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How to hire employees in California

As the owner of a small to medium-sized business, you know your employees are the backbone of the company, making the hiring process extremely critical. Whether you’re looking to bring on new workers or hiring for the very first time in California, it’s important to understand how to go about it correctly so you don’t run into any legal obstacles later. Here’s a step-by-step guide to hiring employees in California. Always consult your state’s website for up-to-date information about hiring processes and labor laws.


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A step-by-step guide: hiring employees in California

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 2021, the minimum wage in the state of California is $14/hour. California also has an at-will-employment policy, which means that unless the employer provides a contract stating otherwise, employees can be fired without cause. Ensure you’re checking local guidelines and reputable state resources for information on current business and employer regulations.


1. Registering as an employer

Before you can begin 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. Familiarize yourself with 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 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.


3. Look at sample job descriptions and check them against other postings

As you prepare for hiring employees in California, it’s a good idea to check job boards at local community centers and online to see how other employers are advertising their positions in the area. Not only will this give you a competitive edge when formulating your posting, but it can give you ideas on how to make your posting stand out, what information you should include and what kind of language you can use to describe the role.


Make sure you’re including all valid information like educational requirements, hard and soft skills that are integral to the role, hours of work each week and perhaps the salary information if you’re operating under a partial or full pay transparency model. When you’re ready to advertise your job posting, choose a clickable job title that will garner plenty of interest.


4. Assess candidates in California

After you receive applications online or in hard copy from local candidates, it’s time to assess the candidates available to you. Start by screening the applications to see who meets the minimum job requirements and eliminate the applicants who don’t. These requirements will depend on the job you’re hiring for but could include education such as a bachelor’s degree in the desired field, previous experience in a similar role or in some cases, the ability to speak a second language like Spanish fluently. If you’ve received applications from individuals who simply can’t fit the position, you may need to consider expanding your search.


5. Consider expanding your search to remote candidates

If the applications you’ve received from local candidates aren’t satisfying the job requirements, consider expanding your search beyond the immediate city. In 2021, many jobs can be done remotely, and if that’s the case with your company’s line of work, you may be able to hire employees from anywhere in the state or even across the country. However, before expanding your search beyond state borders, do your research to see how this impacts your payroll and whether there’s a reciprocal income tax agreement between their state and California.


If the work can’t be done remotely, you can consider hiring remotely and asking employees to relocate to the city as part of the position. Use online job sites like Indeed to expand your reach and get your listing seen by the widest range of candidates possible.


6. Follow California hiring guidelines

Throughout the process, make sure you’re adhering to California hiring guidelines. This includes compliance with the California Fair Employment and Housing Act, which is in place to prohibit 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.


7. 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.


Do thorough research regarding any additional documentation or forms your employees may need to complete on or before their first day of work. New hire forms vary by state, so double-check your state department’s website regularly for up-to-date information on best practices.


8. 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.


9. 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:

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.


10. Posting signs in California

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.


Continue to educate yourself

The hiring process for employers is ongoing, and each time you onboard a new employee, it’s critical to check state and federal guidelines to comply with the latest regulations. Stay on top of your payroll paperwork, post appropriate signage in the workplace and adhere to state labor laws at all times.

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