Hiring your first employee is a major milestone for any business. Start with the steps below when you hire your first employee in Utah:
Do your research
Before you begin your search for your first employee, make sure you understand your responsibilities and obligations. Doing your research first will go a long way in keeping your business compliant with government regulations. Keep reading for some key information you’ll need to know.
Determine whether you need employees or independent contractors
Sometimes a small business doesn’t need an employee just yet, but rather an independent contractor with a very specific skill set. This distinction is important because because it comes with different requirements—and there are more employment protections for employees. In addition to wages, employers also pay for benefits, taxes, and workers’ compensation insurance for their employees.
As a result, the federal government created a series of tests to ensure companies aren’t misclassifying employees to stretch their personnel budget further. Companies that abuse these guidelines could pay thousands of dollars in fines.
If you’re still unsure whether your workers should be classified as employees or independent contractors, file IRS Form SS-8 to request clarification on their worker status.
Understand your hiring costs and tax liability as an employer
If you need to hire employees, your next order of business is to find out how much hiring an employee in Utah will cost. According to the Small Business Administration, the total cost of an employee to your business is about 1.25 to 1.4 times their salary. After all, employers aren’t just responsible for an employee’s wages—they must consider the cost of their recruiting efforts, benefits, and employment taxes as well.
Here are some of your key tax responsibilities as an employer in Utah:
- Employers must withhold federal and state income withholding taxes from each Utah employee’s wages. The amount withheld depends on the employee’s paycheck and withholding allowances.
- Employers and employees make contributions to Social Security and Medicare under the Federal Insurance Contributions Act (FICA). The Medicare tax rate for employers and employees is 1.45% each, while the Social Security rate for both is 6.2%.
- The state unemployment insurance (SUI) tax rate for new employers in Utah is based on the average rate of all employers in their industry, so this rate will be different for each business. The SUI taxable wage base in 2024 is $47,000.
- Because of the Federal Unemployment Tax Act (FUTA), employers pay a 6% tax on the first $7,000 of each employee’s wages. If their SUI taxes are paid in full and on time, they can get up to 5.4% of it back as a FUTA tax credit.
Use Gusto’s hiring calculator to get a better sense of how much money you’ll need to hire an employee in Utah.
Review Utah labor laws
On top of their tax obligations, Utah employers also need to be aware of the labor and employment laws of their state. Below are a few important ones that every employer should know about:
- Minimum wage: The minimum wage in Utah is $7.25. For tipped employees, the minimum wage is $2.13. If tipped workers don’t meet the standard minimum wage after tips, their employer must pay the difference.
- Leave: Utah employers must provide employees with paid voting leave, as well as unpaid jury duty and witness leave. Employers aren’t required to provide vacation or sick leave.
- At-will employment: Unless an agreement is in place, an employer or employee may terminate the employment at any time and without cause.
- Right to work: Employees can’t be denied employment based on their membership (or non-membership) in a labor union or other organization.
- Discrimination: Utah’s Antidiscrimination Act extends the protections enforced by the Equal Employment Opportunity Commission (EEOC) to also prohibit discrimination against employees or job applicants based on their genetic information.
- Post-employment restrictive covenants: Employees can enter into most post-employment restrictive covenants with their employer as long as the agreement doesn’t last longer than one year.
- Child labor: Minors ages 14 and older are allowed to work in Utah. However, state law restricts the occupations and hours that children can work. For further details, visit the Utah state legislature website.
Keep in mind that this list isn’t comprehensive, and that there may be additional laws that may apply depending on your industry, municipality, business activities, or number of employees. And because laws may change over time, it’s important to check with the US Department of Labor, the Utah Department of Workforce Services (DWS), and your local government agencies for the latest information.
Take care of logistics
Once you kick off the hiring process, things will move quickly. Get ahead of the action by completing the tasks below first.
Get a federal employer identification number from the IRS
The first thing you should do is register for an employer identification number (EIN) from the IRS. Think of an EIN as a Social Security number for your business. Having one allows government agencies to identify your company on tax forms and other documents you submit to them.
If your business is structured as a partnership, multi-member limited liability company (LLC), C corporation, or S corporation, you probably already have an EIN for your business. But if you don’t, you can apply for one through the IRS website.
For more information on this topic, visit the IRS webpage on employer ID numbers.
Register with the state of Utah
Utah employers will also need to register with the State Tax Commission and the Department of Workforce Services to receive an income tax withholding account number and employer registration number, respectively. Apply for both simultaneously using the state’s OneStop Online Business Registration portal.
