- posted: Nov. 14, 2024
- Employment
Before you can onboard new hires or begin hiring for the first time, there are some steps that every California employer must take. Note that in 2024, the minimum wage in the State of California is $16/hour, and will be $16.50 for 2025. It can be a higher hourly rate depending on county/city/industry (e.g., fast food and health worker) laws. California also has an at-will-employment policy, which means that unless the employer provides a contract stating otherwise, employees can be terminated for any reason, or no reason, so long as the reason is not illegal, such as discrimination for a protected class. Ensure that you are checking local guidelines and reputable state resources for information on current business and employer regulations.
1. Register as an Employer
Before hiring, you must register as a business and an employer in the State of California. To register as an employer, you must apply for a Federal Employer Identification Number (FEIN) using Form SS-4 from the IRS.
When you have one or more employees in the State of California, you must also register for an unemployment number and a California Employer Account Number from the California Employment Development Department.
2. Use a Payroll Service
Modern payroll is complicated. Using a reputable payroll service can cut costs and aggravation.
3. Understand the Difference Between Non-Exempt and Exempt.
Exempt employees are paid salaries, and are exempt from many labor requirements, such as overtime and lunch breaks. However, they must be paid at least $5,546.67 per month in 2024 (twice the minimum wage), and $5,720 per month in 2025. Exempt employees are decision-makers who have managerial, administrative or professional responsibilities that make up more than half the typical day at work. It is based upon the employee's actual work, not title; making everyone a sales “manager” does not make them exempt from overtime and rest periods. Managers have at least two full-time employees reporting to them.
4. Know State Labor Laws
Before you begin formulating job postings and scheduling interviews, it’s essential to do your research on labor laws and hiring guidelines within your state. Ensure you understand how many hours non-exempt employees can work before requiring a lunch break, how many hours they can work each week before you’re legally required to pay overtime, what the minimum wage is and more. By educating yourself on how to manage employee scheduling, you can create job postings that are enticing to potential candidates and meet legal guidelines.
Lunch break after 5 hours–30 minute unpaid, second meal break after 10 hours of work–30 minutes unpaid.) For each workday that you fail to provide an employee a meal break as required, you owe the employee one additional hour of pay at the employee's regular rate of pay. The additional hour of pay is a wage owed to the employee. Employees have up to three years to file a claim for unpaid wages.
Rest breaks–Employers must authorize and permit uninterrupted rest breaks for all non-exempt employees whose total daily work time is at least 3.5 hours. These mandatory rest breaks must be offered at the rate of 10 minutes for every four hours worked, or "major fraction" thereof. Anything over two hours is considered by the courts to be a "major fraction" of four. If either rest break is not given or is interrupted, you owe the employee one hour of pay at the regular rate of pay, which you must include in the next paycheck.
Overtime–California law requires that employers pay overtime, whether authorized or not, at the rate of one and one-half times the employee's regular rate of pay for all hours worked in excess of eight up to and including 12 hours in any workday, and for the first eight hours of work on the seventh consecutive day of work in a workweek.
Double Overtime. Overtime is double the employee's regular rate of pay for all hours worked in excess of 12 in any workday and for all hours worked in excess of eight on the seventh consecutive day of work in a workweek.
5. Follow California Hiring Guidelines
Throughout the process, make sure you follow California hiring guidelines. This includes compliance with the California Fair Employment and Housing Act, which prohibits discriminatory hiring practices for employers with five or more employees. After following a fair hiring process and conducting interviews based on who has the correct qualifications, you can make your selection.
6. New Hire Forms for California
When you onboard a new hire in California, there are several forms that need to be filled out by the new employee. To work in California, the new employee must submit the I-9 Employment Eligibility Verification Form with Section 1 completed by their first day of work; section 2 is to be completed by you, the employer. This document confirms the employee’s eligibility to legally work within the United States. You must keep the form on file for a designated period.
A new hire in California must also complete Form W-4, which states how much federal income tax will be withheld from each paycheck. They should submit this form to you by the first date of employment, and you should keep the form on file in case you’re audited by the IRS.
7. New Hire Reporting in California
As a California employer, you must report newly hired or re-hired employees to the New Employee Registry Program within the designated timeframe. You can file this document, Form DE34, online for your convenience. You’ll need information both about you, the employer and the employee, including their Social Security number, full name, address and start-of-work date. You’ll need a California employer payroll tax account number as well. Refer to the EDD State of California website for full details on how to properly report new hires in the state.
8. Payroll in California
Once you hire employees, you must also pay payroll taxes. This includes federal income tax withholding, state income tax withholding, Social Security, Medicare and unemployment insurance benefits. You’re also required to have workers’ compensation insurance as an employer in California. You’ll need to complete and submit the following forms to the IRS in a timely manner:
Form 941 (Due quarterly)
Form 940 (Due annually)
Review state guidelines and the IRS website to find out when and why you must file these forms to ensure you don’t miss any deadlines for payroll reporting. Many small business owners find hiring an accountant is useful for managing these documents and staying on top of legal payroll requirements.
You’ll also need to submit Form DE4 for state income tax withholding, along with paying into the Federal Insurance Contributions Act (FICA) for Social Security and Medicare for workers.
9. Required California Labor Law Posters.
After you become an employer and hire employees, you must ensure you’re adhering to California laws regarding posting signage in the workplace. There are minimum signs required by the state to have posted in any workplace. Check the California Department of Industrial Relations page to find out more.
See these sources:
Onboarding kits:
https://www.employers.org/products/downloads/digital-new-hire-packet-for-download-480952/
https://gusto.com/resources/articles/hr/the-employers-2024-guide-to-hiring-employees-in-california
Onboarding kits include:
State and federal law requires California employers to provide the following new hire documents to their employees at the time of hire. These forms have been updated from time to time, including for 2024.
The current list of required notices (with links to find the most up-to-date versions) are as follows:
State and federal law requires California employers to provide the following new hire documents to their employees at the time of hire. These forms have been updated from time to time, including for 2024.
The current list of required notices are as follows:
Use Form I-9 for verifying the identity and employment authorization of individuals hired for employment in the United States. Federal law requires the employer and employee to complete Form I-9 by the third day of the employee’s work.
Employees must complete Form W-4 at the time of hire so that the employer can withhold the correct federal income tax from the employee’s pay.
Employees must complete the DE-4 at the time of hire so that the employer can withhold the correct California state income tax from the employee’s pay.
The California Department of Industrial Relations (DIR) requires employers to provide new hires with its Time of Hire Pamphlet no later than the end of their first pay period. (It’s a Notice re Workers’ Comp–you can pay for it or ask your Workers’ Comp if they can provide for you.)
The Wage Theft Prevention Act requires employers to provide non-exempt (hourly) new hires with a notice upon hire that sets forth various items of required information, such as the employer’s legal name and address, the employee’s rate of pay, and the employer’s paid sick leave policy. The DIR has created a template, form DLSE-NTE, that employers may use, and which meets the law’s requirements, and which covers the 2024 update to California’s paid sick leave law.
You must provide the California Civil Rights Department’s Sexual Harassment Fact Sheet to all new employees at the time of hire.
Employers must give the California Employment Development Department’s (EDD) Paid Family Leave Insurance pamphlet, DE 2511, to new employees at the time of hire.
The EDD’s Disability Insurance Provisions pamphlet, DE 2515, must be provided to employees within five days of hire.
The California Labor Commissioner’s notice on the Rights of Victims of Crime and Abuse must be given at the time of hire.
