This document provides guidance on hiring workers and classifying employment relationships. It discusses the main types of labor relationships such as employees, independent contractors, interns, and volunteers. For employees, it covers exempt vs. non-exempt classifications and outlines the compensation and duties tests. It also discusses recruiting, interviewing, background checks, onboarding new hires, and various legal requirements around hiring and employment.

1. HIRING WORKERS
OLIVIA CHU, MELANIE RAMEY, CHETAN GUPTA
PRACTICUM ASSOCIATES
NEW BUSINESS PRACTICUM — WILLIAM A. KELL, SUPERVISING ATTORNEY
NOVEMBER 28, 2016

2. Classify Worker
Relationships
Recruiting &
Hiring
Exempt v. Non-Exempt
Searching for
Candidates
Back Ground Check
New Employees Company
HIRING
CONTENT

3. CLASSIFYING
WORKER
RELATIONSHIPS

4. 5 TYPES OF LABOR RELATIONSHIP
Employees
Workers are employed directly by
the company for which work is
performed. Workers receive
training/ongoing supervision from
the company and other resources.
Contingent
Workers
Independent
Contractors
Interns
Volunteers
Workers are employees of a
temporary employment agency, but
receive some on-site oversight by
the company that hired the agency.
Workers are their “own boss,” completing a “project”
or providing service to the company, as negotiated in
the IC agreement. Contractor receives only minimal
supervision or resources from the company.
A “volunteer” is generally a
person who performs unpaid
work for public service, religious
or humanitarian reasons.
An individual cannot “volunteer”
to work at a “for-profit” company.
An internship is a carefully
structured unpaid work
experience for entry-level job-
seekers

5. EMPLOYEES
The default relationship, unless affirmative
steps are taken to set up another

6. • Are Governed by a Detailed Overlay Of Federal, State, And Local Laws, plus Sound Business Practices
• How To Set Up:
• Government Requirements: Employer must comply with the 17-pt Employer Checklist (See Handout)
• Minimally Necessary: Use an Application, Interview, Check References, Use an Offer Letter, Provide
Supervision
• Optimal: Create and Adopt a Set of Personnel Policies - See CA Chamber Resources –
www.Calchamber.Com – (Annual Subscription Required)
• Distinguish: Employment at Will vs. Contracted Employment
EMPLOYEES

7. KEEPING TRACK OF EMPLOYER
REQUIREMENTS
• Keeping track of employer requirements is so
complex, it also takes a lot of time and money
• We highly recommend using HR Services
1. Accountants
2. Payroll Services: ex. Paychex, Zenefits
• These are deductible business expenses – and essential
for peace of mind.

8. CONTINGENT
WORKERS
Companies that use temporary employment/
staffing agencies must be cautious and
evaluate the agency in advance to determine
compliance with all applicable employment

9. • Make sure the leasing company well versed in payroll, employment practices, and personnel record
keeping requirements under California and federal law.
Request a sample personnel file and a description of the leasing organization’s payroll process.
• Find out about how the employment agency screened applicants during the hiring process.
• Consider how the leasing organization’s benefits compare with those provided to your regular
employees to avoid the morale problems that could be created if there is great disparity between the
two.
• Request proof of bonding or insurance and written assurance of indemnification, then review the leasing
organization’s assets to ensure it is a solid organization and apt to remain in business.
• Who will provide workers’ compensation coverage for the leased employees?
Confirm coverage if the leasing organization is securing the coverage.
• Who will be responsible for workplace safety issues, such as training?
Existing case law indicates that you cannot divest yourself of your duties under the occupational safety and health
laws.
PRACTICAL CONSIDERATIONS WHEN USING A TEMPORARY
EMPLOYMENT AGENCY

10. USEFUL EVALUATION
CONTRACTING FOR
FOREIGN WORKERS
• Review all existing contracts. Contact those
contractors to obtain assurances of their labor and
employment compliance.
• Consider including legal protections for wage-and-
hour violations, workers' compensation coverage and
claims involving retaliation for protected conduct
• Limit reliance and use on contracted labor or services
and determine internally where efficiencies can be
made with regard to workload or hiring of additional
employees
• A “foreign labor contractor” means a person who
performs “labor contracting activity,” which is
“recruiting or soliciting for compensation a foreign
worker who resides outside of the United States in
furtherance of that worker's employment in
California.” It does not include the services of an
employer if those services are solely to find workers
for the employer's own use.
• Employers who use temporary foreign workers in
California should seek the advice of labor and
employment and/or immigration counsel.

