How to Hire Your First Employee in California

Hiring in California can be a lengthy and confusing process. We wrote this step-by-step guide to detail everything you need to know before you hire your first employee. 

1. First things first, you’ll need to apply for an Employer Identification Number. Here’s where you can do that. You’ll need this to file your taxes. 
2. Then, enroll in e-Services for Business to manage your employer payroll tax account online. Here’s a comprehensive guide on everything you need to know surrounding employer taxes. If any of this seems daunting, find an accountant to help you set things up properly—it’ll be worth it for the peace of mind! 
3. Create a job description and post it on your business’s social media and official website. You can also post on platforms like ZipRecruiter or Indeed. Schedule a couple of interviews and decide on what you’d like to ask the candidates and what qualifications you’re looking for. 
4. After you’ve interviewed a few candidates and made a decision, it’s time to check their employment eligibility by having them fill out an I-9 form. You don’t need to send this in, but you’ll need to keep this on file for 3 years, in case the government decides to do an audit, so keep it somewhere safe! You’ll also need to take a look at one of the documents on this list. 
5. Before your employee starts working, they’ll also need to fill out a W-4 (Employee’s Withholding Certificate) AND a DE-4 (Employee’s Withholding Allowance Certificate) so you know how much tax to withhold from their paycheck. The W-4 is used for federal income tax and the DE 4 is used for California Personal Income Tax. Like the I-9 form, you also don’t have to send these in, but you’ll need to keep them on file. 
6. Your employee will also need to fill out and sign a W-2 form. 
7. You’ll need to get and fill out insurance forms from your insurer to cover worker’s comp, health insurance, etc. 
8. You need to report the hiring of a new employee within 20 days of their start date. To do that, first collect your employee’s name, address, Social Security Number, date of birth, and their start date. You’ll also need your California employer payroll tax account number, Branch Code (if you were assigned a Branch Code number), Federal employer identification number, business name and address, contact person, and phone number.
   • You can either submit this information online through e-Services for Business or by downloading this DE-34 form and
     • mailing it to the Employment Development Department, P.O. Box 997016, MIC 96, Sacramento, CA 95799-7016, or
     • faxing it to 916-319-4400. 
9. Have your employee fill out this Disability Self-Identification form
10. Here are the documents you need to give your employee: 
    • A statement that you’ve followed EEO non-discriminatory hiring practices.  
    • This sheet of rights your employee has in case of domestic abuse. 
    • A DLSE-NTE form, in accordance with the Wage Theft Prevention Act
    • A worker’s comp information sheet 
      • A worker’s comp claim form, if needed in the future
    • A poster that explains the benefits that they have that you’re paying taxes for
    • Information about disability insurance
    • Information about sexual harassment and how they can report it 
    • Information about Paid Family Leave Insurance  
    • Information about the California Family Rights Act

Congratulations on the expansion of your small business! Regulations surrounding hiring in California change often, so be sure to do your own research in addition to following this guide. 

Disclosure: Finli and its employees do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

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