Guide
Hiring employees
Hiring your first employee brings new legal requirements, mainly workers' compensation, and new risks, like claims about how people are treated.
At a glance
- Get workers' compensation Required by law
- Check state disability and paid leave programs Depends on state or visa
- Consider employment practices liability Optional
- Cover employees driving for work Optional
- Understand health insurance rules for employers Depends on state or visa
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1 Get workers' compensation
Required by lawRequired in nearly every state once you have employees, sometimes from the first part-time hire. It pays for work injuries, and generally protects you from being sued over them.
Read more: Workers' compensation
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2 Check state disability and paid leave programs
Depends on state or visaSome states, like California, New York, New Jersey, Washington and Massachusetts, run disability or paid family leave programs funded through payroll.
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3 Consider employment practices liability
OptionalClaims of discrimination, harassment or wrongful firing are among the most common against small businesses. EPLI pays for your defense and settlements.
Read more: Employment and management liability
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4 Cover employees driving for work
OptionalIf employees run errands in their own cars, hired and non-owned auto coverage protects the business.
Read more: Commercial auto
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5 Understand health insurance rules for employers
Depends on state or visaBusinesses with 50 or more full-time-equivalent employees must offer affordable health coverage or pay a penalty. Smaller businesses can choose to offer it.
Read more: Health insurance
Things that often surprise people
- Calling someone a contractor doesn't make them one; if they're really an employee, you can owe workers' comp for them.
- Workers' comp premiums are based on payroll and audited after the year ends, so the final bill can change.