San Jose Business Lawyers Blog
The key to any successful Silicon Valley business is hiring the right people. Indeed, the decision to hire a new employee is an important task for any business, whether it is a startup or a multinational corporation. But what are the legal issues you need to consider before you decide to bring a new person into your company?
SLG offers counseling on a wide range of California employment law issues to businesses in San Jose and throughout Northern California. Here are just a few of the key issues you need to think about when it comes to new employees.
Employee or Contractor?
Everyone who performs work for your business must be properly classified as either an employee or an independent contractor. For many businesses, independent contractors are often a more cost-effective solution to meeting their labor needs. After all, you do not have to cover payroll taxes, overtime, or benefits for independent contractors.
But you cannot simply hire someone to work for you full time and then classify them as an “independent contractor” to save money. Under Section 226.8 of the California Labor Code, your business can be fined up to $15,000 for willful misclassification of an employee as an independent contractor. And if you are found to engage in a “pattern” of misclassification, that fine can escalate to $25,000 per violation. So if you are looking to genuinely hire an independent contractor, you need to make sure you do things above-board and in strict compliance with California law.
At-Will or Under Contract?
Most California employees are considered “at-will.” This means you can terminate an employee without cause at any time. There are, of course, some exceptions to this general rule. For example, you cannot fire an employee who is part of a protected class including race, religion, age, disability and others. You may also be subject to legal action if you terminate an employee who was acting under an employment contract.
It is important to spell out the exact legal status of an employee at the time they are hired. You should give any new hire a written offer letter outlining all relevant terms of employment, including whether they are considered an “at-will” employee. If you have an employee handbook–and you should have one–make sure any new hires review it and have them sign a written acknowledgment of receipt.
Can You Perform Background Checks?
It is legal to conduct background checks on job applicants and new hires in California. But there are a number of restrictions. For instance, under the California Fair Chance Act, you cannot ask a job applicant about their criminal history before extending a job offer. Once you do make a job offer, you can make the final hire conditional on passing a criminal background check. And even if the applicant does have a prior conviction, you still need to consider the severity and nature of the crime before rescinding the job offer.
There are many more legal considerations when it comes to hiring employees. Call the Silicon Valley employment law team at Structure Law Group today at (408) 441-7500 or contact us online to schedule a consultation with one of our employment attorneys to discuss your needs.