Employment Issues & Business

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Hiring your first employee is a big step. It is an expression of the confidence in your business and your realization that your business is too successful for you to manage on your own. Aside from managerial issues, such as ensuring you have clear descriptions of your employee’s tasks and duties and that you have enough work to keep your employee busy is a host of thorny legal issues.

Employee v. Independent Contractor

An employee is an individual that is paid on a W-2 and performs tasks that are inherent to your business operations. For example, if you own a corner store, your shop clerk is an employee because he performs functions inherent to your business, such as stocking shelves and running the register. However, the bookkeeper you hire to help manage your books performs a service not inherent to your business. Your business is about selling goods from a corner shop – not bookkeeping. Therefore, your shop clerk should be an employee, but your bookkeeper does not.

Liability Risk

The primary risk with employees is that your employee is an independent person for which your business could be liable. If your employee injures a customer or makes a mistake that harms a business relationship, your company – not the employee – is the entity primarily responsible for that mistake. Therefore, maintaining business formalities is crucial once you hire your first employee.

Human Resources and Employment Manual

Most employment in California, and in most states (except Montana, how fun is that?), is at-will, meaning that you can fire your employee for any reason that isn’t unlawful. For example, you can fire your employee because they have poor hygiene, but you can’t fire your employee for being a woman, gay, Hispanic, or any combination thereof.

However, within that nearly unlimited right is a lot of room for interpretation that can result in frivolous litigation. For example, you could terminate an employee for repeated instances of tardiness. However, that employee may still present colorable claims that their termination was due to racial or gender discrimination. Therefore, creating an employment manual with clear rules regarding conduct, reporting complaints, and other “human resource” rules and actually following them is crucial to ensuring that you minimize frivolous lawsuits.

Other Issues to Consider:
  • Workers compensation
  • Employee rights,
  • Payroll, and
  • Liability Insurance

However, despite these administrative hurdles, if you need help, then hiring an employee is worth it.

Contact a trusted California attorney today

At the Law Office of Bryson Woulfe, I assist non-profits in a variety of ways. Call my San Diego office today at 619-607-3417 or contact me online to schedule your consultation.