The association between employer and employee is perhaps the most highly regulated relationship in California and the United States. There are numerous decisions and considerations to be made during the hiring process such as deciding whether to hire full-time employees or part time; knowing the correct paperwork that needs to be in place and most importantly, proper considerations to make sure your company is protected. According to Norman Blumenthal, a San Diego-based attorney, the most common violations of California’s Employment and Labor Laws are wage and hour violations, wrongful dismissal and unpaid sales commissions. Being unaware of the various employment and labor regulations is the main reason businesses fall foul of the law. Before hiring employees, enlighten yourself on three key areas related to California’s Employment and Labor Laws.
California and Federal Employment Laws
New Hire Paperwork
Federal laws dictate that an employer should provide new hires with forms and notices to complete. These documents include Forms I-9 and W-4. Also known as the Employment Eligibility Verification Form, Form I-9 verifies that the employee has presented valid documentations confirming his or her identity and legal authorization to work in the United States (U.S.). A product of the Immigration Reform and Control Act (1986), Form I-9 requires employees to complete section 1 immediately after commencing employment while employers should fill in section 2 not later than three days after the new hires’ starting date of employment. However, an employer does not have to furnish a new employee with this document if he or she will work as an unpaid volunteer.
Form W-4 is also called the Employee’s Withholding Allowance Certificate and requires employees to complete it with details of their tax situation, such as exemptions and status. This enables their employers to withhold the accurate amount of tax from the employees’ paychecks. This Internal Revenue Service (IRS) tax document contains various worksheets that allow employees to calculate the amount of allowances they want to claim. Doing so requires them to avail personal information, report the total allowances as well as withholding amounts on the actual W-4 forms. Afterwards, the new hires should hand over the form to their employers.
In addition to these required forms, it is advised to include additional policies such as employee information, emergency contact information, vehicle indemnities, arbitration agreements, the CA Employee Notice and specific company policies in your new hire paperwork.
Although California’s labor laws do not demand that business owners create employee handbooks, it is important to have one that is concurrent with any amendments in federal and state labor laws. These handbooks can orient new employees and establish legal protections for both employee and the business owner. The contents of employee handbooks vary according to the specific needs and sizes of business and the state and federal regulations. New business owners must not forget to constantly update their handbooks to avoid litigation through clarification and publication of their businesses’ policies.
California labor laws demand that employers must incorporate certain mandatory policies in their employee handbooks should they decide to develop one. These policies include written discrimination, retaliation prevention and harassment policies. They clarify employee rights and obligations to new workers while protecting employers from possible liability. Business owners in California should be careful not to override at-will employment by making an implied contract claim by virtue of the wording in their handbooks. They can avoid this by only using general statements of policy while clearly indicating that they reserve the right to amend, alter or change any of the policies.
Apart from the mandatory policies in the handbook, business owners can also enlighten new employees on additional policies related to issues such as leave of absence, management, employee conduct, company property, wages, benefits, health and safety as well as termination. An example is an employee conduct-related policy on drug use and alcohol abuse, which informs new employees on the organization’s rules on use of drugs, such as marijuana and alcohol use, during or after work hours.
California and Federal Payroll Requirements
California requires employers to pay all wages at least twice every month on the date designated by the employer. It is essential to notify your new hires of the date, time, and method of payment to be followed. All payment regulations are contained in the Labor Code sections. As an employer in California, you are mandated to maintain proper payroll records of all your staff.
Federal payroll taxes are administered by the Internal Revenue Service (IRS) and included are social security, federal income tax withholding, federal unemployment insurance, and Medicare. Moreover, as an employer conducting business in California, you also need to register with the Employment Development Department (EDD) and file regular reports.
Deciding to hire one or more new employees is not a light decision. Irrespective of whether you are a single professional looking to expand your practice or run an entrepreneurial venture with dreams of becoming a Fortune 500 company, hiring new employees is vital to your growth. A suitable alternative to hiring permanent staff is outsourcing the essential parts of your business to a professional service company.
As an employer, you should know that your employees are protected by state and federal law throughout the duration of their employment; from hiring to discharge. Every employer should have thorough systems in place for the hiring, assimilating, and orienting of new employees into your business.