Find workers’ compensation coverage
Workers’ compensation insurance covers an employee’s wages and medical expenses if they get injured or sick while on the job. All employers in Utah are required to have workers’ compensation, even if they have just one part-time employee.
Most businesses purchase a policy through the state’s workers’ compensation fund or a licensed private carrier. Alternatively, some companies choose to self-insure themselves if they get permission from the Utah Labor Commission.
Once you hire employees, you’ll need a safe and accessible place to store your personnel files in case the government conducts an audit on your business.
Utah employers should keep the following information on file:
- Tax forms
- Withholding agreements
- Verification of eligibility to work
- Hours worked
- Wages paid
- Pay statements
- Benefits forms
- Performance evaluations
- Disciplinary records
- Other agreements made between the employer and employee
Other recordkeeping requirements can be found on the EEOC website.
Take some time to set up your organizational system and collect the forms you’ll need during the hiring and onboarding process. You should also procure any other items your new hires might need, such as uniforms, access cards, or computers.
Prepare your business for hiring
Put together an employee handbook
Although employee handbooks (also called employee manuals) aren’t required for Utah employers, they’re a valuable document for business owners and their workers. Employee manuals lay out in clear terms the expectations, guidelines, and procedures employees must follow. They ensure that your workers know what’s expected of them, and they can also protect you from complaints and lawsuits as well.
Below are some helpful policies to include in your employee handbook:
- Code of conduct
- Leave policies
- Compensation and benefits
- Nondiscrimination policy
- Sexual harassment policy
- Meal and rest breaks
- Communication policy
- Internet use
- Dress code
- Social media policy
Keep in mind that your employee manual will change over time to reflect the needs of your growing business. So, review your handbook once a year and make updates as needed.
Prepare a compensation package
Next, you’ll need to create a compensation package for your new employees. If you’re unsure where to start, use Gusto’s blog post on creating a compensation plan as a guide.
During this step, you’ll also be choosing the benefits you offer to employees. To make the most of this investment, consider the kind of candidates you want to attract, then build your benefits package around their needs and wants. This will help your recruitment efforts, as it shows prospective applicants that you care about the well-being of your workforce.
For inspiration, here are some of the most sought-after employee benefits today:
- Health insurance plans
- Retirement savings accounts
- Remote work arrangements
- Flexible schedules
- Four-day work weeks
- Generous (or unlimited) paid time off policies
- Professional development opportunities
- Student loan assistance
Once you’ve chosen your company’s employee benefits, set up your benefits program using Gusto’s step-by-step guide.
Advertise the job opening
After setting the groundwork for your first employee, now it’s time to create your first job listing. At the very least, your job post should include the following information:
- Job title and description
- Type of employee (full-time, part-time, seasonal, temporary)
- Job location
- Expected hours of work per week
- Wage or salary range
- Educational requirements, if applicable
- Skills needed for the role
With the sheer number of job openings in the market today, the bare minimum often won’t be enough to attract competitive candidates. Think about your ideal candidate and what they might be looking for in their next opportunity, and use that to tailor your job description to these applicants.
Details about the benefits you offer will be helpful to include, as well as an exciting description of your company culture. These two factors are often what sets small businesses apart from bigger companies with bigger budgets.
Once you’ve written your job posting, you’ll need to get it in front of qualified applicants. You’re probably already thinking of publishing it on Indeed and Glassdoor, but don’t stop there. Consider hanging flyers in places visible to job seekers in your area—think coffee shops, college career centers, local newspapers, and more.
Assess and interview top candidates
By this point, you’ve likely received a fair amount of job applications. Take some time to review each one, create a shortlist of top candidates, and invite each one for an interview.
But before you start the interviews, it’s important to determine what your process will look like. This will help ensure you have everything you need to make an informed hiring decision.
So for the initial interview, you may have a list of questions each candidate should answer. If you’re hiring a copywriter, you might ask for a link to their portfolio as well as a brief copywriting assignment after the first interview. Alternatively, candidates interviewing for a sales position might do some research on a company of their choice and record a short voicemail sales pitch for that business.
No matter what your process looks like, be considerate of the time and effort each candidate will spend to prepare and go through each interview. A six-step process might give you confidence in your hiring decision—but it will be frustrating for candidates who make it through all six interviews without receiving an offer at the end.
