For many small business owners, hiring employees is critical to their company’s growth. However, there can be a steep learning curve when it comes to hiring your first team member(s). If you have plans to hire employees in Washington State, it’s a good idea to understand exactly what you’re getting into before you start hiring—and the good news is that we’re here to help! Follow these six steps: 

Do your research

Businesses take on many important responsibilities once they hire employees—and they become subject to costly consequences if they fail to keep up with them. Your first task as a prospective employer should be to understand these obligations and then make a plan for hiring your first employee. 

Determine whether you need employees or independent contractors

Some small businesses may not need employees right away. Instead, they might find it more helpful and cost-effective to outsource their tasks to an independent contractor or two. 

However, other businesses are better suited to working with employees because of the nature of ongoing work—and also, employers have greater control over how, where, and when employees perform work for the company. Independent contractors, on the other hand, set their own hours and have more authority over how the work gets done. 

Read our blog post for an in-depth comparison between an independent contractor and an employee, and decide which one is better suited for the needs of your business. Just make sure you classify your workers correctly, as failure to do so can cost your business hundreds of dollars or more per misclassified employee. 

The Internal Revenue Service (IRS) website outlines some ways to establish whether a worker should be classified as an employee or independent contractor. But if you’re still unsure about a particular worker’s status, file Form SS-8 with the IRS to get an answer. 

Understand your hiring costs and tax liability as an employer

You also need to understand how much an employee will cost your business so you can plan out your finances accordingly. 

For reference, the Small Business Administration reveals that an employee costs a business about 1.25 to 1.4 times their salary due to additional expenses like benefits, insurance coverage, recruiting costs, and taxes. To help you understand your hiring costs, here’s a summary of important employment tax obligations: 

  • Employers must withhold federal income withholding taxes from each employee’s paycheck. The amount withheld for each employee is determined by their wages and withholding allowances. 
  • The state of Washington doesn’t impose an individual income tax, so employers are not responsible for withholding state income taxes from their employee’s wages.
  • Both employers and employees pay Social Security and Medicare taxes under the Federal Insurance Contributions Act (FICA). The Social Security tax rate for employees and employers is 6.2%, and the Medicare tax rate for both is 1.45%.
  • The state unemployment insurance (SUI) tax rate for new employers in Washington is based on the average tax rate for businesses in their industry, with a minimum rate of 1%. The taxable wage base in 2024 is $68,500.
  • All employers also pay federal unemployment taxes under the Federal Unemployment Tax Act (FUTA). The tax rate is 6% on the first $7,000 of each employee’s wages, although companies that pay their SUI taxes in full and on time can receive a FUTA tax credit of up to 5.4%. 

Employers can use Gusto’s hiring calculator to estimate how much they’ll need to budget for when hiring a new employee. 

Review Washington labor laws

You should also take some time to familiarize yourself with federal and state laws that affect employers in Washington State, as you’ll be expected to honor your obligations as an employer and the rights of your employees. 

Here are some important labor and employment laws in Washington:

  • Minimum wage: In 2024, the state minimum wage is $16.28.
  • Overtime: Non-exempt employees must be paid 1.5 times their regular rate of pay for working over 40 hours in a workweek. 
  • At-will employment: Unless there’s a valid contract in place stating otherwise, employers and employees can terminate employment at any time.
  • Leave: Qualified employees are entitled to receive paid sick leave, paid family and medical leave, as well as pregnancy disability and parental leave. Companies must provide employees with unpaid jury duty, crime victim, and military leave. Employers aren’t required to provide vacation leave to employees, but if they do, they must adhere to the policies outlined in their employee handbook.
  • Child labor: Businesses that want to hire minors must have a permit to do so. Hiring employees under the age of 18 comes with many restrictions and guidelines to follow. For more information on hiring minors in Washington State, visit the Department of Labor & Industries website.
  • Uniforms: Employees may be responsible for buying their own uniforms if the items can also be considered regular clothing. Employers must shoulder the cost of the uniforms if they meet the state’s definition of a uniform.

Note that there may be additional employment and labor laws your business may be subject to, depending on your city or county. And because these laws can change frequently, make sure to check with the US Department of Labor and the Washington Department of Labor & Industries (L&I) for the most up-to-date regulations and guidelines. 

Take care of logistics

Complete the tasks below before you onboard your first employee. 

Get a federal employer identification number from the IRS

All employers need to have a federal employer identification number (EIN) from the IRS. This number acts like a Social Security number for businesses, allowing government agencies to identify your company on tax forms and other documents. 

Businesses that are structured as a partnership, multi-member limited liability company (LLC), C corporation, or S corporation will likely already have an EIN. If your business doesn’t have one yet, you can apply for one online using the application from the IRS. 

You can learn more about employer identification numbers on the IRS website.

