Before hiring someone, it’s important to understand whether the person you bring on will be an employee or an independent contractor. This choice affects how you pay them, your legal responsibilities, your costs, and the flexibility you have as a business owner.

Some entrepreneurs try to classify a worker as a contractor to avoid paying payroll taxes, workers’ compensation, or complying with labor laws—but this can create serious legal and financial problems later. It’s worth taking the time to get it right.

An hourly employee is part of your ongoing team. You decide when, where, and how the work is done. They usually have a set schedule, are paid hourly or through regular paychecks, and you typically provide the tools or equipment they need. Since they’re part of your business operations, you must withhold payroll taxes, keep proper employment records, and may need to offer certain benefits.

A contractor, on the other hand, works independently—more like a business partner hired for a specific job or project (for example, building a website or creating marketing materials). They decide how and when to do the work, often use their own tools, and are paid a flat fee or per-project rate. Contractors can make things simpler in the short term because you don’t withhold taxes or manage payroll—but they often charge higher rates since they cover their own taxes and insurance.

Misclassifying a worker—treating an employee as a contractor or vice versa—can be costly. If the IRS or Department of Labor audits your business, you could face back taxes, fines, and legal penalties. In some cases, a worker might even file a claim for unpaid benefits or wages.

Before deciding, carefully consider the role, level of control, duration, and cost. Getting the classification right helps protect your business and ensures you can grow sustainably and responsibly.

See key differences between Employees and Contractors here.

Before hiring, it’s important to clearly define the role you want to fill. You should first design the job—thinking through what the position will look like and how it fits into your business—and then create a job description that communicates those details to potential employees.

Job Design vs. Job Description

Job design comes first. It’s the planning stage where you decide:

• What the role will include—its key tasks and responsibilities

• The values and behaviors you want the employee to represent

• How many hours per week the job requires and when they’ll work

• How much supervision they’ll need and how performance will be measured

• How the person will be compensated

• The required and desired qualifications

Job description comes second. This is the written summary of everything you’ve planned. It’s the document you share with job candidates or use internally to clarify expectations.

Job Design – The Blueprint

Definition: The process of organizing the tasks, responsibilities, and relationships of a role so it’s efficient, motivating, and aligned with your business goals.

Focus: Deciding what the job will be and how it supports the overall operation.

Purpose: Ensures the role is necessary, well-structured, and fits smoothly into your workflow before you hire.

Key considerations:

• What tasks will the role include

• Core responsibilities and expected outcomes

• Values the person must uphold

• Supervision required and reporting structure

• How the role connects with other positions

• Skills needed to succeed

• Balance of workload and task variety

• Flexibility for future changes

• Hours per week

Example: You decide that a Marketing Assistant will spend 50% of their time on social media content, 30% on event coordination, and 20% on customer emails, reporting daily to the Marketing Manager.

Job Description – The Documentation

Definition: A formal written document outlining the specific duties, responsibilities, qualifications, and expectations for the role.

Focus: Communicating job details clearly to potential candidates or current employees.

Purpose: Serves as both a hiring tool and a guide for performance expectations.

Typical sections include:

• Job title

• Reporting relationships

• Main duties and responsibilities

• Required skills

• Education and experience (required or preferred)

• Working conditions and physical or emotional demands

• Schedule and location

• Pay range or compensation details

📝 Here’s an example: a Job Description for a Personal Care Assistant from one of the home health care businesses in the SBEAP program.

Hiring your first team members is a big step—and doing it right can save you time, money, and frustration later. A good recruitment and selection process helps you find the right people efficiently, affordably, and legally, without overwhelming yourself in the process. For small or low-resourced businesses, the goal is to create a simple, repeatable system that works now and can grow with you.

a. Make Sure Candidates Clearly Understand the Role

Once you have a job description, take time to explain the role in detail during interviews. Ask questions to make sure candidates understand what the job involves and what will be expected of them. When employees know exactly what they’re signing up for, they’re more likely to stay and perform well—saving you from the cost and stress of replacing them too soon.

b. Use Low-Cost Ways to Find Candidates

• Post on free or low-cost job sites like Indeed, LinkedIn, or local community boards.

• Ask for referrals from suppliers, customers, or people in your network.

• Share the opportunity on social media or in local online groups.

These methods are affordable and often bring in candidates who already have some connection to your community or business.

c. Set Up a Simple Screening Process

• Create a few key questions to ask every applicant (e.g., their availability, past experience, and why they’re interested in the role).

• Review applications quickly and shortlist only those who meet your must-have requirements.

Keeping this step simple helps you move fast without wasting time.

d. Plan a Focused Interview

• Keep interviews short—about 20–30 minutes.

• Ask the same questions to each candidate for fairness.

• Avoid questions that are legally off-limits (such as age, family status, or religion).

• Take notes on each candidate’s responses.

• If possible, include a small task or scenario that shows how they would handle real work situations.

e. Make a Clear, Timely Offer

• Call your chosen candidate quickly before they accept another job.

• Confirm start date, pay, hours, and main duties in writing.

• Use simple but compliant paperwork (such as W-4, I-9, and any required state forms).

Being fast and transparent builds trust and sets the tone for a professional relationship.

f. Document and Improve the Process

• Write down each step you take so you can reuse it for future hires.

• After each hire, note what worked well and what you could improve next time.

A Common Mistake to Avoid

Many entrepreneurs make the mistake of hiring people who are just like themselves—or turning first to friends and family. While shared values like integrity, responsibility, and punctuality are essential, your business will benefit most from people with different skills, perspectives, and experiences.

Hiring friends or relatives can be risky. They may not fully respect your authority, might take advantage of your relationship, or could be difficult to let go if problems arise. Always focus on finding the right person for the job, not just someone you already know.

As your team begins to grow, helping new employees succeed from day one is just as important as hiring the right person. Onboarding, training, and development work together to make sure your employees feel confident, skilled, and motivated to contribute to your business.

• Onboarding happens first—it’s how you welcome new hires, help them understand your business, and set them up for success.

• Training and development continue over time, helping employees build new skills and take on more responsibility as your business grows.

Onboarding – Getting Started

Definition: A structured process that helps new employees understand their role, your business culture, and how things work day to day.

Focus: Making sure new hires feel comfortable, informed, and ready to do their job well.

Purpose: Ensures employees can perform effectively from the start and feel part of your team.

Key components:

• Orientation to your company’s values, policies, and expectations

• Completing necessary paperwork (e.g., tax forms, I-9, benefits enrollment if applicable)

• Introduction to tools, systems, and workflows

• Meeting key team members and learning how communication happens

• Basic role-specific training

Example: A new cashier spends the first week learning how to use the point-of-sale system, understanding store policies, and practicing customer service, while being paired with a more experienced team member for guidance.