Hire and onboard your first employee
Now that you’ve found your ideal candidate, it’s time to bring them onboard. Follow the steps below to ensure you’ve covered all your bases and remain compliant with federal, state, and local guidelines.
Send the offer letter
After confirming the acceptance and details of the role with your candidate over the phone, send them an official offer letter outlining your terms and expectations.
The details you’ll want to have in the letter include:
- Job title
- Duties and responsibilities of the position
- Start date
- Wage or salary details
- Expected work hours
- Outline of employee benefits, if applicable
- Conditions of employment, if applicable
- Onboarding requirements
Give them some time to review the terms and sign the letter. Then, keep a copy of the offer letter for your records.
Conduct a background check
You may also conduct a background check on the candidate as part of your due diligence. If you go this route, there are some guidelines to keep in mind:
- Employers can’t use background checks to discriminate against employees or job applicants, or to learn more about an applicant’s previous salary or employee benefits.
- Employers must notify applicants and get their written permission before conducting a background check.
- If an employer decides not to hire an applicant based on negative information revealed in a background check report, they must give the candidate written notice, a copy of the report, and at least five business days to respond to the notice.
There may be additional regulations your company must follow, depending on the type of business you own and your municipality, so confirm with state and local authorities before conducting a background check.
Collect new hire forms from your employee
Federal law requires you to collect new hire paperwork from your employee by their first day on the job. These forms include:
- IRS Form W-4: Determines how much to withhold in federal income taxes from your employee’s paycheck
- Form I-9: Verifies your new hire’s eligibility to work in the US (keep this form in your records for at least three years after your employee’s start date or until a year after their employment ends)
- Voluntary Self-Identification of Disability form: Allows employees to disclose whether they have a disability (required for federal contractors and subcontractors)
Although the following documents aren’t required, you may want to collect them from new hires as well:
- Employment contract
- Employee personal data form, including the employee’s contact information, emergency contact information, and Social Security number
- Benefit enrollment forms, if applicable
- Direct deposit form, if applicable
Report the new hire to the Department of Workforce Services
The last step of the onboarding process involves reporting your new hire to the Department of Workforce Services within 20 days of their start date. You can do this through the DWS online portal.
The information you’ll need to fill out the new hire reporting form includes:
- Your business name and address
- Your EIN
- Employee’s name
- Employee’s home address
- Employee’s Social Security number
- Employee’s start date
You can learn more about Utah’s new hire reporting requirements on the DWS website.
Set up payroll
First-time employers will also need to set up their payroll system to ensure their payroll tax obligations are met and their workers get paid on time. Setting up and running payroll manually can be time-consuming, so if you have the budget for it, we recommend using payroll software or working with a payroll provider.
It’s important to set up payroll correctly, as miscalculating an employee’s wages and taxes can result in costly penalties. If you’d like additional guidance through the process, make an appointment with your accountant so they can help you with setup and educate you on payroll best practices.
Put up labor law posters and notices in the workplace
The federal and state government requires all employers to hang a number of labor law posters in the workplace to inform employees about their rights and their employer’s responsibilities to them. These posters should be hung in a place where they can be easily seen by all workers during business hours, such as the break room or kitchen.
Some of the labor law posters and notices required by the federal government include:
- Know Your Rights: Workplace Discrimination is Illegal poster
- Federal Minimum Wage poster
- Job Safety and Health: It’s the Law poster
- Family and Medical Leave Act poster
- Notice: Employee Polygraph Protection Act
- Your Rights Under USERRA poster
Utah law requires employers to hang the signage below as well:
- Workplace Safety and Health in the State of Utah
- Workers’ Compensation Notice
- Unemployment Insurance Notice to Workers
- Pregnancy and Related Conditions under the Utah Antidiscrimination Act
Note that this isn’t a full list of the labor law poster requirements for Utah employers. You may have additional requirements based on your municipality, industry, business activities, and number of employees. To get the most up-to-date information on your poster requirements, check with the US Department of Labor, the Utah Department of Workforce Services, and local government agencies every year.
Attract top talent to your business with Gusto
The caliber of the employees you hire can make or break your business, so it’s important to get this process right. Gusto’s all-in-one recruiting, hiring, and onboarding software streamlines this process so you can focus your efforts on finding the ideal candidate. And with Gusto’s wide range of integrations, you can use your favorite hiring platforms in tandem with ours. See firsthand how Gusto is designed with small business owners in mind by creating an account today.