One of the biggest milestones for any start-up or small business in the U.S. Virgin Islands is hiring your first employee. This can be more difficult than some business owners initially think, and there are a number of legal requirements you need to keep in mind as you engage in this process.
Before extending an offer of employment to an individual, your company must complete the following:
1. Obtain an Employer Identification Number (EIN): This is the first step in gaining legal employment abilities. To receive an EIN, you must fill out an SS-4 form and submit it to the U.S. Internal Revenue Service. The form is available for download on the official IRS website, at www.irs.gov.
2. Set up a payroll system to withhold taxes: A key requirement in the employment process is making sure that territorial, federal and other applicable taxes are deducted from an employee’s paycheck. The information to correctly calculate tax deductions for each employee can be obtained through a W-4 or a W-2 form. These forms indicate the marital status, number of dependents and various other factors that affect the amount of taxes that should be taken from each paycheck.
3. Verify employee’s eligibility: One of the most basic steps in gaining an employee is determining whether or not that individual is legally eligible for employment at your company. This can be achieved by having the potential new hire fill out an I-9 form from the USCIS.
4. Obtain worker’s compensation insurance: In the case that your new hire becomes injured on the job, it is necessary to have a worker’s compensation insurance policy. This will allow for an employee to receive medical treatment and applicable recovery time from an injury without losing wages. In the U.S. Virgin Islands, organizations with one or more employees must carry this insurance coverage, regardless of wages. The Virgin Islands Department of Labor oversees the Worker’s Compensation program and more information is available at their website.
5. Keep your employee informed: To ensure employees are meeting all of your expectations, it is necessary to create an employee handbook to guide and inform their decisions in the workplace. Additionally, you must post notices outlining worker’s rights under U.S. Department of Labor rules and regulations.
6. Register with the U.S. Virgin Islands New Hire Reporting Program: Within 20 days of adding a new employee to your payroll, you must register that employment with the U.S. Virgin Islands government. This information may be used to determine if your employee owes child support or other obligations upon becoming employed. Further information is available from the Virgin Islands Department of Labor.
Following these steps will help ensure you are meeting all of the legal requirements for brining on a new employee. However, some requirements vary depending on your type of business, so if you have any questions, speak with an employment law attorney right away.
BoltNagi is a respected and well-established employment law firm serving clients throughout the U.S. Virgin Islands.