Onboarding Session Planner

Use this planner to design a simple, structured onboarding process for each new hire. It focuses on what’s essential for small businesses—helping employees quickly understand their job, your expectations, and your company culture—so they can start contributing with confidence.

📆 Find the onboarding session planner here.

Training & Development – Growing Skills Over Time

Once your employees have settled into their roles, it’s important to keep helping them learn and grow. Training and development are ongoing efforts that strengthen your team’s skills, boost confidence, and prepare them for greater responsibility as your business expands.

Definition: Continuous activities that help employees improve their skills, knowledge, and overall performance after the initial onboarding stage.

Focus: Building job mastery and preparing employees for future roles or responsibilities.

Purpose: Improves productivity, job satisfaction, and employee retention by giving your team opportunities to learn, grow, and feel invested in the business.

Key components:

• Skill-specific training – technical, communication, or leadership skills

• Cross-training – helping employees learn different tasks to increase flexibility

• Career development opportunities – identifying paths for advancement

• Professional certifications or continuing education – where relevant

• Mentoring and coaching – offering personal guidance and feedback

Example: A cashier who has worked with you for six months is trained to handle inventory management and starts learning basic scheduling tasks to prepare for a possible shift-lead promotion.

Training & Development Planner

Use this planner to organize ongoing training and skill-building opportunities for your employees. It’s designed for small businesses with limited resources, helping you strengthen your team’s abilities, encourage growth, and create clear pathways for advancement.

📆 Find the training and development planner here.

Designing fair and sustainable pay is one of the biggest challenges for small and growing businesses. You need to find the right balance between attracting good people and keeping payroll affordable. For entrepreneurs with limited resources, the goal is to build a compensation plan that is clear, fair, and easy to manage as your business grows.

Understand the Role and Your Budget

• Clearly define what the job includes and how much time it requires.

• Determine the maximum amount your business can pay consistently, not just during high-revenue months.

Research the Market

• Look up pay ranges for similar roles in your area using tools like Indeed, Glassdoor, or the Bureau of Labor Statistics.

• Decide if the role should be hourly or salaried, based on job duties and labor laws.

Choose the Pay Rate

• Set a starting rate that’s competitive yet within your means.

• Consider small, planned pay increases over time to reward loyalty and retain good employees.

Add Low-Cost Perks

If you can’t offer the highest wages, think creatively about non-cash benefits that add value for your team, such as:

• Flexible schedules

• Staff discounts

• Opportunities to learn new skills or take on added responsibility

These perks can go a long way in motivating and retaining employees.

Plan for Compliance

• Ensure all pay meets or exceeds minimum wage and overtime requirements.

• Keep detailed records of pay decisions for legal and tax compliance.

Review and Adjust Regularly

• Revisit your pay structure at least once a year or whenever roles change.

• Track whether your compensation is helping you attract and retain the right people—and make adjustments when needed.

Compensation Planning Template

Use this template to build a fair, competitive, and realistic pay plan for your business. It’s designed for small enterprises with limited resources, helping you balance employee satisfaction with your financial sustainability.

📝 Find the compensation planning template here.

A performance appraisal is a simple but powerful way to check in on your employees’ progress, give meaningful feedback, and set goals for the future. For small or early-stage businesses, this process should be practical, consistent, and focused on growth—not just evaluation.

Define the Purpose

• Be clear about why you’re doing reviews: to improve performance, recognize achievements, and identify training or support needs.

• Keep the focus on helping employees succeed and grow, rather than just assigning scores or grades.

Choose the Review Frequency

• For a small business, aim for two reviews per year, or start with a 90-day check-in for new hires plus an annual review.

• Keep the schedule simple and realistic so you can follow through consistently.

Decide What to Evaluate

• Base the review on the employee’s job description and main responsibilities.

• Add a few general workplace qualities such as teamwork, communication, reliability, and quality of work.

Create a Simple Review Form

• Use a clear rating scale (for example, 1–5) and include space for written comments.

• Include sections for:

  • Strengths and accomplishments

  • Areas for improvement

  • Goals for the next review period

Prepare for the Conversation

• Review the employee’s recent work and gather feedback in advance.

• Bring specific examples—both positive and constructive—to make the discussion more meaningful.

Make the Meeting Two-Way

• Encourage the employee to share their own perspective and ask questions.

• Talk about what kind of support, tools, or training they might need to do even better.

Document and Follow Up

• Keep a copy of the completed review in the employee’s file.

• Don’t wait until the next appraisal—check in regularly on goals and progress.

Performance Appraisal Template

Use this template to conduct fair, consistent, and growth-focused performance reviews. It’s designed for small businesses with limited resources, helping you set clear expectations, provide useful feedback, and support ongoing employee development.

📝 Find the performance appraisal template here.

Background Checks for Small Businesses: Tips & Tools You Can Use

When hiring someone new, running a background check helps you verify who they say they are and reduce risk. But as a small business, you don’t need a complicated or expensive system. With care and the right tools, you can do this simply and legally.

What You Should Know First

• Get written permission before doing any background check. It’s the law in many places and essential for fairness.

• Use the same process for all candidates applying for the same role—don’t pick and choose who you check.

• Only look into information relevant to the job (e.g., driving record if the job involves driving). Don’t go digging into unrelated personal history.

• Keep any results confidential and secure.

Tools & Services You Can Use

You don’t have to go it alone—here are services built for small businesses:

• Checkr: Offers small business background check packages, fast results, and built-in compliance tools. Checkr

• GoodHire: Designed for small businesses—with no required subscription or minimum orders—and emphasizes compliance. GoodHire+2GoodHire+2

• First Advantage: Provides a range of screening services (criminal, employment, education, etc.) and is used by businesses of all sizes. First Advantage North America

• Accurate Background: Offers flexible, small business–friendly screening that’s FCRA compliant. Accurate+1

• HireSafe: Has been in the field for decades and handles compliance with FCRA and state regulations. HireSafe

These services manage the heavy lifting: verifying records, running national databases, checking credentials, and handling legal compliance.

Steps You Can Follow

1. Collect applicant information. You’ll typically need full name, date of birth, address history, and possibly Social Security number or equivalent (depending on what checks you run).

2. Choose what checks are needed. Common ones include:

   • Criminal history

   • Driving record (if job requires driving)

   • Education or credential verification

   • Employment history

3. Use a background check service. Submit the applicant’s data through a trusted provider (such as those listed above). They’ll handle the data search, legality, and result compilation.

