Hiring Employees in Delaware LLC – Wages, Laws, Compliance Guide


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Any business structure or corporation stands firm on its foundation laid by the employees. An LLC is no exception to this rule. Hiring employees in your LLC comes with some rules, regulations. Before understanding the rules of hiring employees in Delaware LLC, we must understand what an LLC means.

A Limited Liability Company is a business structure that protects the owners from any personal responsibility of the debts or liabilities arising out of the LLC. If an employee action succeeds to liabilities, the owners get the protection against it. LLCs are a combination of the characteristics of a partnership firm & a sole proprietorship. 

Hiring Employees in Delaware

In order to hire employees in Delaware LLC, there are many requirements that a business has to fulfill. One should keep these points in mind while hiring employees in an LLC. These requirements include:

1. Federal & State Employment posters in Delaware

The employers in Delaware are required to show both Federal & State Employment posters mentioned in Equal Employment Opportunities Act, Americans with Disabilities Act, Fair Labour Standards Act (FLSA),  etc. You should seek professional help to fulfill all the norms or requirements.

2. Federal & State Required Forms

Hiring employees is a lengthier process that involves the filing of different forms & applications. Suppose you wish to hire employees in Delaware. In that case, you must ask your employees to submit the Employment Eligibility Form, the Federal Tax withholding form, the W-4 Form, Workers Compensation Claim Form, Disability Self- Identification Form, U.S. Citizenship and Immigration Services Form, etc. These Legal forms are easy and free to download.

3. Requirements of Delaware New Hire Reporting program

Employers of Business owners are bound by Delaware’s New Hire Reporting Program, under which they have to submit a report consisting:

  • Company Name
  • Company Address
  • Company federal tax ID number
  • Employee’s Name
  • Employee’s Social Security Number
  • Employee’s Address
  • First Day of paid Work

In addition to the forms mentioned above, payments, taxes, tax forms, & requirements, there may be some additional compliance for hiring in Delaware (specifically); you must adhere to those norms as well.

Can an LLC Hire Employees?

An LLC or a Limited Liability Company can be regarded as a corporation, partnership, or sole owner business. The owners of the LLC are often referred to as members. Individuals, Corporations &, in some cases, other LLCs can form an LLC as members.

The members form LLCs because of their limited or no liability provided to the owners or members. In the event of liabilities arising out of an employee’s action, the members of the LLC are not personally liable- the LLC is liable for the actionable claim.

Any LLC (even one with a single owner) can hire unlimited employees on wages or salary. (The single-member owner LLC may have different rules and regulations). In addition to the salaried employees, the LLC can appoint Independent contractors for certain tasks on a contract basis. 

Rules to Hire Employees in an LLC in Delaware?

Just like any other business corporation, an LLC is also not immune from certain procedures & rules of hiring. An LLC files many documents & pays a number of taxes to various Government Agencies while hiring employees. Some of the essential rules or steps to hire employees in an LLC are:

  • Federal Employer Identification Number – Every LLC must obtain an Employer Identification Number (EIN) from the Internal Revenue Service. EIN helps report taxes & a few other documents to the IRS.
  • Employee Eligibility Form – It is mandatory for an LLC owner to check if the employee is eligible for employment in the U.S. An LLC has to ask the employees to submit the I-9, Employment Eligibility Verification Form to verify the identity of the employee & to authorize the employment. the I-9 form is a mandatory requirement while hiring an employee.
  • Employee’s Social Security Number – The employee has to have a valid Social Security Number (SSN) to work. LLCs have to ask the new employees to submit their SSN before employment. The SSN is helpful in payment & tax purposes.
  • Setting up a process for collection & payment of the appropriate taxes – There has to be a due process for the employees’ future collection & payment of taxes. This process needs to be set up by the employer (in this case, the LLC)
  • Employee handbook – In the hiring process, one of the crucial elements of hiring paperwork is an Employee Handbook. Although it is not essential in Delaware, it is usually needed as one of the legal documents in many other states. An Employee Handbook consists of a complete list of all the basic rules & policies of the company.
  • Delaware payroll Taxes – An LLC that is running a business with employees or businesses with employees has to pay many federal taxes & state Taxes. Following the rules on payroll taxes is also an essential requirement.  After hiring employees, an LLC is subject to the State Unemployment Compensation Act. Under the said Act, an LLC will have to pay Unemployment tax to the state & to do that; the LLC must register itself with the Delaware Workforce Commission. The process involves simple steps & can be completed in 20 minutes. 
    Payroll taxes also include Federal Income Tax withholding, an employer can withhold money from the employee’s account for the income tax.
  • Workers’ Compensation Insurance An LLC operating in the state of Delaware has to carry workers’ compensation insurance & has to display relevant posters.
  • New Hire Report or Report of the New Employee – An LLC has to
    • Report about hiring the new employees in the form of “Report of New Employee(s)” to the Delaware Workforce Commission within 20 days from the date of hire.
    • Deposit and report federal employment taxes as per the IRS procedures for payroll reporting & payment.

Laws Relating to Wages of Employees

The State of Delaware contains regulations that give employees the right to fair compensation, take leave of absence, and receive healthcare benefits among several other benefits. The State runs on similar lines with the federal law on some issues involving labor regulations such as occupational safety and health hazards.

  • The minimum regular wage offered to the employees in the State is $9.25 per hour.
  • Employers in Delaware are equally bound by the federal Labour Regulations, such as Minimum Wage Rate determined under the Fair Labour Standards Act. The Act regulates the relation between the employees and the employers across the country. The Fair Labor Standards Act (FLSA) contains federal wage and hour legislation that establish minimum standards for the whole country.
  • The LLCs in the State have to act in accordance with the Labour laws with respect to compensation, benefits, leave, etc.

