If you’re getting ready to hire an employee for the first time in Connecticut, it’s crucial to do your due diligence on the hiring process. That starts with familiarizing yourself with Connecticut labor laws and employer taxes.
If you’re eager for more information, keep reading. Here are five steps to hiring employees in Connecticut:
Step 1: Take care of new employer logistics
When you transition from a business owner to an employer, you need to register with certain federal and state departments. Start by taking the steps below.
Apply for a federal employer identification number (EIN) on the IRS website
Before you register with the state of Connecticut as an employer, you have to obtain a federal employer identification number (EIN) from the Internal Revenue Service (IRS).
Fortunately, if you’re already registered as a partnership, multi-member limited liability company (LLC), C corporation, or S corporation, you already have your EIN. But if your business is brand new or if you’ve been operating as a sole proprietorship or single-member LLC, you need to get your federal tax ID.
Register with the Connecticut Department of Revenue Services
Connecticut employers have to withhold income tax from employees’ wages. To pay withholding taxes, you need to register your business with the Connecticut Department of Revenue Services (DRS).
You can register here with myconneCT. You’ll provide your EIN, business information, and personal details (like your Social Security number). Once you get a Connecticut Tax Registration number, you’ll be able to file reports and make payments for withholding tax.
Register with the Connecticut Department of Labor
Employers in Connecticut also have to register with the Connecticut Department of Labor to pay unemployment insurance (UI) taxes. State UI contributions help support workers in Connecticut who become unemployed through no fault of their own and need temporary assistance.
You can apply for an unemployment insurance employer account number (EAN) on ReEmployCT, Connecticut’s Tax and Wage Reporting System.
Register for workers’ compensation insurance
Connecticut’s Workers’ Compensation Act requires all Connecticut employers with at least one part-time, full-time, or seasonal employee to obtain workers’ compensation insurance. Workers’ compensation is standard nationwide since it gives employees financial and medical assistance if they get injured at work, while also providing employers with some protection from liability.
You can get workers’ compensation coverage with a private commercial insurance carrier in Connecticut. For more information, visit the state of Connecticut’s Workers’ Compensation Commission website.
Once you get workers’ compensation insurance, learn how to optimize your policy.
Register for CT Paid Leave
If you have at least one employee in Connecticut, you’re obligated to register for the Connecticut State Paid Family and Medical Leave Act (PFMLA). The program gives eligible Connecticut workers wage-loss benefits and covered time off for sensitive life events and circumstances, including leave to bond with a new child, medical leave, caregiver leave, military caregiver leave, and family violence recovery leave.
To register, start by creating an account online with CT.gov. Then register your business here with the CT Paid Leave Authority. For additional information on the program and your responsibilities as an employer, download the CT Paid Leave Employer Toolkit.
Step 2: Understand your hiring costs and tax liability
Hiring a new employee is a great investment in your business’s growth, but it can also be expensive. Before you start advertising your open roles, use this calculator to gauge your hiring costs.
Keep in mind that on top of recruiting costs and your employee’s compensation package (which generally includes wages, health insurance, and paid time off at minimum), you also have to pay federal and state employer taxes.
Here are the Connecticut employer taxes you’ll be paying:
- FICA taxes: Under the Federal Insurance Contributions Act (FICA), the Social Security tax rate is 6.2% for an employer and 6.2% for an employee, while the Medicare tax rate is 1.45% for an employer and 1.45% for an employee.
- SUI taxes: Every state, including Connecticut, has annual state unemployment insurance (SUI) taxes. The tax rate for new employers in Connecticut is 2.8% on the first $15,000 of an employee’s wages.
- FUTA taxes: The Federal Unemployment Tax Act (FUTA) is a federal unemployment program that goes hand in hand with state unemployment insurance programs. The FUTA tax rate is 6% on the first $7,000 of employee wages. But if you pay SUI taxes on time and in full, you can get a credit on FUTA taxes of up to 5.4%, which puts your FUTA tax liability at just 0.6%.
- Federal income withholding taxes: As an employer, you’ll use Form W-2 to file federal income tax withholding reports to the IRS. You’ll also file Form 941 on a quarterly basis and Form 940 annually.
- State income withholding taxes: As a Connecticut employer, you also have to withhold income from your employees’ wages and make regular payments. Learn more about withholding tax rates and filing deadlines on the DRS website or review these withholding FAQs.
- PFMLA payroll deductions: Under Connecticut’s paid leave program, you have to withhold 0.5% of each employee’s taxable wages up to the Social Security contribution base. There’s no separate employer contribution. Get more information here.
Need help calculating paychecks and withholdings for your employees? Use Gusto’s Connecticut hourly paycheck and payroll calculator and Connecticut’s salary paycheck and payroll calculator.
Step 3: Check Connecticut labor laws
Employment laws are another area to research before you begin hiring employees. Not only should you review key federal labor laws, including the difference between full-time employees and independent contractors, but you should also take the time to understand your state labor laws from the Connecticut Department of Labor.
Because Connecticut has a robust list of worker protections, there are a number of labor laws employers have to abide by. Below are some of the important topics you need to know about:
- Minimum wage: The Connecticut minimum wage is $15/hour as of June 1, 2023.
