(As presented by Dave Wilke during his “Ask The Accountant” segment on the July 24, 2004 edition of The American Entrepreneur)

These are some things to consider so that an employer “covers all the bases” in terms of taking on a new hire, and that every step in the process is in full compliance with state and federal employment laws.

1. THE FAIR LABOR STANDARDS ACT – Applies to ANY employer. Some aspects:
   • Minimum Wage Law – Federal law states that the minimum wage is set at $5.15 per hour. However, this amount does vary from state to state, and in those cases, the individual state’s minimum wage trumps the federal minimum wage amount.
   • Overtime – (Recently revamped under the Fair Labor Standards Act) - If an employee works more than 40 hours in a seven-day period, that employee is entitled to a pay of time and a half, provided that employee is not exempt from this law (i.e. salespeople, management, other salaried professionals). One note of caution: If an employee works a 20-hour workweek, followed by a 60-hour workweek, that employee is STILL granted 20 overtime hours, because of that second week, although that employee worked a total of 80 hours over the course of those two weeks.
2. APPLICATIONS
   • Avoid Prohibitive Subjects – In the application and interview processes, employers are prohibited from asking a potential new hire about religion, sexual orientation, race, and other subjects that are irrelevant to the employee’s ability to perform the job for which they are applying.
   • “At Will” employment – Pennsylvania State Laws dictate that, unless indicated otherwise, employment is “at will”, meaning that either the employee can quit or the employer can fire the employee at any time without cause on either side, with no long-term contract in place.
3. COMPLIANCE WITH TAX ISSUES
   • W-4’s – This form is to be filled out by EVERY employee and held by the I.R.S. to indicate that taxes are to be taken out of the employee’s payment.
   • I-9’s – This form is to be filled out by EVERY employee and maintained on file at the employer’s place of business to indicate that the employee is not an immigrant or illegal alien working in the United States without proper documentation
4. SOME ISSUES FOR BIGGER COMPANIES
   (generally, the following apply to companies with more than 50 employees)
   • Family Medical Leave Act – Requires that employees who are off on a medical leave of absence will not lose their position upon their return.
   • Mental Health Parity Act – Requires that employers provide the same dollar caps for mental health benefits that they do for medical and surgical benefits.
5. PENNSYLVANIA STATE LAWS THAT TRUMP FEDERAL LAWS
   • New Hire Reporting – For every new hire, an employer is required to send the information of the hire to the State of Pennsylvania.
   • Child Labor Laws – Children must be 14 years old to begin work (i.e. for their parents), unless they are in an occupation where they are exempt (modeling, newspaper delivery…back when kids actually delivered newspapers…. etc.)
   • Workers Compensation – Every employer is required to carry workers compensation for his or her employees.
6. ONE MORE FEDERAL LAW
   • COBRA – For any company with an average 20 or more employees, an employer is required to provide continuing health coverage for a minimum of three months to any departed employee.

For more information on this New Hire Checklist, please call Dave Wilke at Wilke and Associates at (412) 278-2200, or visit the Wilke and Associates website at www.wilkecpa.com. “Ask the Accountant” can be heard Saturdays at 9:15 on The American Entrepreneur.