Register with the state of Washington

Prospective employers in Washington State also need to file a business license application with the state to indicate their intention to hire employees. This must be done before you hire your first employee but no sooner than 90 days before your first hire’s start date. 

Once your application is approved, your business will be registered with the Employment Security Department (ESD) and the Department of Labor and Industries for unemployment insurance and workers’ compensation, respectively. 

Find workers’ compensation coverage

Workers’ compensation insurance covers an employee’s wages and medical bills if they get injured while on the job. In Washington State, all employers are required to carry workers’ compensation coverage, even if they have just one part-time employee. 

Unlike many other states, businesses in Washington can’t purchase a workers’ compensation policy from a private carrier. Employers must buy coverage from L&I or receive approval from the department to self-insure their business. After you update your state business license information, you’ll be assigned an account manager who will help you set up your workers’ compensation policy.

For more information on getting a workers’ compensation policy with the state, visit the L&I website. 

Get organized

Employers are responsible for keeping personnel files and other employment-related records secure and accessible in case the records are requested during an audit by the government. 

Some of the records you’ll need to keep on file include: 

  • Tax forms
  • Withholding agreements
  • Verification of eligibility to work
  • Hours worked
  • Wages paid
  • Pay statements
  • Benefits forms
  • Education and training history
  • Performance evaluations
  • Disciplinary records
  • Other agreements made between the employer and employee

Certain documents, including payroll records, must be kept on file for at least three years. Additional recordkeeping requirements can be found on the Equal Employment Opportunity Commission (EEOC) website and on the Washington L&I website. 

Before you begin hiring any employees, set up your organizational system and gather any documents you’ll need during the process. At this time, you may also want to gather any other things your new hire will need during onboarding and afterward. This includes uniforms, access cards, login credentials, training videos, and more. 

Setting this up ahead of time helps ensure the hiring and onboarding process goes smoothly, and helps your new hire hit the ground running on their first day at your company. 

Prepare your business for hiring

Put together an employee handbook

While employers in Washington State aren’t required to have an employee handbook (also called an employee manual), it’s a best practice to have this document ready when you hire your first employee. 

A great employee handbook describes all of a company’s important policies and procedures, allowing the business to set expectations for its employees right away. By getting your company policies on paper, an employee manual can also help protect your business from lawsuits in some circumstances. Make sure to have your employees sign an employee handbook acknowledgment form to confirm they’ve received, read, and understood your company’s policies.

Below are some important ones to consider having in your handbook:

  • Company mission, vision, and values
  • Code of conduct
  • Attendance
  • Employee benefits
  • Rest and meal breaks
  • Anti-harassment and anti-discrimination policy
  • Communication policy
  • Disciplinary policies
  • Leave and time off policy
  • Pay transparency policy
  • Dress code

Ultimately, the policies you include in your handbook should reflect your business as it is right now. As your company grows and its needs change, make sure to update your employee manual accordingly. 

Prepare a compensation package

If your goal is to hire the best talent available, use our six-step guide to creating a compensation plan as a starting point. 

To remain competitive in your industry, it’s critical to offer competitive wages. For reference, ZipRecruiter reports that the average salary in Washington State is $57,733. The average hourly rate is $28. Of course, the average rate will change depending on the industry and role you’re hiring for, so you’ll also want to research the market rate for similar positions. 

You’ll also need to put together a benefits package, especially if you expect to hire full-time employees. Aside from wages, employee benefits are one of the biggest draws for job seekers, so a thoughtful and comprehensive plan can help attract competitive candidates to your company. 

Some of the best employee benefits sought out by job seekers today include: 

  • Employer-sponsored health insurance plans
  • Retirement savings accounts
  • Remote work arrangements
  • Flexible work schedules
  • Generous or unlimited paid time off policies 
  • Mental health support
  • Financial wellness programs
  • Child care assistance

Once you’ve decided on the right mix of benefits for your employees, read our article to learn how to set up an employee benefits program for your small business. 

Advertise the job opening

Fine-tuning your job post is another way to help your company stand out from all the other companies hiring for similar positions. At the very least, your job listing should contain 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 and experience needed for the role

But in today’s job market, the basics just aren’t enough. That’s why you should think of your job listing as a marketing tool for the open position at your company. 

Consider what information job seekers would want to see in your job post and include as much of it as possible. Explain what sets your company apart from competitors, describe your company culture, and list out the employee benefits you have to offer. If you’re not sure where to start, look up job listings from other companies in your industry and improve on them.

When you’re ready to publish your job post, don’t just create a listing on Indeed or Glassdoor and call it a day. Think of other ways to get your job opening in front of qualified candidates. If your company has a big social media following, promote the opening on all your platforms. If your ideal candidate should live in the area, attend hiring fairs in your community or post flyers in the career centers of local colleges and universities.

