Payroll Onboarding Checklist

The HR coordinator captures the new hire's legal name exactly as it appears on their Social Security card — middle initials and suffixes matter for W-2 SSA matching. Mismatches generate IRS Letter 223 / SSA no-match letters that the payroll team has to chase down at year-end.

Residence address determines state and local tax jurisdictions — a remote hire in PA or OH triggers local-tax withholding the payroll system needs configured before the first run. Confirm the work-location address separately if it differs from the residence.

Match the offer letter to the requisition: hire date, FLSA classification (exempt vs. non-exempt), pay rate, and pay frequency. Misclassified non-exempt employees who are paid salary expose the firm to overtime back-pay claims under the FLSA and most state wage-and-hour laws.

Section 1 must be completed by the employee no later than their first day of work for pay. Use the current edition of Form I-9 — USCIS retires prior editions, and using a stale form is a paperwork violation even when the underlying eligibility is valid.

Section 2 must be completed within three business days of the start date. Examine documents in person or via DHS-authorized remote procedure for E-Verify employers. Do not specify which documents the employee must present — that is a document-abuse violation.

Store I-9 forms separately from the personnel file — ICE auditors are entitled to inspect I-9s without seeing unrelated HR records. Retain for the later of three years after hire or one year after termination.

Use the current-year W-4. If the employee does not submit a W-4, withhold at the default Single / no adjustments rate per IRS instructions. Don't accept the pre-2020 form from new hires — it has been retired for new submissions.

No state income tax: AK, FL, NV, NH, SD, TN, TX, WA, WY. Every other state requires a state W-4 equivalent (CA DE-4, NY IT-2104, etc.). Reciprocity agreements between neighboring states (PA/NJ, OH/IN, etc.) can override the default — verify the employee's residence state and work state.

Pull the correct state form for the employee's work and residence state — examples: CA DE-4, NY IT-2104, GA G-4, IL W-4. If a reciprocity certificate applies (e.g., PA REV-419 for a NJ resident working in PA), file that instead.

Key the federal filing status, dependents, other income, and additional withholding from the W-4 into Gusto / ADP / Paychex. Have a second preparer review before saving — transposed numbers on Step 3 (dependents) cause large under-withholding the employee won't notice until April.

Set the department, location, GL mapping class, FLSA classification, and pay group. Misassigning the GL class is a common cause of P&L variance investigations later — the controller will trace a labor-cost surprise back to a new hire posted to the wrong department.

Most states allow direct deposit only with employee consent — mandatory direct deposit is restricted in CA, CO, MA, NY, and others. If the employee selects paper check, set the check-stock distribution; if direct deposit, the next step captures banking detail.

Collect a voided check or bank-issued direct-deposit form — not a deposit slip, which often shows an internal routing number that ACH rejects. Most providers run a one-cycle pre-note before live deposits, so the first paycheck may still issue as a paper check.

Cover the pay frequency (biweekly / semimonthly / monthly), the workweek definition for overtime, the timecard-submission deadline, and what happens when payday falls on a bank holiday. Show the employee how to access pay stubs and Form W-2 in the self-service portal.

Walk through medical / dental / vision plan options, HSA or FSA eligibility, life and disability coverage, the 401(k) match formula, and PTO accrual. Note the new-hire enrollment window — most plans require elections within 30 days or the employee waits until open enrollment.

Capture the elected deferral percentage and pre-tax vs. Roth split. If the plan has automatic enrollment under SECURE 2.0, the default applies until the employee opts out in writing. Remit deferrals to the recordkeeper as soon as administratively feasible — DOL safe harbor is the seventh business day after the pay date for plans under 100 participants.

Check the new-hire reporting response and any income-withholding orders received. Federal CCPA caps disposable-earnings garnishment at 25% (50–65% for child-support orders). Multiple orders follow priority: child support first, then federal tax levies, then creditor garnishments.

Before posting the live run, calculate the expected gross-to-net by hand or in a spreadsheet: gross pay, FIT per W-4 wage-bracket method, FICA at 6.2% / 1.45% (plus 0.9% Additional Medicare over $200K YTD), state and local tax, benefit deductions, 401(k). Reconcile to the payroll system's preview register and investigate any variance over $5.

Pull the actual paystub after the first run posts. Tie net pay to the bank ACH file, confirm the deposit cleared, and verify YTD figures will roll correctly into the W-2. First-paycheck errors caught now are easy to true up; caught at year-end they require W-2c filings.

The payroll manager confirms all forms are filed, deductions match elections, the GL mapping is correct, and the employee has portal access. Note any items still open (pre-note pending, benefits effective-date lag) so the next run picks them up.