EMPLOYEE ONBOARDING

Employee Onboarding Procedure

Step 1: Classify The New Hire

Employee or Independent Contractor?

Before hiring, you must determine whether the worker is an employee or an independent contractor.

Misclassification is one of the most common (and costly) employment law mistakes.

Employee Status

If the worker does not meet all independent contractor requirements, they must be classified as an employee.

Employees generally:

  • Work under the direction of the employer

  • Have an ongoing work relationship

  • Are paid regularly (hourly or salary)

Independent Contractor Status

A worker may be an independent contractor only if all of the following are true:

  1. The worker controls how, when, and where the work is done.

  2. The work is outside your usual business.

  3. The worker runs their own independent business doing the same type of work.

  • If even one of these is not true, the worker should be classified as an employee.

Examples

  • A bakery hires a plumber to fix a leaking pipe.

  • A company hires a graphic designer with their own business to design a logo.

Key Takeaway

Calling someone an independent contractor — or having them sign an agreement — does not make them one.

Now…Exempt or Non-Exempt Employee?

Once a worker is classified as an employee, you must determine whether they are exempt or non-exempt.

Most employees are non-exempt.

Non-Exempt Employee Status

Non-exempt employees:

  • Are entitled to overtime

  • Must receive meal and rest breaks

  • Are usually paid hourly

    Examples

  • Restaurant and retail workers

  • Administrative support staff

  • Warehouse and production workers

Key Takeaway

Job duties — not job titles — determine whether an employee is exempt or non-exempt.

Exempt Employee Status

 Exempt employees:

  • Are not entitled to overtime or meal/rest breaks

  • Are usually paid on a salary basis

  • Perform higher-level work involving judgment or management

 To be properly classified as exempt, both of the following must be true:

  1. The employee meets the job duties test, and

  2. The employee meets the minimum salary requirement.
    If either one is not met, the employee must be classified as non-exempt.

Job Duties Test

 An exempt employee generally performs higher-level work that involves independent judgment, decision-making, or management responsibilities.

Typical exempt duties include:

  • Managing or supervising other employees

  • Making important business decisions

  • Performing professional work that requires advanced knowledge or specialized training

  • Exercising discretion, not just following set instructions

Employees who mainly perform routine, manual, or repetitive tasks usually do not meet the job duties test.

Key Takeaway

Job titles alone do not determine exempt status. Actual job duties control.

Minimum Salary Requirement

In addition to job duties, exempt employees must be paid a minimum salary.

As of January 1, 2025, the minimum salary to qualify as an exempt employee in California is $66,560 per year ($1,280 per week).

If the employee earns less than this amount, they cannot be classified as exempt — regardless of job duties.

Common Exempt Roles (Examples Only)

  • Managers and supervisors

  • Administrative professionals

  • Licensed professionals (e.g., doctors, lawyers, engineers)

  • Outside sales employees

These are examples only. Not all employees with these titles qualify as exempt.

Key Takeaway

Most misclassification issues arise from assuming salaried employees are exempt. Salary alone is not enough.

Step 2: Draft offer Letter

What Is an Offer Letter?

An offer letter is a written document that confirms the key terms of a job offer.
It is commonly used for at-will employment and helps clearly document the role, pay, and basic employment terms before the employee starts.

Offer Letter Procedure

1. Confirm Worker Classification

Confirm whether the worker is:

  • Exempt employee

  • Non-exempt employee

  • Independent contractor
    (This should already be determined in Step 1.)

2. Use the Correct Offer Letter Template

Use the offer letter template provided in The Guide that matches the worker’s classification:

  • Exempt Employee Offer Letter

  • Non-Exempt Employee Offer Letter

  • Independent Contractor Agreement

3. Complete, Review, and Send

Fill in the required information using the template.
Review for accuracy, then send the offer letter to the worker by email or in person.

4. Confirm Acceptance

Allow the worker time to review and accept the offer.
Once accepted, proceed with onboarding paperwork.

Key Takeaways

1. Offer Letters Are Not Employment Contracts

Unless intended otherwise, offer letters should include language confirming they are not binding employment contracts.

This helps preserve at-will employment and reduces legal risk.

2. Clearly State Any Conditions of Employment

If the offer is contingent on a background check, drug test, or other condition, the offer letter should clearly state that condition.

Step 3: Mandatory Employment Forms

1. Form I-9 (Employment Eligibility Verification)

Form I-9 verifies an employee’s identity and authorization to work in the United States.
It is required for all employees (not independent contractors).

Employer responsibilities:

  • Provide the employee with the Form I-9 instructions and list of acceptable documents

  • Ensure the employee completes Section 1 no later than their first day of work

  • Complete Section 2 within 3 business days of the employee’s first day

  • Complete Supplement B if reverification or rehire applies

  • Do not specify which documents the employee must present

  • Retain the completed Form I-9 as required by law

2. Federal Form W-4 (Federal Tax Withholding)

The W-4 tells you how much federal income tax to withhold from the employee’s pay.

Employer responsibilities:

  • Have the employee complete the W-4 before their first paycheck

  • Apply the withholding as instructed by the form

  • Retain the W-4 for at least 4 years

  • Forms may be kept electronically or in paper form

3. California Form DE 4 (State Tax Withholding)

The DE 4 allows employees to set their California state income tax withholding.

Employer responsibilities:

  • Provide the DE 4 at hire (employees may choose whether to complete it)

  • Apply state withholding based on the most recent DE 4 on file

  • Implement changes promptly when a new DE 4 is submitted

4. Notice of Rights of Victims of Domestic Violence, Sexual Assault, and Stalking

This notice informs employees of workplace protections and leave rights related to domestic violence, sexual assault, and stalking.

