January 7 Tip of the Week

“New Hire Notice”

For small to medium-sized businesses the hiring process can be relatively informal.  Human Resources or management verbally informs a new employee of the rate of pay during the interview stage (or earlier, if required by law) and tells the employee when payday is while the employee fills out a direct deposit form during onboarding.  The new employee gets a copy of the employee handbook and is told where to direct any questions.

Stopping here is a common pitfall.  Many states require a separate notice with detailed information to be provided at the time of hire and any time the terms and conditions of employment change.  The purpose of the notice is to provide the employee with exactly what to expect in exchange for their labor and how to contact the business headquarters with complaints.

This notice can require the full legal name, address, telephone number, and email address for the headquarters of the employer, the employee’s rate of pay, whether the employee is exempt from overtime under the Fair Labor Standards Act (FLSA), any benefits the employee will receive (including vacation, paid sick leave, or paid time off) and the details thereof, the pay period, when the employee will be paid, any wage deductions, and information about the employer’s workers’ compensation insurer, depending on state law.  It is important for employers to know the laws applicable to the states in which they operate so that no required information is omitted.

One temptation for employers is to retroactively pay an employee’s hours worked at minimum wage as discipline for an employee transgression, such as quitting without notice or calling out for required shifts.  While this practice is generally disfavored, it is also prohibited by law in states that require this type of notice.  An employee’s wage cannot be changed for hours worked until after the employee has received written notice of the new rate of pay.  Once a regular payday has been established and expressed to the employee in writing, the employee may not withhold the employee’s paycheck beyond the payday stated in the notice for any reason.

It is permissible to put this information in an offer letter, as long as all of the information required by state law is in the offer letter.  The offer letter or the new hire notice should be signed by the employee.  One copy should be given to the employee, and one copy should be kept in the employee’s personnel file.  A new notice should be given to the employee, signed, and retained any time any of the required information changes.