4. Review the results carefully. If something concerning appears (for example, a criminal record), you must:

   • Share the report with your candidate

   • Let them explain or dispute errors

   • Make decisions based on relevance to the job

5. Take any “adverse action” properly. If you decide not to hire because of the report, you may need to send a pre-adverse action notice and a final adverse action notice, depending on local law or FCRA rules.

Note on “Pre-Adverse” and “Final Adverse” Action

• Pre-Adverse Action Notice:
  This is a notice you send before making a final hiring decision. It tells the applicant that something in their background report might affect your decision and gives them a chance to review or dispute the information. You should include a copy of the report and a summary of their FCRA rights.

• Final Adverse Action Notice:
  After giving the applicant reasonable time to respond (typically 5 business days), if you still decide not to hire them, you send a final notice confirming that the decision was made based on the background report.

Document your process. Save the authorization forms, copies of the report (if you keep them), and your decision rationale.

Tips to Make It Work for You

• Start with only essential checks—don’t overextend your budget.

• Compare costs across providers—some offer per-check pricing with no subscription.

• Be consistent: treat all candidates equally, follow your process every time.

• Stay informed about federal and local laws (some places have “ban-the-box” rules that limit when you can ask about criminal history).

• When in doubt, consult a legal advisor for your state or region.

Background checks aren’t just for big companies—they’re an important tool for small business owners too. Used thoughtfully and legally, they help you make better hiring decisions and protect your business’s reputation and safety.

When You Need to Let Someone Go: A Simple Guide for Small Business Owners

Letting go of an employee is never easy—especially when you run a small business where every person matters. But sometimes, it’s the right decision for both the business and the team. Handling it the right way can protect your business, reduce stress, and keep things professional.

Here are some simple steps to follow:

1. Be Clear About the Reason

Before you take action, make sure you know why you need to end the working relationship.
Common reasons might be:

• The person isn’t performing the job as expected

• They often show up late or miss work

• There’s been a serious issue, like disrespect or policy violations

• You no longer need the position or can’t afford it

Whatever the reason, make sure it’s work-related and not personal or discriminatory (you can’t fire someone because of their age, race, religion, gender, disability, or for taking medical or family leave).

2. Keep Simple Notes

Even if you don’t have a formal HR system, keep a short written record of what’s happened—dates, issues, and any conversations or warnings. This helps you stay organized and shows you handled things fairly if questions ever come up later.

Example:

“March 5 – Talked with Ana about coming in late three times this week. Gave verbal warning.”

It doesn’t need to be fancy—just consistent.

3. Give a Fair Warning (When Possible)

If the issue isn’t serious, give the person a chance to improve before ending the job.
You might say:

“I really need you to be on time every day. If this keeps happening, I’ll have to end your employment.”

That way, the employee knows what’s expected and can make changes.

4. Plan the Conversation

When it’s clear the situation isn’t improving, plan what you’ll say and keep it short and direct.
Example:

“I appreciate the effort you’ve made, but this isn’t working out. Today will be your last day. I’ll make sure you get your final pay and wish you the best moving forward.”

Try to meet in private and stay calm and respectful.

5. Handle Final Pay Correctly

Check your state’s rules about final pay—some require you to pay the same day, others allow the next payday.
Make sure the person gets:

• Their last paycheck

• Any pay for unused hours or tips (if applicable)

• Information about returning keys, uniforms, or other items

If you use a payroll service, they can help make sure everything is processed correctly.

6. Keep Things Professional Afterward

You don’t need to explain details to others—just say the person is no longer working with you and that you’ll be taking care of their responsibilities for now.

Avoid talking negatively about the employee; it can damage your reputation and the morale of anyone who remains on your team.

7. Reflect and Adjust

Take a moment afterward to think about what could be improved next time—maybe clearer expectations, better onboarding, or more check-ins. Each experience can help you build a stronger and more organized business.

Key takeaway:
Firing someone is part of running a business. Be fair, be respectful, and keep things documented and compliant with basic labor laws. Doing so protects your business and helps you move forward with confidence.

📝 Example: Hiring Process

If you are ready to hire an employee, there is a lot to learn in terms of how to do it properly, and how to comply with legal requirements. Employees have rights as well as responsibilities, and there are particular things the entrepreneur must understand before hiring anyone. As a result, we address aspects of hiring in this step, but also in STEPS 44, 71, 76 and 77. Here we begin with the basics when you are hiring the first employee.

There are multiple steps in putting together a proper and systematic approach to recruiting, selecting, onboarding, training and evaluation employees. Here we will focus on the creation of the position and hiring of the first employee. However, the first issue to address is whether you are actually hiring an employee, or instead, taking on a 1099 contractor.

Decide if you are looking for an Independent Contractor or an Employee

Once you are ready to hire some help, entrepreneurs sometimes ask if they actually need to hire someone, or if they can just employ an independent contractor. With a contractor, you avoid having to worry about payroll taxes like social security, or paying worker’s compensation. Instead, you simply issue a 1099 form to them at the end of the year that indicates how much money you paid them. An example is Uber drivers. They do not actually work for Uber, but instead are independent operators. However, there are strict rules involved in determining whether the work you need done can be accomplished with an independent contractor.

There is a formal legal distinction between an employee and a contractor, and there are significant legal and tax implications for misclassifying someone. Here are the key questions you need to resolve in making the determination:

• Do you set their schedule and work location? Contractors will have liberty to set the details of where and when they work

• Do you oversee how the work is done? This is typical of an employee-employer relationship. Contractors independently determine how to complete a project.

• Payment schedule? Is the individual paid on a regular schedule (employee), or according to certain performance milestones including after a project is complete (contractor)?

• Are you the only source of work? Contractors typically can work for multiple clients.

• Is training required? This is characteristic of an employee, not a contractor.

• Do you pay for travel costs, or do they? Employee costs are typically covered by an employer. Contractors cover their own costs.

• Do you provide tools to complete a job, or do they? Consultants own their own equipment; employees are provided tools and equipment by their employers.

Note that an individual cannot be a contractor and an employee within the same year. For more information, look at the IRS information: https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee

Create a job description

When you decide to hire an employee, give careful thought to the job itself and develop a job description. This is a document that highlights tasks to be performed and the necessary skills and requirements. Be careful not to include language which could be considered discriminatory. So, for instance, if you want to say someone has to be able to lift 50 pounds, or stand on their feet 40 hours per week, be sure you can defend those requirements, as you could be legally challenged. Could someone disabled do the job another way if accommodation were provided? Consider those kinds of questions carefully.

