Hiring your first employee can be exciting and daunting at the same time. The fact that need to hire an employee means that your business is growing - which is great. It also means that you become someone’s boss, a role that comes with many responsibilities and duties. Your new legal status an employer subjects you to many rules and regulations (state and federal) that you did not have to worry about when you were a one-man show.
As with any business decision, there are financial and legal risks associated with becoming an employer. However, you can drastically minimize your exposure to potential risks by following the rules - always. To that end, you first need to know the rules. Then you need to know how to best follow these rules so that you do not fall into any traps. With this in mind, one can see how important it is to consult with an experienced employment attorney before you interview potential candidates – and certainly before you hire someone.
Factors to Consider Before Forming your First Employer-Employee Relationship
There are many factors you should consider before you hire your first employee - from both a business and legal standpoint. Once you make the decision to go for it, your legal responsibilities as an employer kick in right away and you need to be ready!
To that end, we have compiled a brief sampling of a few important things you should remember before you say, “You’re Hired!”
Confirm Employment Eligibility
Upon hiring an employee, an employer must follow Homeland Security’s detailed instructions for completing, retaining, and storing Form 1-9, which serves as a verification that the new hire is authorized to work in the United States. Failure to adhere to this federally-imposed requirement may result in significant fines and penalties.
***Note: When completing Form I-9, the employee attests, under the penalty of perjury, that he or she is eligible to work in the U.S.; and the employer (or authorized representative for the employer) attests, under the penalty of perjury, that he or she physically examined the appropriate documents.
Find and Purchase the Necessary Insurance Coverage
Except in a very limited number of circumstances, the State of California requires employers to maintain adequate workers’ compensation insurance coverage and unemployment insurance coverage.
An employer may face severe administrative penalties if it does not have these insurance coverages in place, or if the insurance policies are insufficient. If an employee becomes entitled to workers’ comp or unemployment benefits - and the employer does not have insurance coverage to pay these benefits - the employer must pay for all expenses out of their own pocket. This is not a good situation for any employer.
Collect & Remit Taxes to the IRS & The State of California
Payroll taxes, such as federal income tax, Medicare, Social Security, California income tax, etc., do not magically withdraw themselves from an employee’s earnings. Instead, an employer must calculate the correct amount to withhold before issuing payment to the employee.
Don’t forget to calculate and deposit the amount of payroll tax that you, as an employer, must pay to the various tax agencies.
The list of responsibilities you undertake when hiring your first employee can certainly seem intimidating. Yet, with a good employment attorney by your side, you can take this next step in your career with confidence.
Experienced Employment Law Attorneys in Southern California
At CKB Vienna LLP, our labor and employment attorneys specialize in helping soon-to-be-employers navigate the legal maze of state and federal rules and regulations that apply in specific situations. We work with employers to substantially minimize their exposure to liability by creating and implementing legally-compliant strategies and policies.
We know that hiring your first employee is a professional milestone for you and your business. We want you to be in the best position to follow the law while you focus on running your business.
To learn more, contact us today by calling 909-980-1040 or filling out our short online form. We have locations in Rancho Cucamonga, San Bernardino, and Los Angeles – for your convenience.