So you found talent… Now what?

This article outlines how to become an employer in Philly. It includes information on the forms you need to file, the taxes you need to consider, and the federal and state employer laws you need to comply with. It is intended for startups and first time employers in Philadelphia.

An Overview of PA Employer Taxes

• To register as an employer you must apply for a Federal Employer’s Identification Number (FEIN) using Form SS-4.
• You must also register your enterprise with the PA Business Tax Registration (PA-100) to withhold employer taxes.
• Federal and state employer taxes include:
• Social Security tax
• Medicare tax
• State unemployment tax
• Federal unemployment tax
• Employer’s quarterly payroll tax return
• Annual Return of Withheld Federal Income Tax
• Completing Wage and Tax Statements for all employees
• You will also need to withhold taxes from your employee’s paychecks. The amount to be withheld is based on federal Form W-2. These taxes include:
• Social Security Taxes
• Medicare Taxes
• State Income Tax
• Federal Income Tax
• Local Tax (such as county, school district, or city taxes)

Pennsylvania has very specific sales and use tax requirements and many of these are industry and even user specific. Please consult a tax specialist or a tax preparation service prior to filing a quarterly report.

New Employee Requirements

• You must verify that each new hire is eligible to work in the United States. This can be done by having the employee complete a Form I-9.
• Under the Fair Credit Reporting Act (FCRA) and Consumer Credit Reform Act (CCRA) of 1996, employers may not obtain a consumer report, (which includes checks on an employee’s or applicant’s credit standing, and which is obtained through a consumer reporting agency), unless a clear and conspicuous written disclosure has been made to the applicant or employee before the report is performed. This disclosure must be provided on a separate document from all other documents, including a job application.
• All companies are required to report new and newly re-hired employees within twenty (20) days of the hire date. Reports must be made to the state in which the employee is hired. If your employee is from PA, you can file the report online here. You will need:
• The employee’s W-4
• Your company’s name, address, and Federal Employer Identification Number (FEIN)
• Employee hire date
• The availability and source of dependent health insurance benefits for the employee

Payroll Requirements

• If your business is covered by the FLSA, you must abide by minimum wage laws. Effective as of January 2012, PA’s minimum wage is $7.25 per hour for hourly employees and $455.00 per week for salaried employees.
• Additionally, if you hire an employee who is under the age of 20, you must pay the youth minimum wage, which is $4.25 per hour for the initial 90 calendar days
• All companies must offer overtime pay to qualified employees. Under federal and Pennsylvania law, a qualified employee is classified as either hourly or salaried non-exempt. Neither an employer nor employee may wave an overtime premium. Overtime is paid when the employee works more than forty (40) hours in one week. Overtime wages consist of an employee’s normal hourly wage plus one half again.
• Pennsylvania businesses that employ even one employee must provide notice of the regular paydays and the time and place of payment. The notice must contain any changes to the regular scheduled payments.
• An employer must keep all payment records for each employee for a minimum of three (3) years.

Workplace Requirements

• Employers are required to post copies of certain posters in conspicuous places available to all employees and candidates of employment. I have provided a reference guide that details all the posters an employer in PA will need to obtain: download it for free here.
• Virtually every employer needs to acquire worker’s compensation insurance. You may obtain insurance from a private carrier of your choice. Most new businesses have some trouble obtaining private insurance. Therefore, the Commonwealth offers insurance from the State Worker’s Insurance Fund (SWIF). To learn more you can call SWIF at 570-963-4635.
• An employer with less than 10 employees in the past calendar year does not have to keep OSHA records unless the employer is informed in writing by the Federal Bureau of Labor Statistics or OSHA that such records are necessary. If this occurs, you must abide by the following rules as well as log and report certain workplace accidents:
  

Last Notes

This is an article on how to become an employer. It is intended for startups and first time employers in Philadelphia. It is not all-inclusive of every federal and state law an employer must comply with. Employers should contact an attorney, a tax specialist, the Pennsylvania Department of Revenue, Pennsylvania Department of Labor and Industry, or the Federal Wage and Hour Division district office for further guidance.

There is nothing contained in this article that is intended to be legal advice. I am not a licensed attorney or authorized to practice law. A huge thank you goes to Shannon McDonald for legal tips, you can check out her website here.

If you are a startup or first time employer and you are overwhelmed by all this information, please feel free to contact me at joyce.akiko@gohrforstartups.com. I provide consulting services on becoming an employer, creating and filling jobs, and maintaining compliance with employment law.

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