11. INDEPENDENT
CONTRACTOR
There is no set definition of "independent
contractor". You should assume all workers
are employees unless they clearly meet the
classification of independent contractors.

12. • Whether the person performing services is engaged in an occupation or business distinct from that of the principal;
• Whether or not the work is a part of the regular business of the principal or alleged employer;
• Whether the principal or the worker supplies the instrumentalities, tools, and the place for the person doing the work;
• The alleged employee’s investment in the equipment or materials required by his or her task or his or her employment of
helpers;
• Whether the service rendered requires a special skill;
• The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal
or by a specialist without supervision;
• The alleged employee’s opportunity for profit or loss depending on his or her managerial skill;
• The length of time for which the services are to be performed;
• The degree of permanence of the working relationship;
• The method of payment, whether by time or by the job; and
• Whether or not the parties believe they are creating an employer-employee relationship may have some bearing on the
question, but is not determinative since this is a question of law based on objective tests.
SOME OF THE FACTORS TO DETERMINE INDEPENDENT CONTRACTOR

13. UNPAID INTERNS
Interns can participate in work experience
programs without pay, so long as the
Company meets the detailed state law
requirements for using interns.

14. MULTI-FACTOR TEST FOR UNPAID INTERN
• The training provided to the intern by the Company is similar to that
which would be given in a vocational school
• Interns do not displace regular employees, but work under close
observation
• The Company derives no immediate advantage from the activities of
interns, and, on occasion, the Company’s operations may be actually
impeded by the intern’s presence.
• The interns are not necessarily entitled to a job at the conclusion of the
training period
• The Company and intern each understand that the intern is not entitled
to wages for the time spent in training

15. ADDITIONAL ISSUES:
EXEMPT
CLASSIFICATION,
RECRUITMENT, &
HIRING

16. EMPLOYEE CLASSIFICATION:
EXEMPT V. NON-EXEMPT
Exempt employees, typically managers or
professionals, are exempt from many
wage and hour requirements.

17. TWO-PRONG TEST
• Compensation Prong
An employee must earn a monthly salary equivalent to no
less than two times the state minimum wage for full-time
employment.
• Duty Prong
Exempt employees are your key personnel who possess
management and decision-making responsibilities.

18. COMPENSATION PRONG
• Effective December 1, 2016, an employee needs to meet the federal
salary test for the executive, administrative and professional exemptions
in order to be exempt under both California and federal law.
• The federal salary test of $913 per week (amounting to $47,476 annually
for a full time employee)
• Placing an employee on a salary does not exempt that employee from
wage and hour laws.
• Salary is limited to cash wages. It cannot include payments “in kind,”
such as the value of meals and lodging.
• Employers must comply with the law that gives the most protection to
the employee — federal or state.

19. DUTY PRONG
• Exempt employees customarily and regularly direct or supervise at least
two other employees
• Exempt employees generally manage the company or a portion thereof,
either a customarily recognized department or subdivision
• Exempt employees possess the authority to hire and fire employees or
to recommend action in this area
• Exempt employees customarily and regularly exercise discretion and
independent judgment
• Exempt employees must be primarily engaged in exempt duties, i.e.,
more than one-half of the employee's work time must be spent engaged
in exempt work.
• Note: an employee who does not perform exempt duties on a regular
basis cannot be classified as exempt for a temporary assignment.

