Hiring Compliance Basics for Small Business

Nobody starts a small business because they love employment law. But knowing the basics keeps you out of trouble. Here's the stuff that actually matters.

The Questions You Can't Ask

This one trips up a lot of well-meaning employers. During interviews, stay away from:

• Age: Don't ask when they graduated high school or their birth year.
• Family status: "Do you have kids?" is off limits, even as small talk.
• Religion: Including "what church do you go to?"
• Disability: You can ask if they can perform the job duties, but not about specific conditions.
• Arrest history: In many states, you can only ask about convictions, not arrests.

When in doubt, ask yourself: "Does this question relate directly to their ability to do the job?" If not, skip it.

I-9 Forms Are Not Optional

Every employee - not contractor, employee - needs a completed I-9 form within 3 business days of their start date. This verifies they're authorized to work in the US.

The key thing: you have to physically examine their documents. A driver's license plus Social Security card, or a passport. No exceptions, no "I'll bring it next week."

I-9 fines range from $252 to $2,507 per form. For a small business, that adds up fast.

Employee vs. Contractor

Calling someone a "1099 contractor" doesn't make them one. The IRS and Department of Labor have specific tests, and they boil down to this: do you control how and when they work?

If they work set hours, use your equipment, and only work for you - they're probably an employee, regardless of what you call them. Misclassification can result in back taxes, penalties, and lawsuits.

Keep Your Records

You need to retain hiring records for everyone you interview - not just people you hire. Federal law requires keeping applications, resumes, and interview notes for at least one year.

If someone claims discrimination, "I don't remember why we didn't hire them" is not a great defense. Documented, job-related reasons are.

State Laws Vary Wildly

Everything above is federal. Your state probably has additional requirements:

• Some states require posting salary ranges in job listings
• Some states ban asking about salary history
• Some states have stricter background check rules
• Some states require specific break and leave policies

Check your state's Department of Labor website, or ask an employment attorney for a quick review of your hiring process. A one-hour consultation is cheaper than a lawsuit.