Requirements for Businesses with Employees

When hiring any employees, a business must conform to certain requirements. Both federal and state laws regulate employment. The following briefly summarizes the major areas of law:

1. Equal Rights and Opportunity - In Wisconsin, it is illegal to discriminate against job seekers and current employees. A partial list includes, but is not limited to, sex,  pregnancy or childbirth, age (40 and over), race, color, national origin, ancestry, religion, disability, sexual orientation, marital status, and, in most cases, arrest or conviction record. This law applies to employers, employment agencies, labor unions and licensing agencies. Call the Equal Rights Division at (608) 266-6860, or try  www.dwd.state.wi.us.

2. Payroll Taxes - There are two types of payroll taxes; those withheld from employees' pay, (which includes wages, bonuses, tips, cash and non-cash benefits), and taxes paid by the employer. Withholding from employee pay is required for Social Security (FICA) taxes and for federal and state personal income taxes. Employers need a federal tax I.D. number and employees need to fill out W-4 and WT-4 forms. For federal information, call the IRS at (800) 829-1040; for state information, call the Wisconsin Department of Revenue in Madison at (608) 266-2776 or the office in La Crosse at (608)785-9720 (Mondays and Wednesdays, 7:45a.m. - 1:00 p.m.).

FICA (Social Security) and Employee Tax Withholding

Employers must withhold FICA (Social Security) and income tax from employee paychecks. The amount deducted will be forwarded to the government on an annual, quarterly, monthly or daily basis depending on amounts involved. 

A penalty may be imposed if the funds are not paid to the IRS.  A person is liable if the failure to collect funds or the diversion of funds was willful* and the individual was a responsible party during the reporting period.  The individual owner-manager or others may be held personally liable for the penalty.

For instructions regarding federal withholding tax, see IRS Publication 15, Circular E, Employer's Tax Guide, or visit and download the form from  www.irs.gov/formspubs/index.html.

3. Unemployment Insurance (Unemployment Compensation) - If you have employees whom you pay $1500 or more in wages during a calendar quarter or any calendar year; or if one or more persons is employed full or part time for some part of a day in each of 20 or more weeks of any calendar year, unemployment taxes must be filed. Domestic staff in the employ of an individual in such individual's private home who receive $1000 in cash wages in a calendar quarter also requires that unemployment taxes be paid.  Information and forms may be obtained by contacting Wisconsin Unemployment Insurance. Call (608) 261-6700 or try www.dwd.state.wi.us/ui.

4. Worker's Compensation - A business having employees meeting the test of the unemployment compensation code would also be required to have coverage under the Workers Compensation Act. This coverage is obtained through a private commercial insurer. Check with a commercial insurance agency that regularly deals with business accounts for coverage. Employer liability occurs when wages of $500 or more are paid in a quarter, or three or more people are employed. For more information, contact the Wisconsin Worker's Compensation Division, P.O. Box 7901, Madison, WI 53707, or call (608) 266-1340. Website address: www.dwd.state.wi.us/wc.

5. Labor Standards Laws - Both federal and state laws cover a variety of issues relating to the pay and treatment of employees. The following is a partial listing of areas covered by regulations:

*Minimum wage

*Family & Medical Leave Act

*Labor Law Posters (see #10 below)

*Employment of children

*Prevailing wage requirements

Call the U.S. Department of Labor, Wage, and Hour Division at (608) 264-5221, the Equal Rights Division at (608) 266-6860, or try www.dol.gov/esa/regs/compliance.

6. Independent Contractors - The State of Wisconsin presumes that any worker is an employee unless an employer can prove otherwise. This is an area often misunderstood by small business. Call the IRS at (800) 829-1040 for the guidelines on employee vs. the independent contractor. For state information, call the Wisconsin Department of Revenue in Madison at (608) 266-2776. For tax issues call Wisconsin Unemployment Insurance Tax in Madison at (608) 266-7959, www.dwd.state.wi.us/wc/employers/independent_contractors.htm.

7. Employee Benefits: Insurance, Pension and Profit Sharing - Employers who pay voluntary benefits are subject to regulations aimed at protecting workers from mismanagement of funds and discrimination. If you provide voluntary benefits, consult an attorney about the Employee Retirement Income Security Act (ERISA), "Section 89" regulations, and other applicable laws.

8. Immigration Requirements - The Immigration Reform and Control Act made all U.S. employers responsible for verifying the employment eligibility and identity of all employees hired to work in the U.S. This includes having the Employment Eligibility Verification form (I-9) on file. For more information on your responsibilities, FAQ's and access to forms, check the Bureau of Citizenship and Immigration Service website, within the Department of Homeland Security at http://www.dhs.gov/ximgtn.

9. Occupational Safety and Health Administration - There are federal regulations and standards for work place safety. To determine the nature of required compliance, contact OSHA's Madison office at (608) 264-5388. Website address is www.osha.gov.
   
   For free assistance in developing and interpreting safety and health (OSHA) regulations, contact the State Occupational Consultant at (608) 879-2764. You may also wish to request a voluntary safety consultation by contacting the same phone number. At the local level contact (608) 785-9339 for more information.

10. Posting of Labor Law Posters - Employers are required to post various posters to inform workers of their rights under labor regulations. Each regulating agency contacted should be asked about posting. Requirements include the posting of nondiscrimination and safety law notices. For more information visit http://dwd.wisconsin.gov/dwd/posters.htm.