20. COMMON EXEMPT ACTIVITIES
COMMON NONEXEMPT
ACTIVITIES
• Interviewing, Selecting And Training Employees
• Setting And Adjusting Pay Rates And Work Hours;
• Directing Work; Supervising And Evaluating Workers
• Handling Employee Complaints
• Disciplining Employees; Planning, Determining, Or
Distributing Work
• Deciding On Types Of Merchandise, Materials,
Supplies, Machinery Or Tools;
• Controlling Distribution Of Merchandise, Materials
And Supplies;
• Providing For The Safety Of Employees And
Property.
• Performing the Same Kind of Work as Subordinates
• Production Work
• Making Sales
• Stocking
• Performing Routine Clerical Duties, e.g.,
Bookkeeping, Cashiering, Billing, Filing And Operating
Business Machines
• Checking And Inspecting Goods
• Performing Maintenance Work

21. SEARCHING FOR
CANDIDATES
Recruiting and Interviewing Employees

22. RECRUITING
• Posting Positions Internally
Union contracts or internal policies require some employers to post job-
opening notices to their current workforce.Whether or not you must take this
step, posting a job internally is a good source of new candidates.
• Recruiting Other Employees Already Employed
You may generally recruit at-will employees of another employer by offering
more favorable employment conditions. Exception: you may not otherwise
unlawfully interfere with another Employer’s relationships with their workers,
even at-will employees.
• Using Job Applications
Creating a standard job application to gather information about applicants is
usually recommended. However,
1. Questions must conform with legal requirements for interview questions
(see later slide)
2.You cannot charge applicants a fee to apply for a job, either by charging an
application, processing, or acceptance fee.

23. ADVERTISING
• Ads must comply with same legal
requirements as interview questions (e.g.,
non-discrimination required)
• Ads for jobs with no specified duration
are presumed to be employment at-will

24. INTERVIEW
• Try to conduct interviews consistently
• Ask only Appropriate (Legal) Questions,
e.g.:
(X) Are you a U.S. citizen?
(O) If you are hired, can you verify eligibility to
work in the United States?
Avoid: Q’s about marital status, children,
religion, race/ethnic status, gender/sexuality
• Take good notes

25. BACKGROUND CHECK
AND TESTING
Employers can legally check certain
records, e.g., driving, criminal, if related to
the employment

26. BACKGROUND CHECK AND TESTING
• Checking Applicant References
You should require the candidate to sign a waiver authorizing you to investigate
all information he/she submits on a job application
• Physical Examination/Psychological Test
1. Related to the ability to fulfill specific job requirements (e.g., 20-20 vision
needed)
2. required only AFTER a job offer has been made to the applicant (offer
can be contingent on passing physical exam)
• Employers are generally prohibited from requiring a consumer
credit report for applicants
• I-9 Verifying Eligibility
Every employer, regardless of size, has to verify that an individual is
authorized to employed in the United States.You must verify every new-
hired employee’s eligibility by completing a Form I-9 within three business
days of the employee's first day of work for pay.
• E-Verify: https://www.uscis.gov/e-verify
Check!

27. NEW EMPLOYEES
After you decided to offer the
employment.

28. NEW EMPLOYEES
• Pay
California’s minimum wage is $10.00 per hour and the federal minimum wage is
$7.25 per hour. (California’s minimum wage applied)
• Offering Employment
To maintain employment-at-will relationship, have new employee sign an offer letter;
if you have an employee handbook (personnel policies), be sure to reference that in
the offer letter so that the employee agrees to adhere to its guidelines.
• Verifying Social Security Numbers
https://www.ssa.gov/bso/bsowelcome.htm
• San Francisco Bay Area Commuter Benefits
Employers with 50 or more full-time employees in the San Francisco Bay Area are
now required to offer commuter benefits to employees who walk or bike to work
or use public transportation, car sharing or van-pools.
• Mandatory Sexual Harassment Training
California law mandates that employers with 50 or more employees provide two
hours of supervisor sexual harassment training. For more information on this
requirement, see: goo.gl/WB980W

29. Q&A