Finding and hiring the right employees is an important and difficult task. Once you have identified personnel that will work well with your ministry, be careful that you don’t miss these important requirements.
• Complete an I-9 form with each new employee. Form I-9 is available from the U. S. Citizenship and Immigration Services (USCIS). The form shows evidence of an employer’s efforts to inspect and verify documentation demonstrating that the new employee is legally permitted to work in the United States. The form does not have to be filed with the government, but the employer is required to keep the form and be able to produce it for inspection at any time. The form must be kept for three years after the date of hire or one year after termination of employment, whichever is later. The USCIS does make unannounced visits to inspect I-9 forms. Employers may be fined up to $1,000 for each employee whose I-9 form is not in order.
• Have each employee subject to income tax withholding complete Form W-4. The employer retains the W-4 and does not submit it to the Internal Revenue Service unless an employee claims 10 or more withholding allowances or if the employee claims exemption from all withholding even though he is paid $200 or more per week.
• Report the name, address, and social security number of all newly hired employees, and the name, address, and Federal Employer Identification Number of the employer to the State Directory of New Hires in the state where the employee works. This reporting requirement applies to any employee who is required to receive a W-2 form from the employer. There is no required form that must be completed. The employer may simply send a letter or create a form. The report must be made within twenty (20) days of the date of hire, unless a shorter time frame has been mandated by the State to which the report must be made. The “date of hire” is considered the first day services are performed for wages. The State may impose civil monetary and non-monetary penalties for an employer’s failure to report. Fines generally may not exceed $25 per newly hired employee, but if there is a conspiracy between the employer and the employee not to report, the penalty may be increased to $500 per newly-hired employee.
There are, indeed, many other requirements for a payroll program to be set up in a legally appropriate way. The items listed above, however, are commonly overlooked. In order to ensure full legal compliance, many Christian ministries hire outside companies to help handle the details of the payroll.
If you have questions about ensuring that your payroll is legally compliant, please contact the Christian Law Association right away.