The job description should include the following:

• Accurate, easy to understand job title

• Required skills such as customer service skills, proficiency in Excel, first aid certified, etc.

• Desired skills, or skills that aren’t completely necessary, but that you would like an employee of yours to possess

• Role or duties of the position

• Whether the position is full time or part time

• Compensation (you do not have to provide this on-the-job description, but you can)

You can find templates for creating job descriptions, and sample descriptions, at various online sites such as Monster (https://hiring.monster.com/resources/job-descriptions/), Indeed (https://www.indeed.com/employers), and Workable (https://resources.workable.com/job-descriptions/).

On the next page is a sample of a formal job description. In this case, the entrepreneur is creating a job for a personal care assistant. This is for a business that provides assistance to the elderly, infirmed and disabled individuals who are living independently.

Examples of websites where you can post the full job description include:

• LinkedIn – Administrative and other professional jobs

• Indeed – Wide range of jobs

• ZipRecruiter – Wide range of jobs

• Handshake – Student job and internship board

• Nextdoor – Offers section to post classifieds

Job Description: Personal Care Assistant

We are seeking a warm, caring person to extend love to those in our Professional Community. The position can be parttime or full-time, and we provide uniforms and all necessary equipment. Details are as follows:

Job Requirements

• Assists the patients with transfers and/or ambulation

• Turns and positions patients who are bed bound

• Assists patients with toileting: bedroom, bedpan, and urinal

• Assists with Range of Motion (ROM) appropriate for the patient

• Assists with meal and meal preparation

• Assists patients with medications which are self-administered

• Changes simple non-sterile dressings or external bags per State and Federal Regulations

• Perform light housekeeping tasks

• Observes and reports changes in patient conditions and needs to the Registered Nurse/therapist

• Completes paperwork in an accurate and timely manner, per policies

• Participates in interdisciplinary team meetings as appropriate to coordinate patient care, exchange information and problem solve

• Always follows patient plan of care

• Accepts other assignments deemed appropriate

• Willingly accepts direction from the Owner or Manager

• Adheres to establish personnel policies

• Manages time efficiently and effectively

• Provides role modeling when it comes to teamwork, accountability, and a positive attitude

• Maintains patient confidentiality

• May be requested to aid on-call emergencies

Working Conditions

• Patient’s homes and/or institutional setting and automobile travel

• Potential exposure to infections, communicable diseases, odors, blood excreta, hazardous materials, and physical contact from disruptive patients

Physical Demands

The physical demands described here are representative of those that must be met by an employee to successfully perform the essential functions of this job. Reasonable accommodations may be requested by individuals with disabilities to allow them to perform the essential functions.

• The ability to work in a constant state of alertness and safe manner

• Exchange information and communicate verbally and by written word

• Must be able to read write, and comprehend English

• Demonstrate active listening skills

• Good vision including close and distant vision, and depth perception

• Ambulate on rough surfaces and climb stairs

• Endure long periods of driving

• Stand, walk, and/or sit for long periods of time

• Lift or move up to 50 lbs

Recruit Job Candidates

Then, consider what would be the most effective recruitment strategy. This may differ based on the types of positions for which you are hiring. You may start by posting on social media, making sure to provide the role, job description, and a link to the application. One of the best places to post job listings for office and administrative positions is LinkedIn. Aside from social media, there are online platforms that allow you to post job listings for free. The most popular are www. indeed.com and ziprecruiter.com. To recruit high school or college students, https://joinhandshake.com/ is a great platform to post job listings and internships.

The job posting should include the following:

• Accurate, easy to understand job title

• Required skills such as customer service skills, proficiency in Excel, first aid certified, etc.

• Desired skills - skills not absolutely necessary, but that you would like an employee to possess

• Role or duties of the position

• Full time or part time

• Compensation (you do not have to provide this on-the-job description, but you can)

Local targets should be chosen to distribute these flyers in places where potential employees frequently visit. For example, if someone is seeking to hire a home health aide, some community colleges have certificate programs that last one semester. These graduates become Home Health Aides, Certified Nursing Aides, or Dementia Care Assistants. You could consider hand out flyers at local places of worship where you can find caring individuals who need a job or are willing to help seniors in need. These organizations tend to help network congregants with other members when placement times are hard. Here is an example of a job flyer.

Screen job candidates

Once you begin getting responses to your advertisements, categorize the applicants according to their suitability, and make notes about each as to why you chose to interview or not interview a given candidate. Again, should you be challenged about your employment practices, it is good to have some documentation to back up your decisions. As you go through the applications, have a set of key criteria in mind. What are the five most important things you are looking for? Refer to your job posting.

Organize and conduct interviews

If you find someone truly worth hiring, remember that they are selecting you as much as you are selecting them. You want them to approach you in a professional manner, but you must also be professional in your appearance and approach. You are sending a signal in terms of what you stand for. You need to be well-prepared for the interview, with a list of questions you want to ask and information you want to convey. The interview should be conducted in an appropriate and quiet environment, with no distractions or interruptions.

In addition to assessing their skills, qualifications, and motivation, you should also pay attention to things like the interviewee being on time, how they communicate, and how well they might represent your business. Give the interviewee time to ask you questions. Their questions will also help you determine how prepared they were for the interview. Have they taken time to look up your website or check out your social media pages?

When it comes to the actual interview, don’t ask questions randomly. Have a structure or order in mind, and be willing to pause and give a candidate more time to answer. Think in terms of a beginning, middle and end. It is important to use some simple introductory questions to break the ice and learn more about the applicant. The way the individual describes their history should be consistent with the responses to the application that you should have reviewed before the interview.

If we go back to the Personal Care Assistant job description, the entrepreneur is looking for a person who is professional, has integrity, is a caring individual, demonstrates a strong work ethic, and has the physical capacity to assist the client with mobility. So, one wants to include questions that assess these five qualities. Below is a sample format for the questions the entrepreneur might ask. Note that we are trying to avoid asking leading questions or obvious questions such as “Are you hard working?”, as obviously the person will indicate that they are, regardless of the whether this is true. You will also see, in this example, that we ask some situational questions, or provide simple scenarios. Such questions allow you to see how the candidate thinks on their feet, and gives you a firsthand feel for the applicant would respond to difficult scenarios that occur all the time in this type of job.

Introduction

• Tell me a little about yourself.

• Why are you interested in working for (name of your company)?

• Could you talk about any background you have that would be helpful in working for us?

Professionalism

• Let’s say you were assisting one of our clients, and the person insults you and asks you to leave them alone. How would you handle such a situation?

