Congratulations on your new business! While you have many things on your mind, it is important to remember that you are subject to California employment laws. As you likely already know, these laws are some of the most employee friendly in the country. To allow you to spend your time and money on building your business, you need to steer clear of employment law issues and avoid costly lawsuits. A good starting point is reviewing the top 5 employment-related mistakes often made by start-ups.
1. Deferring Compensation
All employees, including founders of an LLC, must earn at least minimum wage for all hours worked. While some forms of compensation can be deferred, such as bonuses, you should ensure that nonexempt employees are at least paid the minimum wage on regular paydays. As of January 1, 2022, the California minimum wage is $14.00 for employers of 25 employees or less and $15.00 for larger employers. The minimum wage is projected to increase again on January 1, 2023. Additionally, certain municipalities have a minimum wage higher than the state’s. So if you have employees working in your offices or even remotely from other locations, be sure to pay them the correct minimum wage. Failure to do so can carry steep penalties.
Additionally, it is important to remember than not every employee who is paid a salary is exempt from timekeeping and overtime requirements. For an employee to be exempt from overtime and other wage and hour laws, they not only must be paid a regular...
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