How to Hire Your First Employee in California
Hey, new California employers! This is a big step. You’re about to hire your first employee for your small business. You probably know you’re in for a lot of paperwork, but you don’t need to worry too much. We’ve figured this out, and we’ve got a bunch of resources all ready for you. Seriously, you’ve got this.
Let’s look at the steps you’ll need to take:
Before you make the hire
1. Get organized
Before you do anything, make a plan. Hiring in California is an unfamiliar process (which, unfortunately, requires a lot of paperwork), and you’ll want to make sure you understand the system, so you’re not figuring things out on the fly.
So, get the logistics out of the way first. Do all your research now. Clear out a drawer in your file cabinet and get an organizational system in place. Download all the hiring forms required by California law (you’ll find them linked throughout this article) and keep them all together.
This is also a good time to print out and post all the documents you’ll be required to display at your business. You can find the general workplace postings at the California Department of Industrial Relations. (Here’s their listing of industry-specific postings, too. You should check it out to see if your industry has additional requirements.)
2. Apply for an Employer Identification Number
You need an Employer Identification Number to file your taxes (and for other business paperwork). You can get one here by filling out this IRS form.
3. Get ready for payroll taxes
The short version of employment taxes? Get a payroll tax number, file quarterly returns, make your payroll tax deposits on time, and report everything to the IRS. Plus, keep a record of all employment taxes for at least four years.
If that sounds intimidating, our best advice is this: book time with your accountant. You’ll want to have a long conversation with an expert to make sure you know what you need to do to stay compliant. A good accountant can help you set up your system correctly from the beginning, so you don’t run into problems later. (Plus, they’ll know the current payroll tax requirements better than any internet article.)
Of course, you can always educate yourself about federal tax requirements at the Employer’s Tax Guide. And here’s some information about your California tax requirements. But, seriously, just get help from a professional. This stuff can be complicated, and you need to get it right.
4. Prepare an employee handbook, if desired
Sure, this is your first employee, but it’s still a good idea to get your expectations in written form. Employee manuals aren’t required in the state of California, but they can help educate employees and avoid misunderstandings. (Be aware: if you do choose to create an employee manual, certain sections must appear in it by California employment law.)
You don’t have to write your employee manual from scratch, either. To save time, you can Google around for sample California employee manuals and then adapt one for your business.
5. Get workers’ comp insurance quotes
Workers’ compensation insurance is required by law in California, even if you have just one employee. You’ll need workers’ comp as soon as your employee starts work, and there are some hefty penalties for going without it, so don’t ignore this step.
The traditional way to get a workers’ comp quote can take a long time, so get going as soon as you decide to hire. (Keep in mind that you can also use our workers' comp calculator and get a business insurance quote online from Huckleberry in about five minutes.)
The hiring process
6. Write and post a job description
Here’s where you’ll get specific about who you’re actually looking for. Take a look around on job sites to get an idea of what others have done, but don’t be afraid to get creative. Some spark and personality can really set a job description apart.
However fancy you get with the description, be sure to include a concrete, specific list of your expectations and requirements for the role.
Got a winner? Post it online and start reading applications.
7. Choose and interview top applicants
Entire books have been written on this process, so we’ll just say this: find a person who (a) can do the job and (b) who you enjoy being around. You’ll be spending a lot of time together. (Here’s a general overview of the interview process. Don’t forget reference and background checks!)
8. Hire and onboard your new employee
You found someone fantastic. Nice! Let’s start the paperwork.
Here’s what you’ll need to have them sign:
- An official offer letter. You’ll need them to sign it for your records.
- A personal data form. This covers the basics like name, birthdate, emergency contact info, Social Security Number, etc. (You’ll make it yourself, but it’s easy to find templates online.)
- An I-9 Employment Eligibility Verification form that verifies their right to work in the United States. You’ll also need to collect and physically inspect at least one of the documents on this list.
- A W-2 tax form.
- A W-4 tax form.
- A DE 4 California Payroll Tax Form.
- Any insurance forms. (You’ll get these from your insurer or from the state. Think workers’ comp, health insurance coverage, etc.)
- A Disability Self-Identification form, if applicable. (Does your company do any business with the government? If yes, have them fill this form out.)
- Any other contracts or agreements specific to your company. For example, if you deal with proprietary information, you may want the employee to sign a non-disclosure agreement so that they’re prohibited from sharing company information.
Okay. Now that they’ve signed everything, you’ll need to give them the following documents.
- Your employee manual, if applicable, and any written standards for conduct.
- A DWC-1 Workers’ Compensation Claim form, for future reference.
- A DE 1857A poster, which informs your employee that you’re paying taxes for them to receive various kinds of benefits.
- DE 2515, which covers Disability Insurance.
- DE 2511, which covers Paid Family Leave Insurance.
- DFEH-185, which explains sexual harassment laws and gives information about how to report violations.
- DFEH-188, which covers the California Family Rights Act.
- A Workers’ Compensation “Time of Hire” information sheet, which you can also get from your workers’ comp insurer.
- A DLSE-NTE form, in accordance with the Wage Theft Prevention Act (if your employee is exempt, you can skip this one).
- “Rights of Victims of Domestic Violence, Sexual Assault and Stalking,” another information sheet about rights your employee has in the case of domestic abuse.
- Copies of all the workplace postings you researched in step #1 (both general and industry-specific).
- A statement that you have followed EEO standards of non-discrimination in hiring practices. (This should go without saying, but it’s illegal to discriminate due to age, gender, national origin, sexual orientation, and more.)
- Any other documents required by your city and county.
That’s quite a list. Note that it’s as up-to-date and accurate as we could make it, but you should be sure to double-check it with state and federal law sites to be sure you’ve got the most current information possible.
9. Report your hire with California’s New Hire Reporting Program
Almost finished. Now, it’s your turn to fill out some paperwork.
Within twenty days of your employee’s start-of-work date, you’ll need to submit a Report of New Employee. (You can do this online at California’s E-services for Business site.)
It’s a fairly basic form. You’ll just need your payroll tax number, your EIN, plus some information that your employee should provide on their personal data form.
Great. Looks like you made it! Now, all you have to do is keep up to date on your taxes, stay organized, and be a great employer. We believe in you.
Hey, thanks for reading. You should be all set for hiring employees for your CA business! Let us know if this was helpful.
Also, if you’re a small business owner who’s ready to hire employees, here’s another friendly reminder: you have to get workers’ comp first! Super unpleasant things can happen if you don’t. (Luckily, getting workers’ comp online only takes about five minutes.)