• What does professionalism mean to you when thinking about a job like this?

• What are you most proud of in your work life up to this point?

Integrity

• When it comes to the work environment, or life in general, what does the word integrity mean to you?

• Could you give me an example of a situation you have been in where your integrity was tested? How did you deal with it?

• Could you describe a situation where doing the right thing was difficult or costly to you, but you did it anyway?

Caring Individual

• Could you explain the qualities that make you a good caregiver?

• What is or would be your approach when it comes to working with patients who are older, particularly when they seem difficult?

Work Ethic

• How would you handle it if your shift is over, but the replacement Care Assistant hasn’t arrived?

• What does have a good work ethic mean to you?

• Can you provide an example of a time when you put in extra time at work?

• How do you stay motivated?

Physical Capacity

• A client slips and falls in the bathroom and is trying to stand up. What do you do?

• How would you move a bedridden client from their bed to a wheelchair without hurting yourself?

Closing

• Based on our discussion and what you have learned about (name of your company), on a 1-10 scale (10 = extremely interested), how interested are you in the position with our company?

• Do you have any reservations about the job?

• What is your availability to serve as a Personal Care Assistant?

• How soon could you begin working for (name of your company)?

As you ask questions, be ready to probe, to ask the person to elaborate a bit more, or to ask them why they answered something the way they did, or to provide an example of what they mean. If you see inconsistencies between their answer to one question and their answer to another, probe into reasons why.

You want to take careful notes during an interview, or find some way to capture the candidate responses. If you are recording the interview, be sure to ask for their permission. Once the interview is over, it can be valuable to formally score the applicant on the criteria that are most important to you. In the example above, you might have an applicant scoring sheet that places weights on the criteria based on their importance, and then allows you to score the applicant on a 1-10 scale (where 1= poor or unacceptable and 10 = outstanding).

1. Professionalism (weight of 15%): Score ____

Comments:

2. Integrity (weight of 20%): Score ____

Comments:

3. Caring Individual (weight of 25%): Score ____

Comments:

4. Work Ethic (weight of 20%): Score ____

Comments:

5. Physical Capacity (weight of 15%): Score ____

Comments:

6. Other (additional things you observed in interview) (weight of 5%): Score ____

Comments:

You would take the importance weights times the scores and add them up. This would allow you to rank the order of the candidates that you interviewed. You would then make a final selection decision, unless none of the candidates scored very well. Keep in mind that you would change the evaluative criteria and the importance weights based on the kind of company you have and the kind of job you are trying to fill.

Every once in a while, you might find the perfect person right off the bat, but this is not the norm. Unless you are in desperate need of help, you are better off waiting for just the right candidate. When hiring employees, remember to hire slowly, and fire quickly. This means be selective with who you hire, and quick to fire any employees who do not meet the expectations. For many entrepreneurs, firing people is very difficult, and so they let a bad situation go on for way too long, often raising their own stress levels and damaging the business.

Communicating Your Decision with Applicants

If you decide to select the applicant —

When you find an applicant, you are interested in hiring, best practice is to put an offer letter in writing, communicating the job description, the hours expected, the start date, and salary or hourly wage. If there are benefits, that should also be communicated.

If you decide to not select the applicant, here is a sample rejection letter —

If the applicant doesn’t fit the position criteria in the Job Description or the Scoring Method, they should receive a formal rejection. Below is an outline for an email rejection response that can be sent to a rejected applicant either after you have reviewed their application responses or after the interview. Make the necessary changes to customize the letter, then send the email to the applicant:

See sample rejection letter here.

Making the hiring decision is a significant step for you as an entrepreneur and for your company. An employee will be acting as an extension of yourself and your business brand, so take time to think about your company culture, and how you want this person to represent you. STEP 71 provides in-depth information about this, so you may want to begin to implement whatever is relevant for you at this stage.

When you make the hire, it is a good idea to create an employee contract, which is a legally binding agreement made for both you and your employees. This contract puts your expectations for your employees in writing and holds them to those expectations. This contract will make it clear to your employees what is expected of them and will allow you to easily uphold standards and reduce the risks of employer liability.

One website which may be helpful, and provides specific tailoring for state laws is: https://legaltemplates.net/form/employment-contract/

Contracts will vary by position. Whatever the contract may be, it should include the following:

1. Job description with roles and responsibilities

2. Duration of employment (this should be negotiated with each hire)

3. Weekly number of hours and time of day when the employee is supposed to work

4. Compensation: will the employee be paid based on a salary, hourly wage, or commission? How much will they be paid? Are there opportunities for raises?

5. Benefits (if applicable)

6. Terms of vacation days or paid leave

7. Whether there is a probationary period before the employee is permanently hired

8. Guidelines for termination (if the employee needs to be fired, how will it be handled?)

9. Any applicable employment laws for the state you are in

This discussion covers the basics of hiring that first employee. As you hire the first employee, you must also complete paperwork to meet state and federal regulations. These include: I-9, I-2, and W-4. You will also need to have someone help you with payroll issues in these early stages. STEP 44 provides details regarding how to address payroll issues. We will elaborate on additional things to consider as you hire more employees in STEPS 71, 76 and 77.

When your business begins to get traction and grow, you will need to consider if you have the capacity to hire and pay more employees. This step ties in with and builds upon STEPS 55 and 56, so you first might want to review those two steps. It is also tied to STEPS 76 and 77 (hiring and people issues will be a central issue as long as you have this business). Be sure to review the material in those steps about part-time versus full-time and employees versus contract workers.

As you start to grow your number of employees, you want to make your process systematic. First, consider whether you really need an employee. Then, develop a job description and address the other elements of a recruitment strategy.

Determine if it is time to hire new employees.

Key indicators that you might need to hire an employee include:

• You or your employees are feeling exhausted, stressed, or overwhelmed;

• Problems with poor customer service, taking too long to fill customer orders, making mistakes with customer orders;

• You are having to turn away customers or work;

• You are working full out, and some exciting new market opportunities have arisen;

• You are getting ready to add new products or services;

• You have decided to do some tasks yourself that you were paying an outside person to do;

• Employees with valuable skills are tied up doing low-skilled work.

To determine if this is the right time for you to hire new employees, take a moment to think about where help is needed and what can you afford? While new employees can take some burden off your shoulders, they require time to hire, train, supervise, evaluate, track their hours, and pay.

For instance, you can make a simple plan like this to think through how much it would cost to bring on a paid employee. Here is an example for a restaurant. Use this calculation to plan for your slow times, as well as your busy times.

