What is the step-by-step procedure for legally hiring my first employee in California?

Hiring your first employee in California requires you to complete several key registration, insurance, and reporting steps with both federal and state agencies. Here is the step-by-step procedure: Step 1: Obtain Employer Identification Numbers First, apply for a federal Employer Identification Number (EIN) from the IRS. You can do this for free online at IRS.gov. Next, you must register as an employer with the California Employment Development Department (EDD) to obtain your state Employer Account Number. You are required to register with the EDD within 15 days of paying more than $100 in wages in a calendar quarter. Step 2: Secure Workers' Compensation Insurance Before your employee performs any work, you must purchase a workers' compensation insurance policy. This is required by California Labor Code Section 3700 and provides benefits to employees who get injured or ill from their job. You can obtain a policy through a licensed insurance agent or directly from the State Compensation Insurance Fund. Step 3: Complete New Hire Paperwork On or before the employee's first day, have them complete a federal Form W-4 and a California DE 4 for tax withholding purposes. You must also complete a federal Form I-9, Employment Eligibility Verification, within three business days of their start date. You must inspect the employee's identity and employment authorization documents and keep these forms on file. Step 4: Report Your New Employee to the State You must report your new hire to the California New Employee Registry by filing a Report of New Employee(s) (Form DE 34). This report must be submitted to the EDD within 20 days of the employee's start-of-work date. You can file this report online using the EDD's e-Services for Business portal. Step 5: Post Required Workplace Notices You must display mandatory state and federal workplace posters in a conspicuous location accessible to your employee. These posters inform employees of their rights regarding wages, hours, and safety. You can download these required posters for free from the websites of the California Department of Industrial Relations (DIR) and the U.S. Department of Labor (DOL). Important Details and Nuances You are responsible for complying with all California wage and hour laws, including minimum wage, overtime pay, and providing mandatory meal and rest breaks. You must also withhold payroll taxes, pay the employer's portion, and report these taxes to the IRS and EDD on a set schedule. Warnings and Limitations It is critical to correctly classify your worker as an "employee" rather than an "independent contractor," as misclassification carries severe penalties. This guide covers general state-level requirements; your city or industry may have additional registration or licensing obligations. This is general information and does not constitute legal advice. For complex situations or guidance tailored to your specific business needs, consult with a qualified California attorney.