Starting your own business is exciting, but also challenging. One of the most daunting tasks is formally hiring your first employee. This task is risky, too. Here is a checklist of steps to take before you officially become a boss.

Define the Job

Before you hire your first employee, it is best to define the job. Know in advance what to expect from your employee. Set out the job duties in writing and give your new employee the list. This helps avoid conflict and helps protect your growing business since the job expectations are set out plainly and clearly. Your first employee is a risk-reward phenomena.

Get Workers’ Compensation Insurance

Every California employer must have workers’ compensation insurance. Workers’ compensation covers the medical bills and costs if your new employee is injured on the job. This insurance can be purchased from a private insurance company or through the California State Compensation Insurance Fund. See Department of Industrial Relations FAQs here.

Be Prepared to Report Your New Employee to the EDD 

Every newly hired or rehired employee must be reported to the California New Employee Registry which is compiled by the California Employee Development Department. See here for more information. There is also a registry for independent contractors.

Get the Forms Filled Out

In general, when you hire a new employee, your employee must complete various forms. The short list is:

• IRS W-4 form for income tax withholding
• USCIS I-9 form for immigration eligibility verification

You do not necessarily need to file these forms (depending upon how many employees you have). These forms can be found online.

Be Prepared to Deduct Payroll Taxes and Pay Your Unemployment Insurance & ETT

California has four state payroll taxes which are administered by the California Employment Development Department. Two are paid by you, the employer – unemployment insurance and an employment training tax. Two are withheld from your employee’s wages – state disability insurance and income tax. Likewise, the IRS requires income tax withholding from employee wages. These state and federal taxes must be paid quarterly along with completed tax forms.

Put Up the Notices

California law imposes a number of obligations on an employer including various notices that must be posted. For example, you must post “conspicuously” information for your employee(s) about your workers’ compensation insurance. The federal department of labor also requires various notices (although the notice requirements depend upon the number of employees you have). Other notices include, without limitation:

• Safety and health related
• Equal employment opportunity
• Sexual harassment laws
• Fair labor standards act
• Equal pay rights
• Workers’ rights
• Minimum wage rights
• Rights under the Family and Medical Leave Act

Prepare the Employment Agreement and Employee Handbook to Protect Your Business

It is important to prepare an employment agreement and an employee handbook. As we say on our website, employees and independent contractors can be essential to growth, but a bad fit can also threaten the success of your business. Well-defined rights and liabilities in an employment agreement and rules in an employee handbook help protect your business and make your workplace run smoothly. Not all of these will be appropriate for every business, but here are some issues to consider:

• Policies regarding paid sick, vacation, and personal days
• Working days and hours
• Employee-at-will explanation
• Harassment policies
• Dress code
• Holidays
• Discipline and termination policies
• Timekeeping
• Breaks
• Pay periods
• Tax withholding
• Benefits – none or whatever are being provided
• Overtime
• Wage/salary increases – timing
• Confidentiality – trade secrets
• Personal calls, use of email, texting, smartphone use while working
• Drug/alcohol policy
• Social media policy – what should/should not be tweeted, posted on Facebook, etc.

Contact San Diego Corporate Law Today

If you would like more information about employee handbooks or individual employment contracts that are drafted to fit your business and your specific needs, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard has extensive experience in drafting employee handbooks, employment contracts, and the other contracts and agreements necessary for running your business. Mr. Leonard can be reached at (858) 483-9200 or via email. We look forward to helping your business succeed.

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