*Please note that the cost to you may be more as you may need to pay workers comp and social security taxes. Also, consider whether the need for the employee is year-round or more seasonal.

Review and revise job description.

With the experience you have gained since creating the job description in STEP 56, take some time to review what you have written and revise it to meet the current needs of your company.

Implement your recruitment and selection strategy.

Building on the recruitment strategy you developed back in STEP 56, consider what would be the most effective recruitment strategy for this stage of your business. This may differ based on the types of positions for which you are hiring. Again, the key components of the recruitment (discussed in STEP 56) included:

- Creating a job posting

- Screening job candidates

- Organizing interviews

- Scoring candidates

- Communicating with interviewees

- Creating employee contracts

Complete required paperwork.

Three key forms that you most always have to complete when hiring someone at the I-9 Employment Eligibility Form, W-4 federal tax withholding form, and the tax withholding form for the state where you are working from.

The I-9 form is required to verify the employee’s identity and legal authorization to work in the United States. To complete this form, the new hire must bring documentation that satisfies both conditions. The form is not submitted directly to the U.S. Government, but it is required to be kept for three years. Acceptable forms of identity and employment verification are on this form.

The W-4 form is to be completed by the new hire before they receive their first paycheck and given to you. The form provides information to the employer (you) about how to calculate the amount of tax withholdings you need to take from the employee’s paycheck.

Instructions: Give the employee this form to complete https://www.irs.gov/pub/irs-pdf/fw4.pdf. Like the I-9 this is not submitted to the government, however, it is kept on file by you for four years.

The W-2 tax form shows the amount of taxes withheld from the employee’s paycheck for the year, and is used to file the employee’s federal and state taxes. It is to be completed by the employer using information from the W-4 and must be issued to the employee for them to submit no later than January 31st of each year.

Instructions: Complete the W-2 form using the information provided in the W-4 to fill in the highlighted portions. The employee needs three copies by January 31st: one for the record, one for the federal tax return, and one for the state tax return.

Setting up payroll and dealing with taxes, employee-related insurance and deductions.

It is time for you to revisit the way you managed payroll based on our discussion in STEP 44 to ensure it is adequate for your current stage of growth.

As an employer, there are several federal and state taxes you need to deduct from the worker’s paycheck. They include: federal income tax, Social Security and Medicare Taxes, federal unemployment tax. Additionally, states have their own regulations about taxation and may have additional rules to be followed. In the state of Indiana for instance, employers need to notify the State of a new employee within 20 days using this form: https://www.in-newhir .com/files/IN New=Hire form.pdf.

Another responsibility of the entrepreneur is to enroll in the state’s workers’ compensation program. Worker’s compensation (or comp for short) is insurance that provides cash benefits and/or medical care for workers who are injured or become ill as a direct result of working for you. You pay for this insurance, and you cannot require employees to contribute to the cost of this insurance. The program is run at the state level and so requirements will vary from state to state. Usually, if a worker is unable to return to work for a minimum period of day (e.g., more than 7 days), the state’s compensation fund (that you are paying into) provides the employee with payments to make up for the time they were not paid. While rates vary, the amount you pay for worker’s comp depends on how much the employee is paid and their job classification. A very rough average is about $400 per year.

Further, as an employer, you are responsible for unemployment insurance. This pays workers who are laid off or let go. It is a joint federal-state program jointly financed through federal and state employer payroll taxes. Generally, employers must pay both state and federal unemployment taxes if: (1) they pay wages to employees totaling $1,500, or more, in any quarter of a calendar year; or, (2) they had at least one employee during any day of a week during 20 weeks in a calendar year, regardless of whether or not the weeks were consecutive. However, some state laws differ from the Federal law and employers should contact their state workforce agencies to learn the exact requirements. Go to https://oui.doleta.gov/ unemploy/agencies.asp for state links.

Options for managing payroll and dealing with these taxes and deductions include:

• Bookkeeper – Consider hiring a bookkeeper experienced in payroll management to handle these issues for you. Be sure to check their references and ensure they have the right experience.

• Payroll management software

• Use a payroll management company

Consider using Square Payroll which is an affordable, user-friendly solution that will streamline this aspect of the onboarding process. It will also handle W-4 and W-2 forms for you. The software package is presented as a flat rate of $35 per month with an additional $5 per month per employee. Alternatively, you can hire an accountant to manage your payroll process for you. If you are interested in using Payroll, the process for signing up is as follow:

• Create a Square Payroll account by entering your email address and a password.

• Enter your business information. This includes your business name and type, address, and business locations. If you need assistance inputting data or have a question, visit Square’s list of state payroll tax resources.

• Next you will be asked to link the bank account you wish to use for Square Payroll. You can link a separate bank account exclusively for Square Payroll, or use Instant Payments. With Instant Payments, you can choose to have your employee’s direct deposit debits come from your stored balance. Note: You will still need to link a traditional bank account for tax debits.

• If you are interested in linking your account follow this Link and Edit Your Bank Account. Once you are finished confirming your bank details, Square Payroll will deposit and then withdraw two small amounts from your bank account (this is a security measure).

Once you get to a certain size in terms of employees, it may begin to make sense to use an outside payroll firm. They will take all the payroll and deduction hassles off your shoulders. There are national and often local companies that offer this service. Examples include Paychex Flex, Gusto, Onpay, ADP Run, and WAVE Payroll. Costs vary, but a flat fee of about $35 to $40 per month plus $5 to $10 per employee is not unusual.

Finally, if you have not already, you may want to offer your employees the option of having their paychecks directly deposited into their bank accounts. To do this, your payroll provider will help you set up a payroll account. You will send a direct deposit authorization form to your employees, verify the correct account information, and then your employees will receive direct payments to their bank accounts going forward at the intervals you determine (weekly, bi-weekly, monthly).

Health Insurance

As a start-up business with less than 50 employees, you do not have to offer health insurance to your workers. However, some of the entrepreneurs we work with want to do so, usually for full-time employees (those who work an average of 30 or more hours per week in a given month). You can purchase a small group health plan from a health insurance company or you can get a policy through an exchange called a Small Business Health Options Program (SHOP). More general information can be found at https://www.healthcare.gov/small-businesses/ and information on the SHOP option can be found at https://www.cms.gov/cciio/programs-and-initiatives/health-insurance-marketplaces/shop. There is also something called a health reimbursement arrangement (HRA) that might be more affordable. Here, the employer contributes a certain amount and employees can use the money to pay for qualifying medical expenses. There is also a type of HRA where employees purchase their own coverage through a health insurance marketplace and the employer reimburses them for the monthly premium. More information can be found at https://www.bcbsm.com/index/health-insurance-help/faqs/plan-types/health-spending-accounts/hra.html

Onboarding

Once you have completed this preliminary paperwork, you are ready to onboard your employees. As you bring on a new employee, having an onboarding process is a key opportunity to introduce them to your company, your values, and the policies by which you operate. Set aside time to go over the guidelines and work rules with your employees so they understand not only the rules, but the reasons behind them. This is an important time to begin to build a relationship with your employees and reinforce the culture you are establishing through your business. In this manner, they can learn your values and how to accurately represent you to customers and other outside parties.

