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Employer Responsibilities to Employees

Payroll Responsibilities

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Your Responsibilities as an Employer

When you hire your first employees, you have some responsibilities to that employee, and to all future employees, relating to compensation. These responsibilities are codified under federal laws:

  • You must pay at least the minimum wage (unless the employee receives tips or is somehow not subject to minimum wage.
  • Unless an employee is categorized as exempt (managerial, professional, and supervisory employees), you must pay overtime at 1 1/2 times hourly pay, for all hours worked over 40 in any week.
  • Along with each paycheck, you must provide employees with a statement showing gross pay, deductions and withholding, and net pay for the pay period and the year to date.
  • You must provide employees with a yearly statement of earnings, withholding, and deductions, no later than the end of January of the next year. This statement is a W-2 Statement of Earnings.
Some states have more strict requirements for paying employees. Check with your state labor department for more on your state's labor laws.

Some Additional Responsibilities to Employees

  • When the employee leaves or is terminated, you must pay a final paycheck as soon as possible, but no longer than 30 days after termination (some states require more prompt payment).
  • If you have 50 or more employees, under the provisions of the Family and Medical Leave Act, you must give employees time off for sickness, disability, or family leave.
  • You must provide all workers with a safe, healthy place in which to work, under the provisions of the Occupational Safety and Health Act (OSHA). This law applies to all employers.
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