What Attorneys Need to Know When Hiring Their First Employee: A Guide to Getting It Right

Jason, a white man with light brown hair, wears a light purple shirt and grey blazer. By Jason Deshayes

As a small firm practitioner, you’ve likely spent years building your practice, establishing client relationships, and honing your legal skills. Now, you’re ready to take the next step: hiring your first employee. While this is an exciting milestone, it also brings a host of legal, financial, and administrative responsibilities. Making sure you’re prepared for this transition will not only help you avoid costly mistakes but also set the foundation for a successful working relationship with your new team member.

Here’s a guide to help you navigate the key considerations when hiring your first employee.

1. Classify the Worker Correctly

The first thing you need to determine is whether you’re hiring an employee or an independent contractor. Misclassifying a worker can lead to serious legal and financial consequences. Employees are entitled to various protections under federal and state law, including minimum wage, overtime pay, and access to benefits like unemployment insurance and workers’ compensation.

If the person you’re hiring is an independent contractor, the legal obligations are different. The IRS and state labor departments have specific criteria for distinguishing between employees and contractors, such as the level of control you exert over how and when they perform their work. If in doubt, consult with an employment law expert to ensure proper classification.

From a practical perspective, if you can tell someone what to do, how to do it and when to do it, then you likely have an employee.

2. Understand Employment Law Compliance

There are numerous federal and state laws that govern the employer-employee relationship. Key legal requirements include:

  • Wage and Hour Laws: Ensure that you comply with the Fair Labor Standards Act (FLSA), which sets rules for minimum wage, overtime, and record-keeping. Depending on your state, you may also need to follow local wage laws.
  • Non-Discrimination Laws: Be mindful of federal and state anti-discrimination laws that prohibit discrimination based on race, gender, age, disability, and other protected categories.
  • Workplace Safety: Even if you have a small office, you are still required to provide a safe working environment under OSHA regulations.

Hiring your first employee is a serious step, and ensuring compliance with these laws will protect both your practice and your employee.

3. Create Clear Job Descriptions and Expectations

A well-defined job description is critical for both you and your employee. It will set clear expectations from the outset and help prevent misunderstandings down the road. Be specific about:

  • Clear job duties and responsibilities
  • Expected working hours
  • Compensation and benefits (health insurance, time off, retirement, etc…)
  • Whether the role is fully in-office, remote or hybrid

Clarifying these points will help ensure both parties are on the same page, and it will be invaluable should any disputes arise later.

4. Prepare for Payroll and Taxes

As an employer, you’ll need to set up payroll to ensure that taxes are withheld, and benefits are managed. This includes:

  • Withholding Income Taxes: You’ll need to withhold federal and state income taxes, as well as Social Security and Medicare contributions (FICA).
  • State and Federal Unemployment Insurance: You’ll also need to pay unemployment taxes to the state and federal government.
  • Worker’s Compensation Insurance: Most states require employers to provide workers’ compensation coverage, which helps protect both you and your employee in case of a workplace injury.

Leveraging a payroll service helps you make sure all of the various reports and deposits are made timely, given the number of government entities who are looking for information on your employee.  This is not an area that is recommended to DYI on!

5. Onboarding and Documentation

Effective onboarding is essential to help your new employee integrate smoothly into your practice. Beyond the usual introductions and training, you’ll need to provide key documents:

  • Employee Handbook: If you don’t already have one, create an employee handbook outlining your firm’s policies on things like attendance, conduct, and leave.  By having these policies documented, it avoids confusion on expectations and gives you and your employee something to refer to in the future.
  • Employment Agreement: Consider drafting an employment agreement that specifies the terms of employment, including job duties, compensation, confidentiality, and non-compete clauses (if applicable).

6. Insurance and Benefits

Decide what benefits, if any, you can offer to your new employee. For small law firms, providing health insurance and retirement options may not be feasible immediately, but you can still offer perks like paid time off, flexible work hours, or professional development opportunities.

Retirement benefits are a baseline expectation for today’s employees. There are a variety of plans available (SIMPLE IRAs, SEPs and 401(k)s for example) with reasonable match requirements and costs to you the employer. The IRS has also incentivized businesses to start retirement plans by offering various tax credits. Consult with a tax advisor to ensure you select the right plan for you.

Also, ensure you have the proper business insurance, including general liability, professional liability, and workers’ compensation, to protect both your firm and your new employee.

Conclusion

Hiring your first employee is a significant milestone, but it comes with legal, financial, and administrative responsibilities that you must manage carefully. By understanding the legal requirements, clarifying job expectations, setting up proper payroll, and providing a supportive onboarding process, you can lay the groundwork for a successful employer-employee relationship.

Take the time to plan ahead and seek professional advice where necessary. With the right preparation, your first hire can be a smooth and positive experience that helps grow your practice and take it to the next level.