- Overtime: Per federal law via the Fair Labor Standards Act, non-exempt Connecticut employees who work more than 40 hours in a workweek must be paid overtime pay at a rate of 1.5 times. Here’s more Connecticut wage and hour information.
- At-will employment: The state of Connecticut is an employment-at-will state. As an employer, you have the right to fire employees at any time without reason or cause. Your employees also have the right to leave their jobs at any time without reason or warning.
- Breaks at work: Under Connecticut law, employers are required to give employees who work at least seven and a half consecutive hours a 30-minute break, which can be unpaid, during their workday.
- Pay transparency: Connecticut has a relatively new pay transparency law that requires employers to share a job’s salary range on the job posting.
- Salary history: Connecticut employers have to comply with the state’s salary history ban, which prohibits employers from asking job candidates about their previous salaries during the hiring process. See Gusto’s state-by-state guide to salary history laws for more information.
- Paid leave: Connecticut’s state paid leave program requires employers to offer eligible employees paid time off for parental leave, caregiver leave, medical leave, and other qualifying events.
- Paid sick leave: Connecticut employers with 50 or more employees are required to provide sick leave. For employers with fewer than 50 employees, there’s no state law that requires you to offer sick leave, holiday pay, vacation time, or severance. The employee benefits you offer are up to you as an employer.
- Nursing in the workplace: Connecticut has a law about nursing in the workplace that requires employers to provide lactating employees with reasonable break time—as well as a private location other than a bathroom stall—to express milk at work.
- Jury duty leave: Connecticut employers have to provide paid jury duty leave for employees who will be gone for five consecutive days of jury duty.
- Voting leave: Connecticut employers also have to provide two hours of unpaid time off for voting leave during major elections.
- Discrimination laws: Under Connecticut’s anti-discrimination law, enforced by the Connecticut Commission on Human Rights and Opportunities, employers with three or more employees cannot discriminate against job candidates or employees on the basis of race, color, religion, age, disability, national origin, sexual orientation, pregnancy, genetic information, gender, marital status, ancestry, or mental disorder.
- Pay equity: Connecticut’s Pay Equity Law makes it illegal for employers to pay an employee less than another employee of the opposite sex for comparable work.
- Criminal history: Connecticut has a “ban the box” law that went into effect in 2017. Under this law, employers can’t inquire about a job candidate’s criminal history on an initial job application.
- Sexual harassment: Connecticut’s Time’s Up Act requires employers with three or more employees to provide sexual harassment training to their employees.
- Pregnancy support: Under the Connecticut Fair Employment Practices Act, Connecticut’s pregnancy discrimination law says that employers can’t terminate an employee or otherwise discriminate against an employee or job applicant because of pregnancy, childbirth, or another related condition.
- Immediate pay: Connecticut employers are required to pay employees weekly on a regularly scheduled payday. Employees who are laid off or who quit must be paid the wages owed to them on the next regularly scheduled payday.
Step 4: Fill out the Connecticut new hire reporting form and other hiring documents
When you hire a new employee in Connecticut, you need to report information about that employee to the state. New hire reporting is a mandatory requirement across the United States; it’s used to locate parents who are late on their child support payments.
In Connecticut, employers need to report new hires within 20 days of the employee’s official date of hire. The hiring date is usually the first date an employee performs services you’ll pay them for, or the first day an employee is eligible to earn commission. You have to report both newly hired employees and rehired employees.
You’ll provide your employee’s name, address, Social Security number, date of birth, and work start date. You can submit new hires online here at the Connecticut New Hire Reporting Center or mail a copy of Form CT-W4 to the below address:
Connecticut Department of Labor
Office of Research, ATTN: CT-W4
200 Folly Brook Blvd.
Wethersfield, CT 06109
For more information, check out Connecticut’s new hire reporting FAQs.
In addition to reporting new hires, it’s a good idea to complete these other hiring documents, including:
- Employment contract: Writing an employment contract for your new employee(s) provides them with important information about the employment relationship and manages expectations. In the contract, list the job responsibilities your employee will have, break down your compensation structure, and include the most common workplace policies available in your employee handbook.
- Form I-9: The US Citizenship and Immigration Services (USCIS) uses Form I-9, the Employment Eligibility Verification Form, to verify that employees are able to work in the US. As an employer, you have to complete the I-9 form for every employee you hire, and each employee must attest to their employment authorization. You don’t have to file Form I-9 with the USCIS or Immigration and Customs Enforcement (ICE). Instead, just hold onto the form as a record for at least three years from the date of hire or from one year after employment ends. You can download Form I-9 and read the completion instructions here.
- Form W-4: Each new employee you hire needs to complete IRS Form W-4, The Employee’s Withholding Certificate, on or before the date of their employment. The W-4 form determines how much federal income tax will be withheld from the employee’s paychecks. Download the form.
- Form CT-W4: You also need to give employees Form CT-W4, the Connecticut Employee’s Withholding Certificate, to fill out.
It’s critical to keep copies of the above documents as part of your business’s records.
Step 5: Display labor law posters and required notices
Connecticut requires employers to post labor law signs in the workplace that explain employee rights, obligations, and benefits on the job.
Get a better business payroll system
Instead of trying to manually process payroll as a new employer, consider jumping straight to your best solution: an all-in-one payroll platform. Gusto’s small business payroll software is designed to make your life easier with automatic payroll and tax filing. Want to get started? Create an account today.