  • Must be provided to all employees

  • Available in English and Spanish

5. Notice to Employees – Workers’ Compensation (Time of Hire Notice)

This notice informs employees of their rights under California workers’ compensation law.

  • Must be provided at the time of hire

  • Also known as the “Workers’ Compensation Time of Hire Notice”

6. Sexual Harassment Pamphlet

California employers must provide this pamphlet to:

  • All employees, and

  • Independent contractors performing services

It explains employee rights and employer obligations regarding harassment prevention.

7. State Disability Insurance (SDI) Pamphlet

This pamphlet explains California State Disability Insurance benefits.

  • Must be provided at hire

  • Must also be provided when an employee takes a qualifying non-work-related leave

8. Paid Family Leave (PFL) Pamphlet

This pamphlet explains California Paid Family Leave benefits.

  • Must be provided at hire

  • Must also be provided when an employee takes a leave that may qualify for PFL

9. Wage and Employment Notice (“Notice to Employee”)

This notice provides key information about wages and working conditions.

  • Required for non-exempt employees at the time of hire

  • Must be updated if any required information changes

10. New Employee Registry (EDD Reporting)

California employers must report all new and rehired employees to the EDD.

  • Must be submitted within 20 days of the hire or rehire date

  • Reporting may be done online or by mail

Key Takeaways 

  • These forms are required at hire and help establish compliance

  • Some forms are given to employees, others are kept in your records, and some are filed with the state

Step 4: Provide Employee Handbook

What Is an Employee Handbook?

California does not require employers to have an employee handbook.
However, a handbook is one of the best ways to communicate workplace rules and required employee rights.

An employee handbook helps:

  • Set clear expectations

  • Communicate required policies and notices

  • Reduce misunderstandings and disputes

The employee handbook provided in The Guide is designed to meet California compliance requirements and should be updated as laws change.

Employee Handbook Procedure

1. Distribute the Handbook

Provide each new employee with a copy of the Employee Handbook on or before their first day of work.
The handbook may be provided electronically or in paper form.

If the handbook is updated, provide the revised version to current employees.

2. Obtain Signed Acknowledgment

Have the employee sign the Employee Handbook Acknowledgment Form provided in The Guide, confirming receipt of the handbook.

Retain the signed acknowledgment in the employee’s personnel file.

3. Ensure Ongoing Access

Make sure employees can access the handbook at any time, either electronically or by requesting a copy.

Key Takeaway

A handbook helps document workplace rules and employee rights and should be consistently distributed and acknowledged.

Step 5: Conduct Compliance Training

Sexual Harassment Prevention Training

California employers with 5 or more employees must provide sexual harassment and abusive conduct prevention training.

Training Requirements

  • Non-supervisory employees: 1 hour

  • Supervisors: 2 hours

  • Frequency: Every 2 years

  • Timing: Must be completed during working hours

  • Cost: Paid for by the employer

The California Civil Rights Department (CRD) provides free online training that satisfies these requirements.
Trainings are available in multiple languages.


When Training Must Be Completed

  • New hires: As soon as practicable, and no later than required by law

  • Existing employees: Every two years from the last training date

Short-term employees

  • Employees hired for less than 6 months must be trained within 30 days of hire or 100 hours worked, whichever comes first

  • Employees who work less than 30 days and fewer than 100 hours do not need to be trained

Who Must Be Trained

  • Employees must be trained

  • Independent contractors, volunteers, and unpaid interns are counted toward the 5-employee threshold, even though they are not required to be trained


Sexual Harassment Training Procedure

1. Assign the Training

Assign the appropriate training (supervisory or non-supervisory) to each employee.

2. Complete the Training During Work Time

Ensure the employee completes the training during paid working hours.

3. Collect Proof of Completion

Have the employee save or provide their completion certificate.

4. Retain Records

Keep the completion certificate in the employee’s personnel file.

5. Track the Next Training Date

Track the employee’s next two-year training deadline to ensure ongoing compliance.

Key Takeaways

  • Training is mandatory for employers with 5 or more employees

  • Training must be paid, on work time, and documented

  • Keep clear records and track renewal dates

Step 6: Provide Arbitration Agreement

What Is an Arbitration Agreement?

An arbitration agreement is a written agreement between an employer and employee to resolve most workplace disputes through private arbitration instead of court.

If a dispute arises, it is decided by a neutral arbitrator rather than a judge or jury.
Certain claims may still be filed with government agencies, even if an arbitration agreement is signed.


Why Employers Use Arbitration Agreements

  • Arbitration can be faster and less expensive than court

  • Arbitration can keep disputes private

  • Arbitration can reduce the risk and cost of lengthy lawsuits

For these reasons, many employers choose to use arbitration agreements as part of onboarding.


Important Compliance Notes

  • Arbitration agreements must be clearly written and fair

  • Employees should be given time to review the agreement before signing

  • Employers should not pressure or mislead employees into signing

  • Employers should not retaliate against an employee for questions or concerns about the agreement

Best practice is to present the arbitration agreement as part of onboarding and allow the employee a reasonable opportunity (e.g. 21 days) to review it.


Procedure

  1. Provide the “Arbitration Agreement” included in The Guide

  2. Allow the employee time to review the agreement

  3. Answer questions or direct the employee to seek independent advice if requested

  4. Retain the signed agreement in the employee’s personnel file