Watching your idea bloom from a small business into one where you need employees can be exciting. As you approach this new chapter, you get to find excellent people to support your journey.
For many new businesses, hiring can be a challenge. Often, it is not part of your skillset, and there are nuances that can consume your time and energy.
Here are some common mistakes to avoid when hiring your first employees.
Classification matters
As an entrepreneur, it is easy to think of everyone involved in the company doing what they need to do to get the job done. However, in California especially, misclassifying your employees can be a big mistake.
In the aftermath of the Dynamex ruling, it is now extremely difficult to consider a worker an independent contractor. Instead, most workers should be classified as employees. For a worker to be an independent contractor, you must satisfy all of the following criteria:
- You cannot control how the worker performs their tasks
- The work must be outside the scope of your usual business
- The contractor must engage in an established business, trade or profession outside your business
If your new hire does not meet all three criteria, you cannot classify them as an independent contractor.
Stay away from their past salary
In recent years, both government and employees have made efforts to end pay disparities based on discriminatory principles like gender or race. California’s effort to end pay disparities makes it illegal for employers to ask applicants about their salary history. This allows applicants to have a fresh start negotiating their pay, especially if they have experienced discrimination in the past.
Look out for local laws
In California, there could be several layers to the employment rules you need to follow. In addition to state and federal laws, several cities have their own laws regarding hiring and paying for your employees. While these rules are often similar to the applicable state laws, several cities have important differences.
As you start considering making your first hires for your business, it is essential to talk to an experienced professional who can help you avoid expensive mistakes.