Structure of The Wages of The Employees

Wage and hour laws exist on both a state and federal level in the United States to safeguard workers’ pay rights. The laws established by the States should not set the standard requirements below the federal minimum set by the FLSA. We have tried to list down the essential aspects of the Minimum wages in Delaware.

Minimum Wage

Unless an employee is exempt, an employer in Delaware is required to pay a minimum wage to its employees. The state’s minimum wage is $9.25 per hour.

  • For overtime work hours, the State of Delaware does not have any local provisions. Therefore, the employees are covered under the Fair Labour Standards Act to receive overtime compensation. Employees who exceed the 40 work hours in a week are eligible to receive an additional compensation at the rate of 1.5 times the usual pay rate.
  • For tipped employees, the minimum wage is set at $2.23. Tips are the portions earned by the employees in their individual capacities, which shall not be withheld or shared among other employees or the employers.
  • For young and minor children, in addition to the federally restricted employment, Delaware law prevents children under the age of 18 from working in a range of dangerous jobs. Minors aged 16 and 17 are not permitted to work or attend school for more than 12 hours a day. In each 24-hour period, they must also get at least eight hours of nonwork and non-school time.

Meals and Breaks

Employees who work for seven and a half hours or more each day are entitled to an unpaid dinner break of at least 30 minutes.

Delaware Employee Rights

Delaware, like any other state, has a set of employee rights. These rights should be kept in mind while hiring employees in LLC in Delaware. Here are the rights below,

Right to Receive Salary and Compensation

Employees working in the State of Delaware have the right to be fairly compensated by their employers. As per the set determinants under the Federal Minimum Wage Standards as well, no employees in the State shall receive a salary that is below the compensation level determined by the Federal law.

Protection against Harassment and Discrimination

The Civil Rights Act of 1964 guides the code of conduct at workplaces. No employer shall enforce any anti-discriminatory practices at the workplace based on color, sex, race, gender, origin, disability, etc.

Unemployment Benefits

Employees at Delaware are eligible for unemployment compensation while looking for work if they have lost their job due to no fault of their own. To get these benefits, the ex-employee must confirm that they are not employed at any organization on a weekly basis.

Organizational Exit and Final Pay

The important Delaware requirements impacting organizational exit is that any offer benefits or wage supplements offered to an employee upon termination, the benefits must be provided within 30 days of the employee’s departure. Also, the wages earned by an employee who quits is fired, suspended, or laid off must be paid by the following paycheck using the usual payment method.

Workplace Health and Safety

The Occupational Safety and Health Act provides safety at the workplace and the right to receive compensation for any kind of workplace injury or fatality.

How to Hire Employees Fast in Your Delaware LLC

To hire employees for your Delaware LLC you need to verify if the person is eligible to work in the US and then report him/her as ‘new hires’ to the state.

When hiring employees in Delaware, there are many rules and regulations that must be followed. The Occupational Safety and Health Act (OSH Act), for example, requires you to report new hires to the state. It also provides you with compensation for workplace injuries.

There are other laws that are related to employment in Delaware, such as minimum wage and overtime laws. Employers must adhere to all of these, and any violations can result in significant fines. If you are a new business owner, it is a good idea to consult with a lawyer to help you understand all of the details and rules of Delaware employment law. Fortunately, the state has developed a special court system to handle corporate legal matters, which makes it easier to resolve lawsuits.

For many business owners, hiring their first employee can be an exciting and a scary experience. But you can make the process more convenient by choosing the right partner to work with. Luckily, SixFifty has developed a tool that helps you quickly and easily create and maintain an employment handbook for your out-of-state employees. This will help you simplify your hiring practices and stay compliant with the latest standards.

To begin hiring employees in Delaware, you must first register with the Delaware Department of Labor. This includes filing forms and displaying posters in your office. You will also need to obtain an Employer Identification Number (EIN) from the IRS. Your EIN is a nine-digit number assigned by the IRS that you will use to report your taxes. Getting your EIN is free and can be completed online through the IRS website.

Once you have a Delaware LLC, you will need to register for a business license. In addition to the regular state taxes, the LLC must pay a gross receipts tax each year. These taxes vary depending on your business, but you will be responsible for paying them. A consolidated application for employment insurance and workers’ compensation is available in Delaware.

The Delaware Division of Corporations will then review the Certificate of Formation you have submitted to confirm that the LLC is formed. Afterwards, the LLC is officially created and can open a business bank account. Depending on the size and profit margin of your business, you may have access to additional tax benefits.

Whether you are a new business or you have been operating your business for years, it is always a good idea to consult with an attorney. They can advise you on the best way to set up your business and keep it in compliance with state and federal laws. However, you should understand that maintaining compliance can be a complicated process, which is why it is important to work with a trusted partner.

Regardless of the size and nature of your business, it is a good idea to have a written operating agreement that outlines your company’s business practices. This will not only help you settle any disputes that might arise, but it can also provide a framework for the future.

FAQs

What Is an LLC?

An LLC is a business entity that can be treated as either a corporation, a partnership, or a sole owner business.

Is the LLC liable for damages caused by employees?

The owners of the company are not personally liable for the actions of the employees, the LLC is liable for any such actions.

What is the IRS Form I-9?

Before hiring an employee, under federal law, the business has to verify an employee’s eligibility to work in the United States with the (IRS Form I-9). The business owner also has to make sure the employee has a valid SSN or Social Security Number.

What is LLC self-employment?

LLC members, or LLC owners, are self-employed according to the IRS because they pay themselves through the earnings of LLC.

In Conclusion

All the LLCs with employees are bound by many rules and regulations with reference to wages. It is always advisable to register a registered agent service to understand the laws better. Feel free to share your feedback with us in the comment section below.

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