Assess and interview top candidates 

As you receive job applications, compare each applicant’s qualifications to your own set of requirements for the ideal candidate. Create a shortlist of the most promising candidates and extend interviews to each one. 

When planning your interview process, keep it short and to the point. Be mindful of the time each candidate will spend preparing for and interviewing with your company. 

Throughout the interview process, try your best to respond to each candidate, even if it’s just to let them know you won’t be moving forward with an interview. Each person spent time filling out an application, and by treating them with respect and consideration, you elevate your employer branding and build relationships with potential future employees. 

Hire and onboard your first employee

Follow the steps below as you hire and onboard your new employee. 

Send the offer letter

After you verbally confirm your ideal candidate’s acceptance of the job offer and terms of employment, send them an official offer letter to get their acceptance in writing. Make sure to include the information below:

  • 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 

Once you receive the signed offer letter, keep a copy of it for your records. 

Conduct a background check

Before officially bringing the candidate onboard as a new member of your company, you may want to conduct a pre-employment background check as part of your due diligence. Before you do, however, there are a number of federal and state guidelines to keep in mind: 

  • Employers can only ask about or get information on a candidate’s criminal history after they’ve determined the applicant is qualified for the role. They also can’t discriminate against applicants based on marijuana use outside of work. 
  • Employers also can’t ask about a candidate’s credit reports unless required by law or related to the requirements of the job. In the latter case, the employer must provide the candidate with a written explanation for the use of their credit information. 
  • Companies must notify the candidate in advance and receive permission from them in writing before proceeding with a background check. All findings must be kept confidential.
  • Employers can’t require candidates to disclose information about their social media accounts, provide their login information, or access their accounts in the presence of the employer. They also can’t ask candidates to change their privacy settings or be added as a contact on their social media accounts. 
  • If an employer decides not to hire a candidate based on the results of a background check, they must notify the candidate in writing, provide them with a copy of the background check report, and give them at least five business days to respond to the notice. 

Your city or county may have additional background check laws you need to be aware of, so make sure to check with your local government authorities for more information. 

Collect new hire forms from your employee

As an employer, it’s your responsibility to collect new hire paperwork from your employees by their first day on the job. The forms mandated by federal law include: 

The documents below aren’t a requirement for employers, but having this information on file could be helpful for your company:

  • Employment contract 
  • Employee personal data form, including the employee’s contact information, emergency contact information, and Social Security number
  • Employee handbook acknowledgment
  • Benefit enrollment forms, if applicable
  • Direct deposit form, if applicable

Make sure to answer any questions your employees might have about these documents, and give them a point of contact to reach out to about their benefits if needed. 

Report the new hire to the Washington Division of Child Support

Employers must report each new hire to the Division of Child Support (DCS) within 20 days of their start date. While the DCS recommends that you report new hires through their online portal, you can also file new hire reports by fax, mail, or phone. 

Have the following information on hand when filing your report: 

  • Business name and address
  • Employer identification number
  • Employee’s name and address
  • Employee’s date of birth
  • Employee’s Social Security number
  • Employee’s date of hire

For more information on reporting a new hire in the state of Washington, visit the Department of Social and Health Services’ website. 

Set up payroll

Employers will also need to set up their payroll system and comply with payroll tax laws. Although some business owners might gravitate toward running payroll manually to cut costs, we recommend using payroll software or working with a payroll service provider—it’s less time-consuming and helps reduce payroll mistakes. 

No matter which method you choose, you can use Gusto’s blog post to walk you through setting up payroll for the first time. If you’re hiring remote workers, check out our guide on paying out-of-state employees. 

Put up labor law posters and notices in the workplace 

All employers are required to display certain labor law posters and notices in a place where employees can easily read them—think areas like the break room or kitchen. These posters educate workers on their rights and responsibilities as employees.

Some of the posters required by the federal government include: 

Below are additional posters mandated by the state of Washington: 

Note that this list isn’t comprehensive. Your company’s specific poster requirements are determined by your industry, business activities, number of employees, and other factors. 

Find out what federal and state posters you need to display in your workplace by visiting the US Department of Labor website and the Washington Department of Labor & Industries website.

Refine your hiring process with Gusto

The hiring process is critical to your company’s success. You want to make sure you find the best fit for your organization, after all. But that doesn’t mean you shouldn’t look for ways to run things more efficiently.

That’s where Gusto comes in. Our all-in-one recruiting, hiring, and onboarding software cuts down the time you spend managing the hiring process so you can focus on growing your team instead. Discover all the ways Gusto can amplify your recruiting and hiring efforts by creating an account today. 

Feli Oliveros Feli Oliveros is a freelance finance and business writer with experience covering personal and small business finance. In 2015 she graduated from UCLA, where she earned her bachelor’s degree in English and minored in Anthropology.

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