Sometimes, you lose great employees. An employee could accept a new job offer, retire, be laid off, or move away. Whatever the case may be, there might come a time when you consider rehiring former employees.
Read on to learn about the pros and cons of rehiring former employees. And, if you decide to rehire a former employee, there are some procedures you should know about, such as what forms you need to fill out.
Rehiring former employees: pros and cons
Rehiring former employees can save the time and money needed for recruiting and training a new employee. But, carefully weigh the pros and cons before you decide that rehiring a former employee is the smart move for your small business.
The pros of rehiring former employees
Rehiring employees can be beneficial to your small business, especially if they were a strong contributor the first time around.
Here are some pros to rehiring former employees:
- There might be a higher retention rate when rehiring a previous employee since they spent time away and want to come back.
- You could save time and money since they are familiar with your business. You do not need to provide them with the in-depth training required for onboarding new employees.
- When rehiring a terminated employee, you show that you value your workers, which could boost overall employee morale.
- A former employee might have had a job since first working for your business, bringing new skills, work experience, and fresh ideas to your small business.
The cons of rehiring former employees
Rehiring employees can also pose some challenges, especially if their termination was a result of being fired.
Here are some cons to rehiring a terminated employee:
- The employee might have clashed with your company’s culture. If they quit because of the way your business is run or had a conflict with another employee, they will probably have the same conflict.
- If your employee was laid-off, they might harbor some hard feelings toward you and your business.
- Current employees might be threatened if the rehired employee has a higher-level job than them.
- In some cases, a brand new employee could do the job better than a former employee.
Onboarding process for rehired employees
If you decide to rehire a former employee, the paperwork you and the employee need to complete depends on when they are hired.
When you first hire an employee, you and the employee fill out Form I-9. Form I-9, Employment Eligibility Verification, verifies that your employee is eligible to work in the United States.
A new employee also completes Form W-4. Form W-4 is what your employee fills out so you know the amount of federal income tax to withhold from paychecks. Whether your worker is a new hire or a rehire, you may wish to provide Form W-4 help if they are confused about filling out this form.
Form I-9 for rehired employees
You will need to fill out a new Form I-9 if you hire an employee after three years of first filling out their original Form I-9.
If you rehire a former employee within three years of first filling out Form I-9, you have two options:
- Fill out a new Form I-9
- Fill out Section 3 on the employee’s original Form I-9
Filling out Section 3 of Form I-9
If the employee has a different name than when Form I-9 was originally filled out, record the employee’s name change in Block A of Section 3, Reverification and Rehires. Include the date of rehire in Block B of Section 3.
Fill out Block C if the employee’s employment authorization document has expired, like a U.S. passport. This will require you to examine a document from List A (documents that prove identity and work eligibility) or List C (documents that prove work eligibility only) and make a new copy of the document to keep in your records.
Finally, you will sign and date the last box in Section 3.
Keep the updated Form I-9 in your payroll records even after your employee no longer works for you. If your employee leaves, keep Form I-9 three years after you rehired them or one year after the employee’s termination, whichever is later. Store both the new and old Forms I-9 in your records.
Form W-4 for former employees who are being rehired
However, the IRS does not have rules on filling out Form W-4 for rehired employees. It is a good idea to have the rehired employee fill out a new Form W-4 to verify that their information is current.
The new Form W-4 should be stored in your records for at least four years from the date your rehired employee fills it out.
Rehiring former employees: miscellaneous documents
The paperwork portion of the onboarding process for a rehired employee should be similar to new-hires. Here are some documents that you might include for your rehired employees:
Even though your employee worked for you in the past, you should have them sign and date paperwork verifying they understand and agree to the information in their onboarding packet. Using employee portal software is a great way to provide convenient, online access to some or all of the above files for your workers.
Need to add a new employee to payroll? With Patriot Software’s online payroll, entering employee information is quick and easy. And, we offer free support if you have questions. Try it for free today!
This is not intended as legal advice; for more information, please click here.