Here are some other items to be considered in the onboarding process:

• Goal setting—working with the employee to set personal goals

• Establishing work hours and performance expectations

• Introducing the values and culture of the company

• Explanation of job responsibilities

• Job training

• Dates for check-ins on how things are going and progress being made

• Introducing new employees to any co-workers

• Information about any probationary periods

• How the employee will be evaluated and when

• Introduction to employee handbook—company policies and procedures

Please visit STEP 76 for information about preparing an employee handbook, and other important information to cover in the employee orientation process.

Building upon STEPS 44, 55, 56 and 71, which cover various aspects of the hiring process, Step 76 focuses on creating the employee guidelines, workplace rules, general company expectations of employees. All three of these can be compiled into an employee handbook, with guidelines altered for each position. This handbook should include not only the rules and regulations created specifically by you, for your business, but should also include any city or state law regulations that apply to your employees. It can be shared with employees as part of the onboarding process.

Taking time to formulate an employee handbook that captures all of this information is a key step in professionalizing your business and setting the stage for sustainable growth. It is not just helpful for making sure you are complying with laws and regulations, but also is a way to capture the values your company stands for, the kind of work environment you are striving to create, and the kinds of support you provide to employees. Having and enforcing standard policies helps ensure all employees are treated equally, and that clear boundaries are established.

Below are topics that you might consider including in your handbook:

• employment classifications: part-time, full-time

• work schedules, breaks

• attendance and leave policies

• safety and security procedures

• company mission, vision and values

• anti-harassment and non-discrimination policy

• code of conduct

• dress code

• communications policy

• compensation and benefits information

• reviews, promotions and raises

• performance improvement plans

• new hire and separation procedures

• procedures for complaints

• equity policies

• employee benefits and discounts • professional standards unique to your industry or corporate culture

The first thing you will want to do is familiarize yourself with federal, state and local laws so that the rest of your policies fall in line. There are key regulations regarding fair labor practices, overtime, discriminatory practices, workplace safety and health, minimum wage, union activity, family and medical leave, and employees with disabilities, among others. Included here are laws addressing employment and hiring in general, as well as any rules or regulations governing your specific industry. For example, if you run a food business, laws regarding sanitation and food handling will need to be a part of the handbook. In terms of federal labor laws, a good overview can be found at https://www.dol.gov/general/aboutdol/majorlaws. Find other laws at your city or state Department of Employee Regulations or for further detail, visit the U.S. Department of Labor’s website for individual State Labor laws: https://www.dol.gov/agencies/whd/state.

Also, keep in mind that some of the statutes and regulations enforced by the U.S. Department of Labor require that notices be provided to employees and/or posted in the workplace. Examples include notices related to injuries caused by work, workers compensation coverage, minimum wage, and no smoking. The Department of Labor provides free electronic and printed copies of these required posters.

Beyond following laws and regulations, the entrepreneur wants to establish rules and guidelines for how things are done in the business and what is expected of employees. These policies cover areas such as punctuality, a dress code when on the job, remote work, expense reimbursements for employees, employees using their cell phones for personal reasons during work time, employee leave and vacation time, employee complaints, interactions with other employees, interactions with customers, and how violations of company policies will be handled.

These guidelines will also help reinforce the culture you are trying to create for your employees. Take time to think about what cultural values you want your business to represent, and how that will look in practice for your employees. What are the five values that your company most stands for? These could be things like honesty, integrity, open communication, teamwork, customer care, efficiency, and going the extra mile, among many others.

As you prepare the policies and a handbook, it is a good idea to use easy-to-understand language. To the extent possible, you should try to avoid using a lot of legal or other technical terms. When it comes to the structure of flow of an employee handbook, there is no one right way to approach it. Here is an example of a possible structure:

I. Welcome and introduction to the company, such as its story, mission, values, and culture II.  Statement regarding your commitment to non-discriminatory employment and the regulations set forth by the Equal Employment Opportunity Commission (EEOC) III.  Workplace policies and procedures, including policies related to missing work, payroll, breaks, paid time off, use of social media and personal cellphones, interactions with fellow employees, weapons in the workplace, cybersecurity, privacy, and anti-discrimination IV.  Employees’ rights under federal, state and local employment laws, including those related to wages/salaries, employee benefits, and workplace safety V.  Details on employment relationship between the employer and the employee VI.  Code of conduct, such as your dress code, policy regarding drug and alcohol use, policy regarding ethical behaviors, and policies regard potential conflicts of interest VII.  Disciplinary actions, including how violations of company policies will be handled and behaviors that can lead to employee discipline VIII.  Expectations, including what you expect to see from employees and what employees can expect from the company IX.  Acknowledgement of receipt (you want employees to sign a statement that they received and read through your handbook).

You might also include a statement that the employer has the right to change the rules without notice, that employment is at will (meaning the employer can fire the employee at any time—check to see the specific rules regarding this for your location) and that the handbook does not create a contract. These are called disclaimers.

Some online free sources are also available to assist you in putting together an employee handbook. Here are a few examples:

https://clickup.com/blog/employee-handbook-templates/ https://www.zenefits.com/workest/employee-handbook-examples/ https://resources.workable.com/tutorial/employee-handbook https://www.rocketlawyer.com/sem/employee-handbook

Once you have your employee manual created, keep in mind that this is a living document, and is subject to change. Issues may arise that will bring you to add or subtract policies from this book. Always be open to editing and updating.

Many entrepreneurs struggle with a key aspect of having employees, namely, providing feedback on their performance. Feedback is much more than letting someone know they are doing a good job. It is finding productive ways to demonstrate where employees are coming up short or could improve. It reflects a concern not just that a job is getting done in the proper manner, but that the employee is learning and developing, and also that they feel they are contributing to and are a part of your business. You are investing in them. Conducting periodic or annual reviews is not only a valuable aspect of developing good employees—it is a key component of the skill set you develop in becoming be a good supervisor.

