What You Need to Know about Employee Documentation

First-Day Paperwork

On the first day of employment, employees should be hit with a lot of paperwork. This is very routine and you normally will not get any question from the new employee about why they need to do it. Employees are used to this type of process when starting a new job. However, if you are unsure of exactly what you need, this list of paperwork and the role they serve will help you develop your first-day packet for new employees.

• Tax Forms – No matter what state you do business in, your employees must fill out a W-4 form, which is the IRS federal tax form. It is also known as the Employee's Withholding Allowance Certificate. This is the form that will tell you the employee's filing status so you can ensure that the right amount of taxes are taken out every pay period. In addition to this tax form, many states also require a tax form to be filled out to determine their state filing status. You should check with your state laws to determine if this should be included in your packet.
• USCIS Form I-9 – Form I-9 is a federally required employment eligibility verification form. Employees must fill out the first section of the form on their first day. The purpose of this form is to ensure that the employee is legally authorized to work in the United States, as well as a way to prove that they are who they say they are. After they have filled out section one of this form, they must provide you with original documentation. You will make copies of this documentation for support of the paperwork and will return the originals to the employee. This documentation is also what you will use to complete the rest of the form. The documentation they can legally provide to show proof is listed on the I-9 paperwork. This form should be kept in a separate folder from the other employee documents as required by law.
• New Hire Reporting Form – Some states require that you have the new employee fill out this form. This is a form that the state government will use to determine if the employee owes child support that will need to come out of their check. This form includes basic identifying information that the employee should have available on day one.
• Benefits Forms – If you offer benefits to your employees, you will need to provide them with the enrollment forms that they can fill out for you. Even if they do not have to have these completed on day one, which is often the case, you should still make it a practice to provide them the information and forms ahead of time. This information should include what benefits are available, the cost of these benefits both for the individual employee as well as their family (for things such as health and dental insurance), and plan options, if any.
• Miscellaneous Forms – You may have several other forms that you need to have filled out by the employee. These are not required by law, but you may want to make it best practice. For example, you may want to have forms that ask for emergency contact information, vehicle information, and direct deposit and banking information. Again, while these are not required, it may be a good idea to offer things such as a direct deposit and provide your employees with the forms.
• At-Will Agreement – This is a form that you will develop for your business. It serves as a legal document that the employee signs. This document typically contains a statement that the employee acknowledges that the employment is at-will for both parties. This means that they can be let go at any time and for any reason, and they can do the same thing. Some businesses choose to do this as part of the application process, but others have it as part of the first-day paperwork. Some states are considered to be at-will states and some are not. You should check with local laws before adding this to your packet.
• Non-Compete Agreement – Another legal document that you may want to have your employees sign is a non-compete agreement. With this type of agreement, the employee is essentially promising, legally, that they will not compete against the business. This extends to a certain period after employment ceases as well and stops them from going to work for a competitor. One thing to keep in mind is that this type of agreement is not legal in all states, so you should check with your local and state laws to ensure that you are not making employees sign something that is illegal. Beyond that, they must be reasonable in the sense that the time period and geographic area you refer to in the agreement is not beyond expectation. You should ensure that what you are expecting is reasonable both for the business and the individual employee.
• Non-Disclosure Agreement – You may want to consider adding a non-disclosure agreement to your packet as well. This is another legal contract that essentially asks the employee to promise not to reveal or share private company information, confidential information, or trade secrets. This is the type of documentation you will want to have in place if you have confidential customer lists, specific formulas for your products, or other confidential information. If there is any chance that this information will be provided to the employee, you will want to ensure that they sign this non-disclosure agreement to better protect your business. Included in this document should be an explanation of possible confidential information, the terms, how to handle the information, and what the penalties may be for breaching the agreement.
• Non-Solicitation Agreement – If you have a list of customers that you want to protect, another legal document to consider is a non-solicitation agreement. This type of agreement requires the employee to agree to not solicit the customers of your business and even the employees of the business for anything other than business purposes. It should also outline that if they are no longer working with the company, they should not be contacting them at all. If the employee is responsible for bringing new clients to your business, you may want to add into the agreement a clause that excludes some people, such as their friends or family members. Additionally, it should also only prohibit contact to take them away from the company, but should not include those who leave on their own if an employee leaves the company.
• Arbitration Agreement – An arbitration agreement is something you may want to consider if you want to try to avoid any potential lawsuits. This is an agreement that requires employees to give up their rights to an employment-related lawsuit against your business. Instead, it requires that all of these potential issues be brought to arbitration. This helps the business because it is a private proceeding that is faster and easier for both parties.

This is just a sample list of some documents to include in your employee packet. While some are legally required, others are not; you can decide if you want to include them, if possible. Keep in mind that some states may still require additional forms, so you should check your local and state laws to ensure that you are covering all required documentation in your area when it comes to the employee's first day.

Documenting Employee Performance

Beyond maintaining the employee file based on documents needed on day one, you should also document employee performance. This is important for a variety of reasons including:

• having proof to support a promotion or recognition of an employee;
• providing evidence of performance issues and that they were discussed in a timely manner;
• providing a history of employee improvement or issues over time to show events as they occurred and how they were managed;
• providing documentation to support the firing of an employee, providing a raise, lowering pay, or even why pay showed no increase or decrease; and
• showing proof that any performance issues were discussed with the employee and that they were given enough time to improve.

Maintaining Files

Once you have all of the files put together for an employee, you should also do your best to keep them up to date. For example, if your employee changes their taxes or their direct deposit information, you should put new copies of the forms in their file. Additionally, every time you provide feedback on employee performance, you should include that in the file. You should be able to go to the employee file and find the most up-to-date information every time. To do this, you have to ensure that you maintain the files every time there is a change. You should make it a habit to file away new documents and forms on a regular basis so you know that your employee files are accurately maintained. This is also important in the case that you are audited at any time and you need to pull these files to show your documentation.

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