Employment Requirements is about 20% of the CSLB Law and Business exam. The CSLB study guide lists four subtopics: hiring employees, supervising and training employees, evaluation and record-keeping, and payroll. This note covers the hiring paperwork, pay and payday rules, and record-keeping rules that California and federal law set for employers.
Hiring employees
- Check that the person can work in the U.S. You must verify that each new employee is legally eligible to work in the United States. This includes completing USCIS Form I-9. (IRS Pub. 15)
- Federal withholding form. Ask every new employee for a signed Form W-4 when they start work. (IRS Pub. 15)
- California withholding form. California income tax is withheld based on the employee's DE 4 (Employee's Withholding Allowance Certificate). (EDD DE 44)
- Report new hires within 20 days. Report every newly hired or rehired employee to EDD's New Employee Registry (form DE 34) within 20 calendar days of the start-of-work date. (EDD DE 44)
- Independent contractors. Report an independent contractor on the DE 542 within 20 calendar days of paying them $600 or more, or of signing a contract for $600 or more, whichever comes first. (EDD DE 44)
- Written notice at hiring. At the time of hiring, give each employee a written notice with their pay rate (including overtime rates), the regular payday, the employer's name, address, and phone number, the workers' compensation insurance carrier, and their paid sick leave rights. Use the language you normally use with the employee about work matters. (Lab. Code §2810.5)
- Changes to that notice. Tell employees in writing about changes to that information within seven calendar days, unless an exception applies. (Lab. Code §2810.5)
Paydays and final pay
- Twice a month. Most wages must be paid at least twice during each calendar month, on regular paydays the employer sets in advance. (Lab. Code §204)
- Pay windows. Work done from the 1st through the 15th of a month must be paid between the 16th and the 26th of that month. Work done from the 16th through the end of the month must be paid between the 1st and the 10th of the next month. (Lab. Code §204)
- Weekly, biweekly, or semimonthly payrolls. The payday rules are also met if wages for a weekly, biweekly, or semimonthly payroll are paid within seven calendar days after the close of the payroll period. (Lab. Code §204)
- Overtime pay. Wages for work beyond the normal work period must be paid by the next regular payday. (Lab. Code §204)
- Firing or discharge. If you discharge an employee, all earned and unpaid wages are due immediately. (Lab. Code §201)
- Quitting. If an employee without a written contract for a definite period quits, wages are due within 72 hours. If the employee gave at least 72 hours' notice, wages are due at the time of quitting. (Lab. Code §202)
Pay stubs (itemized wage statements)
With each payment of wages (or twice a month), give each employee an accurate written itemized statement showing, among other things (Lab. Code §226):
- gross wages and net wages earned;
- total hours worked (with some exceptions for salaried employees);
- all deductions;
- the dates of the pay period;
- the employee's name and only the last four digits of the Social Security number, or an employee ID number;
- the employer's legal name and address;
- every hourly rate in effect and the hours worked at each rate.
Keep a copy of the statements and the record of deductions for at least three years. (Lab. Code §226)
Record-keeping
- Labor Code. Keep a record of the names and addresses of all employees, and the ages of all minors. Keep payroll records showing the hours worked daily and the wages paid, for at least three years. (Lab. Code §1174)
- California payroll taxes. EDD requires payroll records to be kept for at least four years. (EDD DE 44)
- Federal employment taxes. Keep all records of employment taxes for at least 4 years. (IRS Pub. 15)
Different laws set different periods. Keeping payroll records for at least four years meets all three.
Payroll taxes
Who pays each payroll tax, and when to deposit it, is covered in the Business Finances note.
Supervising, training, and evaluation
Safety training is covered in the Safety note. The free public sources this note relies on do not set specific rules for general supervision and employee evaluation, so this note does not summarize them.