1. Authorized Workers Only
The federal Immigration Reform and Control Act of 1986 (IRCA) prohibits employers from knowingly employing workers who are not authorized to work in the United States. Accordingly, employers must verify the identity and employment eligibility of each new hire. Each employee must be a citizen or have a valid visa or green card. Visas are classed into different categories which depend on the anticipated length of time in the United States, the employee’s education, and job description. A green card, however, proves permanent residence status. To ensure authorization, employers and employees must complete the Department of Homeland Security’s Employment Eligibility Verification form (“Form I-9”). The I-9 form must be completed, and all required documentation provided by the employee, within 3 business days of hire. If the employee is incapable of doing so, the employer may not continue to employ this individual. Failure to abide by these requirements can subject the company to serious penalties and fines, even criminal indictment.
2. Employment Applications
When it comes to recruitment, employers are restricted by federal and state laws governing permissible and impermissible pre-employment inquiries. These limitations are generally intended to ensure against illegal discrimination in hiring. Employers must beware of the information they request on their applications for employment, the questions they ask in job interviews, and the information they may solicit – wittingly or unwittingly – in accessing online sources, administering preemployment examinations, or conducting background checks. For example, most states forbid employers from inquiring into whether job applicants have ever been arrested for allegedly committing a crime. By contrast, most states permit employers to ask on an application whether applicants have been convicted of a crime.
Further details about employment applications and pre-employment inquiries are provided in Littler’s Start-Up Guide for Foreign Employers in the United States; to request a copy, please contact Susan Woodhouse at firstname.lastname@example.org
3. Offer Letters
U.S. employment law is based on the at-will doctrine. Accordingly, employers are strongly recommended to avoid making any guarantees of employment or employment conditions which undermine the application of the at-will employment.
When an employer has decided to hire an individual, the next step is determining how to make the offer of employment. In the United States, other than when hiring high-level employees, the custom is to extend an offer of employment in the form of a short letter that expressly refers to and preserves the at will nature of the employment relationship. For example, the offer letter should not be referred to as an “agreement” or “contract.” It should include language that disclaims it as a contract and affirms the at-will employment. Finally, employers should avoid referring to an employee’s “entitlement” to receive benefits; a better practice is to reference an employee’s “eligibility” to participate in benefit plans.
B. Employee Handbooks
Even small employers often decide to provide employees with an employee handbook that identifies the essential policies of the company. As companies grow, the need for a handbook becomes even more compelling. Handbooks can be strong communication tools to establish the culture of the company, its expectations, and its benefits. Indeed, handbooks provide employees an easy reference to the employer’s rules and expectations and can answer questions about where to obtain more information about the workplace. Notably, federal and state law actually mandate that certain policies be included in a handbook (if the employers actually have a handbook).
Importantly, and to state the obvious, handbooks should be drafted with care. First, they are often the primary exhibits in employment litigation. For example, the promises and expectations written in the handbook – if poorly constructed – may be used to rebut the at-will doctrine. To that end, every handbook should include a provision that emphasizes the at-will doctrine and disclaims that the handbook is a contract of any sort. In addition, although handbooks are used to list and identify for employees the numerous benefits they receive while working for employer, these terms should be carefully drafted to avoid contradicting or deviating from the actual benefit plan terms. Otherwise, they may be construed to create a promise that binds the employer even if the handbook terms are inconsistent with the actual benefit plan. For these reasons, handbooks – though useful and necessary – should be carefully constructed to avoid unintentionally creating legal obligations and liabilities.
C. Reporting, Posting, and Record Retention Requirements
Federal and state laws also provide a host of reporting, posting, and record retention requirements with which most employers must comply. These standards vary widely from state-to-state.
Employment income is taxed at progressive rates, depending on various factors. These factors include the amount of the income earned, the employee’s marital status, and other factors. In addition to income taxes, there are also Social Security taxes and taxes for Medicare, a publicly funded health insurance program. Employers are obligated to withhold the required percentages from the employee’s wages. In addition to federal taxes, there may also be state and municipal taxation requirements. Companies should seek advice of local professionals to ensure that they are complying with all withholding, reporting, and payment requirements.