Hiring Employees in Pennsylvania 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 Pennsylvania 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 Pennsylvania

In order to hire employees in LLC in Pennsylvania, 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 Pennsylvania

The employers in Pennsylvania 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 Pennsylvania. 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 Pennsylvania New Hire Reporting program

Employers of Business owners are bound by Pennsylvania’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 Pennsylvania; 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 Pennsylvania?

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 Pennsylvania, 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.
  • Pennsylvania 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 Pennsylvania 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 Pennsylvania 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 Pennsylvania 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 Pennsylvania adheres to federal legislation that protects employees from discrimination and assures the payment of minimum wage, overtime pay, and the right to family leave, among other things. The Fair Labour Standards Act governs the rules pertaining to employee rights. The State does not have any particular labor legislation of its own.

  • The present Pennsylvania minimum pay is $7.25 per hour. If the federal wage changes, so will Pennsylvania’s wage rate.
  • Discrimination and retaliation against employees in a range of protected categories are considered illegal in Pennsylvania.
  • Apart from normal compensation, the Fair Labor Standards Act requires companies to compensate employees for any overtime labour performed when the total number of working hours surpasses 40 per week.
  • There are laws in Pennsylvania that govern the minimum wage, overtime, and child labour.
  • The business LLCs shall adhere to every federal legislation and State enforced labour laws while operating their businesses in the State.

Structure Of Wages Of Employees

The State of Pennsylvania is guided by federal laws with respect to employer-employee conduct at a workplace and related labor laws. Following below, we have mentioned the key provisions that structure the employee wages in the State.

Pennsylvania Minimum Wage

Pennsylvania’s minimum wage is $7.25 per hour, which is the same as the federal minimum wage. With any hike in the federal minimum wage, the Pennsylvania minimum wage shall rise automatically. There are certain exceptions to the standard minimum wage rate rule.

  • Tipped Minimum Wage: For tipped employees, the current minimum pay is $2.83 per hour. If a company pays its tipped employees the lower minimum wage, it must also make sure that the gratuities they receive cover the difference between the lower and regular minimum wage. The final wage of such employees after adding tips to their regular wages should add up to at least $7.25 per hour.
  • Student Learners: Employers who acquire a special certificate of permission from Pennsylvania’s Department of Labor and Industry can pay learners a subminimum wage rate that is less than the regular minimum wage.

Pennsylvania Overtime Wage Rate

For any hours worked beyond the 40 hours limit in a workweek, Pennsylvania law requires an employer to pay the eligible employees overtime at 1.5 times their standard wage rate. Overtime pay must be settled on a weekly basis, regardless of whether the employee is paid hourly pay, a monthly income, a piece rate, etc.

Youth Labor

Minors below 18 years are not permitted to engage in dangerous activities such as piloting, firefighting, manufacturing dyes, and chemicals. They are likewise restricted from working in establishments that manufacture, sell, or distribute alcoholic drinks. Minors under the age of 16 are barred from working in a range of other vocations, including scaffolding or tunnel work, as well as youth peddling and promotion.

Pennsylvania Employee Rights

Federal and state laws protect employee rights during the term of their employment in the State of Pennsylvania. The State offers certain rights to the employees in Pennsylvania to safeguard their interests and well-being while working for the employers.

Anti-discriminatory Rights

The Pennsylvania Human Relations Act (PHRA) strictly prohibits any form of discrimination at the workplace based on factors such as race, color, creed, caste, religion, nationality, handicap, and so on, for employers with four or more workers.

Equal Pay

The Equivalent Compensation Law in Pennsylvania bans employers from discriminating in pay for comparable labor on occupations that demand equal ability, effort, and responsibility and are conducted under similar working circumstances based on gender. A seniority system, a merit system, a system that assesses wages by quantity or quality of work, or a difference based on criteria other than sex may all allow for differing pay rates.

Leave of Absence

Employers in Pennsylvania must comply with the Federal Family and Medical Leave Act (FMLA). Employees who meet the qualifying criteria can take up to 12 weeks of unpaid time off each year for looking after a family member or other medical and family reasons.

Workplace Safety

Employers in all states, including Pennsylvania, are required to provide a safe and secure workplace free of any known hazards, according to Occupational Safety and Health Act. Working conditions must be healthful and safe, and industry-specific safety equipment must be readily available at the workplace. Employers are required to give safety training to anybody starting a job in a profession or industry that requires it.

Whistleblower Protection

The Pennsylvania Whistleblower Law protects any employee against workplace reprisal if they report or disclose unlawful acts or misconduct by the employer or any abuse at work, to a governmental agency or a law enforcement body. Employers cannot harass or retaliate against such employees at the workplace in any manner.

Final Pay

Whether the termination is voluntary or involuntary, Pennsylvania law requires that final earnings be paid by the following normal paycheck. The compensation for paid leave is determined by the particular business policy.

How to Hire Employees Fast in Your Pennsylvania LLC

To hire employees for your Pennsylvania 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 it comes to hiring employees for your Pennsylvania LLC, there are rules and regulations to follow. If you want to hire the best possible employees, it’s important to understand what you’re doing. Depending on the business type, you may be required to obtain a license. In some cases, the law might require you to show federal employment posters, and others might require you to register for employer withholding.

For instance, you’ll need to establish a payroll, collect direct deposit information for all workers, and buy a workers’ compensation insurance policy. You’ll also have to pay federal and state unemployment taxes. These rules and regulations vary from state to state, so it’s important to know what you need to do.

It’s always best to consult with a tax professional before registering your Pennsylvania LLC. The laws and regulations surrounding payroll and taxes can be very complex. However, there are some simple things you can do to reduce your burden. Besides, there are even tax credits available for LLCs.

An operating agreement is a legal document that outlines the business’s operations and ownership. A comprehensive operating agreement can lower the risk of future disputes. It should be drafted based on your business’s goals and future plans.

Similarly, you’ll need to establish a good business bank account. This helps separate your personal and business finances. Keeping your personal and business finances in separate accounts can also help protect you from personal liability.

One of the most important components of your Pennsylvania LLC is its name. As with any business, you’ll need to choose a name that’s unique, but doesn’t duplicate another business in the area. Check out the online database of available names for a name that’s right for your business. Also, consider whether your chosen name is available as a domain name. Even if you aren’t planning on using it for your website, you’ll want to reserve it for use in the future.

There are a variety of state-specific business permits and licenses to look into, so you’ll need to research and plan ahead. For example, if you’re running a restaurant, you’ll probably need a building permit, signage permit, and health permit. Plus, you’ll need to pay sales and use tax for certain goods and services, and you might need a license to operate.

You’ll also need to report new employees to the Pennsylvania Workforce Commission. This agency is responsible for tracking and regulating businesses in the state. Unlike some states, you don’t need to wait for a long time before you can start hiring employees in Pennsylvania. But it’s still a good idea to get all your ducks in a row and be ready to begin hiring as soon as you’re able.

Finally, you’ll need to register your Pennsylvania LLC with the Department of State. The state has a nifty website that’s designed to help you do this. During the process, you’ll be given a certificate of organization that lays out some basic information about your LLC. Generally, the process takes about one week. Whether you choose to submit your certificate of organization by mail or online, make sure it’s filed during regular business hours.

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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