There are different ways you can establish a system of feedback and evaluation for your employees. Whatever your approach, two core principles should guide your efforts and can ensure the feedback program is effective:

1. Establish clear expectations: These expectations make it clear what the job-related tasks are, or areas in which the employee is expected to perform, and will be evaluated. They establish clear performance standards for each task, or in each area. They make clear what would be unacceptable performance.

2. Encourage two-way communication: It will be difficult to establish respect and trust with your employees if you foster an environment where their opinions do not matter. You will have expectations for your employees and your employees should have expectations of their authority figures as well as the workplace. Encourage your employees to bring up issues when they arise and make suggestions for your business.

Some of the approaches you might consider when it comes to employee feedback and evaluation include the following, and you might use one or a combination of these methods:

Periodic check-ins:

Instead of only speaking with your employees about their performance when there is a problem or issue, establish a consistent schedule to sit down with your employee to talk about their performance and how things are going. This can be monthly, or every few months—whatever makes sense for your business. These meetings should not only discuss the employee’s performance, but leave room for the employee to discuss their questions or concerns regarding their job, what they are struggling with, and things happening in the business that impact their ability to do the job.

Self-evaluations:

Have your employees evaluate their own work. Sometimes workers are tougher when evaluating themselves than you might be. This can give you the opportunity to critique and praise employees as well as allow them to reflect on their own performance. Often employees understand when they are coming up short, having problems, or not meeting expectations. It will also help illustrate to you how much the employee understands what is expected of them. This approach can allow them to reflect on the business and their efforts, and personalize their insights.

Ongoing on the job feedback:

With this approach, you provide regular feedback to employees as they are doing the job. As opposed to hovering over your employees or micromanaging them, you give them room to do the job, but make a point to observe their efforts, recognize their strengths and weaknesses, as well as what they struggle more with, and give them constructive feedback. This can be a difficult approach to use if you are overwhelmed with other responsibilities, and/or are not directly working with the employee. You also do not want to provide feedback unless you have observed enough of the employee’s efforts to be accurate in your judgements. It may help to keep a running log of good things the employee is doing and things that are missing or not being done according to your expectations.

Periodic formal evaluations:

With this approach, you conduct a formal review of the employee, often by completing some sort of written evaluation, and then meeting with the employee to discuss the feedback. Many entrepreneurs do this either every six months or once a year, but you determine how often it should be done based on the nature of the work and the employee. The point is to have a regular evaluation time scheduled and let the employee know when this will occur.

Entrepreneurs often design a standardized form to evaluate employees across a number of areas specific to their jobs. Here is an example.

It is a mistake to just complete the form and give it to the employee. You need to take time to review it with them and have a productive discussion. Further, when conducting this kind of evaluation, please keep in mind the following:

• Before conducting an evaluation, employees should be made aware of what the standards of evaluation are;

• Evaluation and feedback should be specific and supported by evidence and examples. Instead of saying, “xxx was bad”, say, “In order to improve xxx, next time include yyy and spend less time on zzz”;

• Both positive and negative aspects of an employee’s behavior should be communicated;

• If someone’s performance is lacking, determine if there is a skill or skills they are lacking, and try to find a way to address that;

• Discuss the impact of an employee’s behavior. Because you did not follow procedure xxx, it resulted in yyy outcome;

• In addressing negative feedback, the employee should be given an opportunity to improve;

• Give the employee an opportunity to respond to your observations. Ask follow-up questions, “Do you agree with my observation?” “What am I not understanding about xxxxx?”;

• Use the evaluation as an opportunity to learn about ways you as a manager or the company can approach opportunities or problems differently;

• Set goals and provide continuing feedback about those goals.

Again, both negative and positive feedback should be given to employees. When employees are doing an exceptional job, let them know! You might consider setting up a reward system of some kind. Choose an employee of the month or offer rewards (e.g., a gift card) for exceptional service, problem solving skills, or sales numbers. Let your employees know they are appreciated and are making a difference!

Other considerations

Here are a few addition tips to keep in mind when managing your evaluation process:

1. When evaluating employees, be sure you are treating each person in a fair and equitable manner. Any sort of discrimination based on race, religion, age, gender, disability, marital status, pregnancy or sexual preference is illegal.

2. Be sure you have provided resources and training to enable the employee to properly do their job?

3. Avoid emotional language, and ensure criticisms relate to job requirements.

4. Address any problematic behavior specifically, identifying clear examples, and state what corrective actions or ideal response would look like.

5. Keep a log of incidents to back up any problem areas addressed in the performance review. You always want to have a paper trail, particularly in case an employee is ultimately fired and/or sues you or registers a complaint with some authority.

6. Appraisals should be kept confidential.

7. Check your state’s requirements regarding how long human resource records including evaluations need to be kept.

For security and privacy reasons, Social Security Numbers (SSNs)should not be placed in general employee files that are widely accessible.

Here’s the correct rule and best practice:

Rule / Best Practice
- SSNs must be stored separately from the general personnel file in a secure, restricted-access location (either encrypted digitally or in a locked physical file).

- Only authorized HR or payroll personnel should have access.

- Never include SSNs in files or databases that other staff, supervisors, or departments can access for routine personnel management.

Legal and Compliance Basis
- Under the Privacy Act, Identity Theft laws, and various state data protection regulations, employers are required to:

- Limit access to sensitive personal identifiers like SSNs.

- Protect employee data from unauthorized disclosure or misuse.

- Notify individuals if their SSN is exposed or breached.

Practical Setup Example
- Personnel File: Job application, performance reviews, training records, etc. (❌ No SSN)

- Confidential File: I-9 form, W-4, payroll and tax information, background checks, medical records (✅ May include SSN; secured access only)

Social Security Number (SSN) Security Policy
To protect employee privacy and comply with federal and state data protection laws, the organization strictly limits the collection, use, and storage of Social Security Numbers (SSNs).

1. Storage and Access: SSNs will be kept in a secure, confidential file separate from the general personnel file. Access is restricted to authorized HR and payroll personnel who require the information for legitimate business or legal purposes.

2. Use: SSNs will only be used for purposes required by law, such as payroll reporting, tax documentation, and verification of employment eligibility. SSNs will not be used as employee identification numbers or shared with unauthorized individuals.

3. Protection: All records containing SSNs, whether electronic or paper, must be stored securely. Electronic files will be encrypted or password-protected, and paper files will be kept in locked cabinets.

4. Disclosure: The organization will not publicly display, print, or transmit SSNs in any manner that could result in unauthorized access or identity theft.

5. Retention and Disposal: SSNs and related documents will be retained only as long as legally required. When no longer needed, they will be securely destroyed in accordance with the organization’s data retention policy.