The Employment Start-Up Kit for Start-Ups – Part 1

There are many common employment issues that start-ups might face. Weintraub attorneys Meagan Bainbridge and Ryan Abernethy help review these issues in a two-part series for California Employment News. Join them in part one, which covers independent contractor classification and employment exemptions. Watch this episode on the Weintraub YouTube channel here. Show Notes: Ryan:<br /> Welcome to the latest episode of California Employment News, a video podcast series from Weintraub Tobin’s Labor and Employment Group. I’m Ryan Abernethy, an employment attorney here at Weintraub Tobin, and joining me today is my colleague and shareholder here at Weintraub, Meagan Bainbridge. So this is the first episode of a two-part series that we’ve put together for startup companies, where we’ll be delving into some of the most common employment issues that California startups face. So in this episode, we’ll be going over independent contractor classifications and employment exemption issues, which are kind of the first steps that a startup faces. And then in the next episode, we’ll cover the obligations that apply to employees in California and some best practices for startups to comply with those laws in order to avoid lawsuits. So, Meagan, can you tell us a bit about how to distinguish between independent contractors and employees? Meagan:<br /> Yes, of course. Thanks, Ryan. Before hiring anyone, the first thing a startup must do is determine whether they are hiring employees or independent contractors. The key difference between an employee and an independent contractor for purposes of today’s discussion, is how that worker is paid. In the case of an employee, the employer issues form W2 and is required to withhold federal and California employment taxes on the wages independent contractors are paid subject to various other laws. In the many years that Ryan and I have been doing this, I think we’ve both seen a tendency from startups to label its initial workers as independent contractors as they work to start up the business. While certainly we understand this logic, it’s important for all new employers to understand that, well, at least in California, the assumption is that all individuals who do work for an employer should be classified as employees. In recent years, the state has taken a strong stand against the independent contractor classification, and in doing so has passed new laws making it increasingly difficult to classify any person as an independent contractor. In fact, it doesn’t matter if both the company and the employee desire to classify an individual as an independent contractor. The only thing that matters is whether the ABC test can be met. This means that under the current law, any worker who meets the following criteria is presumed under California law to be an employee. Fir