New ways to get into hot water in California in 2016

It's a new year, and that means that there are new employment laws on the books everywhere. More specifically, companies operating in California continue be subject to all sorts of employee-friendly laws.  Hey, the state has to make money somehow!  And remember...ignorance is not a defense.  Rather than list out all of the new laws in California, we're going to give you a few ways that you can get into hot water in California in 2016.

1.  You run an e-commerce firm in San Jose and you've hired three fulfillment reps - Tim, David, and Jennifer - to manage order processing.  All three employees have the same job descriptions and are doing work that is "substantially similar."  You pay Tim and David $40k per year, and you pay Jennifer $35k per year.  This pay disparity is problematic due to California's Fair Pay Act.  Temperature of water:  Hot 

2. You own a blog and media startup Bakersfield, but you open up a small office in San Francisco.  In order to afford your rent in SF, you pay your part-time employees $10 per hour for every hour worked.   While you're meeting Federal minimum wage requirements, you're not paying them in accordance with San Francisco's local minimum wage of $15.25. You also fail to realize that due to AB970 the California Labor Commissioner can now enforce local minimum wage laws, in addition to the less-feared OLSE.  Temperature of water: Warm

3. You are the CEO of a professional services firm in Los Angeles.  Your company has been using E-Verify since 2014.  You have an HR Manager on staff and they use E-Verify as part of the hiring process. You are talking to a new candidate and you really like her.  You "want to know a little more" about the candidate and you have your HR Manager run the candidate's info that was included on their application through e-verify.  You didn't realize that this is now illegal. There is an electronic record of what has been done.  Be prepared to shell out up to $10,000 in penalties.  Temperature of water: Scalding. 

If you have a company or employees in California, try to avoid being like any of the companies above.  And if any of you feel inclined to take on "the law", I'd encourage you to listen to what The Clash has to say about fighting the law (along with who won).

I'm a U.S. Company and I want to hire a Canadian. Help, eh?

We see it all the time.  We're working with a U.S. based company and a request comes in from someone there letting us know that they want to make a new hire.  But this isn't just any new hire, it's a special new hire.  It's an international new hire.  And the worker that this company wants to hire lives in Canada.  "Where do we start" they ask....

We've put together a bit of a checklist/reality check that you can use to get the ball rolling on bringing on board your new Canuck.  Note that this is just a starting place, and not an exhaustive list, when it comes to what you should or shouldn't be doing in order to employ your new Neighbor to the North.

Here's where to start:

• Gather Information - This might be the most important step in the process.  Find out as much as you can about this new worker.  What province do they live in? What province will they be working in? What exactly will they be doing? Where will they be doing it? Are they a Canadian citizen or just living in Canada? Do they have employment authorization?

• Determine Employee Vs. Independent Contractor - This can be a confusing step.  Much like U.S. workers, you'll need to determine if the work this person is doing qualifies them as an employee or an independent contractor.  Canada's version of the IRS (the CRA) can be helpful in figuring this out.  There are also different rules for those in Quebec.

• Employee -  If they're an employee, you'll need to figure out how to employ them in Canada.  Have you set up an entity in Canada? That's one option.  Can you employ them through a payrolling company in Canada? That's another option.  Can you register for a business number and and set up a payroll deductions account? There's a third option. Regardless of what you do, you're going to need to withhold Income Tax, Canadian Pension Plan (CPP) withholdings, and employment Insurance (EI) for your employee (and pay on behalf of the company as well).  You'll also need to have the employee fill out some forms and you'll need to register with the WISB.   

• While employment law in Canada is primarily provincial/territorial, Canada does have an Employment Standards Act - the ESA - that covers most employees (and most provinces/territories like to follow it). U.S. folks can think of this as bits of the FLSA, OSHA, and NLRA wrapped up in a neat box with a red maple leaf stamped on it. 

• Contractor - If your worker is an independent contractor you'll need to have them sign a W-8BEN or a W-8BEN-E and keep it on file.  Remember, no W9 because they're not going to be issued a 1099.  Banking info is needed, and remember, because your worker will be using a Canadian bank you'll need their SWIFT number and account number (sorry Yankee, no Account and Routing number in these colder parts of the world). 

• Paperwork - Next we need to figure out how we are going to "paper" this person.   Do you have an agreement in place with this person? You should.  Has it been localized to where they live? Does it need to be in English and French?  If they're an employee we should probably put an offer letter in place and include things like: their rate, when they're paid, what they'll be doing, when they start, time off, benefits, etc.  

• End of Year - You'll need to figure out what sort of end of year documentation your employee or contractor will need.  Do we need to issue a T4 or T4A? 

• Termination - Need to terminate your employee? Make sure you provide them with a Record of Employment!

There are also different and unique rules depending on what province you're in and sometimes what City your person is in.  And remember, special attention should be always be paid to Quebec. 

Keep in mind that just like the IRS, the CRA doesn't look kindly upon any companies, international or domestic, that misclassify employees as contractors.