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 Maryland 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.
On this page, you’ll learn about the following:
- Hiring Employees in Maryland
- Can an LLC Hire Employees?
- Laws Relating To Wages Of Employees
- Rights Of The Employees in Maryland
Hiring Employees in Maryland
In order to hire employees in LLC in Maryland, 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 Maryland
The employers in Maryland 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 Maryland. 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 Maryland New Hire Reporting program
Employers of Business owners are bound by Maryland’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 Maryland; 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 Maryland?
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 Maryland, 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.
- Maryland 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 Maryland 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 Maryland 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 Maryland 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 Maryland follows a combination of the federal and State-enforced laws that offer strong protection and basic working rights to the employees in the State, such as basic wage, working hours, overtime compensation, leave of absence and vacation, healthcare benefits, etc.
- The current minimum wage applicable in Maryland is $12.50 for big firms and $12.20 for smaller employers.
- When an employee’s employment ends, Maryland employers must follow the appropriate final pay regulations.
- Labor regulations established by the federal and state legislation must be complied by all LLCs and corporate employers.
- Maryland law mandates that some firms who do business with the state pay their workers a “Living Wage.”
Structure Of Wages Of Employees in Maryland
The federal legislation, the Fair Labor Standards Act (FLSA) guides the minimum wage and hour standards that must be followed by all companies in the United States. States shall not form any laws in contravention to the federal provisions. In addition to the State-enforced laws, Maryland follows various regulations under federal law, such as overtime pay, military leave, and workplace safety.
Maryland Minimum Wage
Applicable from January 2022, the minimum wage in Maryland has risen from $11.75 per hour to $12.50 per hour for big companies with more than 15 employees in their establishment and to $12.20 per hour for small employers with less than 14 employees.
- Tipped employees: Employees who earn more than $30 in tips per month must be paid at the rate determined by the State Minimum Wage Rate per hour. Employers are required to pay a minimum wage of $3.63 per hour. Employers in Maryland must guarantee that their tipped employees earn the normal minimum wage of $10.10, which includes the tipped minimum pay plus tips. In case there is a shortfall in the final amount, then it shall be the responsibility of the employer to cover the remaining amount.
- Learners: Maryland’s minimum wage rules allow the Maryland Department of Labor to create regulations allowing businesses to pay learners a subminimum rate of at least 80% of the normal minimum wage.
- Trainees: Maryland’s minimum wage regulations prohibit companies from paying trainees less than the state’s legal minimum wage.
Maryland Overtime Wage
According to the Maryland working hours provisions, any hours worked beyond 40 hours in a week is overtime work. The employer should compensate such employees at the rate of 1.5 times their usual pay rate for the number of extra hours worked beyond the 40 workweek hours.
Minor employees under the age of 18 years should be paid a sub-minimum wage which should be at least 85% of the state’s minimum wage.
Minors under the age of 16 are prohibited from working in a range of occupations that are considered to be dangerous and hazardous jobs. A minor should be provided with a half-hour break between a five-hour shift. A minor’s combined school and job hours on any given day cannot exceed 12 hours.
Rights Of The Employees in Maryland
The rights of employees in Maryland were established so that employers cannot exploit the employees on any front. To hire any employee, LLCs must follow these rules,
Rights Against Discrimination
Under Maryland’s Fair Employment Practices Act (FEPA), employers operating their businesses in the State are prohibited from discriminating among their employees on the basis of protected characteristics such as race, sex, color, origin, etc.
Equal Pay for Equal Work
Under the Equal Pay for Equal Work Act enforced in the State of Maryland, the employees are provided standard protection with respect to their wage compensation without any discrimination based on the gender of the employees. All the employees who work under similar conditions and are provided with similar tasks should be compensated at the same wage rate without any gender bias.
Employees are likewise protected from discussing their salary with co-workers under the Act. An employee cannot be forced to sign an agreement that bans them from discussing their pay with co-workers and not be fired for discussing pay.
Living Wage Law
Certain employers that work for the state government are required by Maryland law to give their employees a “Living Wage.” The amount of the Living Wage is determined by the county in which you work. In Montgomery County, Prince George’s County, Howard County, Anne Arundel County, Baltimore County, and Baltimore City, the Living Wage is $14.42 per hour; in all other parts of Maryland, it is $10.83 per hour.
Time Off and Leaves of Absence
Any company with 15 or more workers who provide paid leave must enable an employee to utilize such paid leave to care for a sick immediate family member (child, spouse, or parent) under the Maryland Flexible Leave Act (MFLA).
Employers must also give paid sick leave if they have more than 15 employees in their establishment, whereas employers with less than 15 employees must provide unpaid sick and safe leave, according to the Maryland Healthy Working Families Act (MHWFA). To be eligible for leave, an employee must work at least 12 hours each week.
All salaries owed to terminated workers must be paid by the following normal paycheck. If certain policy and communication criteria are followed, an employer is not compelled to pay accumulated leave to a dismissed employee.
How to Hire Employees Fast in Your Maryland LLC
To hire employees for your Maryland 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.
Hiring employees can be a complicated process, but it can be done very quickly and easily with the right steps. First, you need to get an EIN, or federal employer identification number. This number is required for a wide range of transactions, including opening a business bank account, accepting payments, and hiring employees. You can get this number free of charge through the IRS website. Next, you’ll need to register your business with the Maryland Workforce Commission, or MWC. This registration process is simple and takes about 20 minutes.
Getting a FEIN (Federal Employer Identification Number) is essential for Maryland employers. You must obtain one before you can hire employees in the state. This number is needed for filing taxes, hiring employees, and setting up a bank account. It’s also required to pay minimum wage in Maryland.
Hiring employees is an essential part of growing a business. While hiring an employee can be fast, there are important rules to follow. If you’re starting a new business, it’s important to consider the state’s regulations. For example, LLCs must be registered with a federal employer identification number, which will help you report to the IRS.
Another important step to creating an LLC in Maryland is choosing a name. Many people overthink this step, and end up not moving forward. However, the process of choosing a name is actually quite easy. First, you can check if the name you want is available. Secondly, you need to make sure that the name is not already trademarked.
You can complete the Articles of Organization online or by mail. You can even file an expedited application with the state. In either case, you must pay a fee. If there are errors in the LLC documents, you need to file an Articles of Amendment. This will allow you to fix any errors and get the LLC up and running as quickly as possible.
Next, you need a resident agent. This agent will receive any legal correspondence on behalf of the company. This agent should be an individual within the company or a business located in Maryland. You can also choose to hire a specialized company to act as the resident agent for your LLC. This service typically costs $100 to $200 per year, but some services offer it for free for the first year.
In addition to using Jobvite, you can post information about the position and make notes about applicants. The software also lets you access the documents of employees anytime and anywhere. Jobvite also has templates for job postings, offer letters, and tax forms. You can even send links to these documents through text message.
An LLC is a business entity that can be treated as either a corporation, a partnership, or a sole owner business.
The owners of the company are not personally liable for the actions of the employees, the LLC is liable for any such actions.
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.
LLC members, or LLC owners, are self-employed according to the IRS because they pay themselves through the earnings of LLC.
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.