time! As always, thank you for taking time out of your day to join us. Onward!
