Hiring
Hiring Your First Employee in California: A Step-by-Step Checklist
Hiring your first employee in California? Get workers' comp, register with the EDD within 15 days, report new hires in 20 days, and meet 2026 pay rules.
Last reviewed October 20, 2026 · 8 min read
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Your first hire is a big step. California has more employer rules than most states, but they follow a clear order.
What you'll need
An EIN from the IRS (free at irs.gov)
A workers' compensation insurance policy
Federal Form W-4 and California Form DE 4 for the employee
Form I-9 (federal work eligibility)
A payroll method: a payroll service, software, or an accountant
Required workplace posters and notices
What are the key deadlines?
WhenBefore day 1
WhatHave workers' comp coverage
SourceDWC
WhenBy day 1
WhatEmployee completes Form I-9 Section 1
SourceUSCIS
WhenWithin 3 business days of hire
WhatYou complete I-9 Section 2
SourceUSCIS
WhenWithin 15 days of paying over $100 in a quarter
WhatRegister with EDD
SourceEDD
WhenWithin 20 days of the start date
WhatReport the new hire (DE 34)
SourceEDD
| When | What | Source |
|---|---|---|
| Before day 1 | Have workers' comp coverage | DWC |
| By day 1 | Employee completes Form I-9 Section 1 | USCIS |
| Within 3 business days of hire | You complete I-9 Section 2 | USCIS |
| Within 15 days of paying over $100 in a quarter | Register with EDD | EDD |
| Within 20 days of the start date | Report the new hire (DE 34) | EDD |
How do I hire my first employee, step by step?
Get an EIN. You need a federal EIN to hire. It's free from the IRS.
Buy workers' comp insurance. The Division of Workers' Compensation says California employers must have it "even if they have only one employee." It pays for medical care and other benefits if a worker is hurt on the job.
Set the pay. The state minimum wage is $16.90 per hour as of January 1, 2026. The DIR notes some cities and counties have higher local minimums. If a local rate is higher, you must pay it.
Do the paperwork on day one. The employee fills out I-9 Section 1, federal W-4, and California DE 4. Within 3 business days, you review their documents and complete I-9 Section 2. Keep the completed I-9 in your own records.
Register with the EDD. The EDD says you're a "subject employer" once you pay over $100 in wages in any calendar quarter. Register within 15 days through e-Services for Business. The EDD assigns you an eight-digit employer payroll tax account number.
Report the new hire. File the Report of New Employee(s) (DE 34) within 20 days of the start date. You can do it in e-Services.
Run payroll and file on time. Withhold and pay state and federal payroll taxes. The EDD's employer guide lists the due dates.
What payroll taxes does California have?
The EDD's 2026 employer guide lists four state payroll taxes:
TaxUnemployment Insurance (UI)
Who paysEmployer
2026 details from EDDNew employers pay 3.4% on the first $7,000 per employee, for two to three years
TaxEmployment Training Tax (ETT)
Who paysEmployer
2026 details from EDD0.1% on the first $7,000 per employee
TaxState Disability Insurance (SDI)
Who paysWithheld from employee
2026 details from EDD1.3% of wages, with no wage limit
TaxPersonal Income Tax (PIT)
Who paysWithheld from employee
2026 details from EDDBased on wages and the employee's DE 4
| Tax | Who pays | 2026 details from EDD |
|---|---|---|
| Unemployment Insurance (UI) | Employer | New employers pay 3.4% on the first $7,000 per employee, for two to three years |
| Employment Training Tax (ETT) | Employer | 0.1% on the first $7,000 per employee |
| State Disability Insurance (SDI) | Withheld from employee | 1.3% of wages, with no wage limit |
| Personal Income Tax (PIT) | Withheld from employee | Based on wages and the employee's DE 4 |
You also handle federal taxes, like income tax withholding, Social Security, and Medicare. A payroll service can do most of this for you.
What other rules apply to employers?
Paid sick leave. Since January 1, 2024, employers must generally provide at least 40 hours or 5 days of paid sick leave per year.
Harassment prevention training. If you have 5 or more employees, the Civil Rights Department says non-supervisors need 1 hour and supervisors need 2 hours of training every two years. New hires must be trained within six months. CRD offers free online courses.
Notices and posters. The Labor Commissioner provides a required paid sick leave poster and the Labor Code 2810.5 employee notice. Post required notices where workers can see them.
Employee or contractor?
This matters a lot in California. Calling someone a contractor when the law sees them as an employee can bring penalties and back taxes. The EDD and the Labor Commissioner both have guidance. If you're unsure, ask an employment attorney or a tax pro before you hire.
How long does it take?
TaskEIN online
TimeMinutes
TaskWorkers' comp quote and policy
TimeVaries by insurer
TaskEDD online registration
TimeOne sitting
TaskFirst new-hire report
TimeA few minutes in e-Services
| Task | Time |
|---|---|
| EIN online | Minutes |
| Workers' comp quote and policy | Varies by insurer |
| EDD online registration | One sitting |
| First new-hire report | A few minutes in e-Services |
Get workers' comp and your EDD account lined up a couple of weeks before your first payday.
Want to free up time before you hire? We'll show where AI can take admin off your plate in a free AI plan.
This is general information, not legal or tax advice. Fees and rules change, so please check the linked official pages before you file or pay.
Questions people ask
When do I have to register with the EDD?
The EDD says you become an employer when you pay over $100 in wages in a calendar quarter to one or more people. You must register within 15 days after that, usually online through e-Services for Business.
Do I need workers' comp for just one employee?
Yes. The California Division of Workers' Compensation says employers must have workers' compensation insurance even if they have only one employee.
What is the California minimum wage in 2026?
The Department of Industrial Relations lists $16.90 per hour starting January 1, 2026, for all employer sizes. Some cities and some industries have higher minimums, so check where your employee works.
How much paid sick leave do I have to give?
Since January 1, 2024, the Labor Commissioner says employers must generally provide at least 40 hours or five days of paid sick leave per year, whichever is more.
Do I need harassment prevention training?
If you have 5 or more employees, yes. The Civil Rights Department says supervisors need 2 hours and other employees need 1 hour, every two years. CRD offers free online training.
We can talk through the next hiring step on a free call.
Book a Business Boost CallWords to know
EIN: Employer Identification Number. Your business's federal tax ID number, free from the IRS.
EDD: Employment Development Department. The state agency for payroll taxes and unemployment.
Workers' comp: Insurance that pays for medical care and lost wages if a worker is hurt on the job.
Form I-9: A federal form that confirms a new worker can legally work in the U.S.
Payroll tax: Taxes tied to wages. Some you pay, and some you hold back from each paycheck.
Sources
- California Employer's Guide (DE 44) - EDD · edd.ca.gov
- Step 1: Register as an Employer - EDD · edd.ca.gov
- DWC employer information - California Division of Workers' Compensation · dir.ca.gov
- Minimum Wage FAQ - California Labor Commissioner · dir.ca.gov
- Paid Sick Leave - California Labor Commissioner · dir.ca.gov
- Sexual Harassment Prevention Training: Information for Employers - California Civil Rights Department · calcivilrights.ca.gov
- Completing Section 2 of Form I-9 - USCIS · uscis.gov
- Get an Employer Identification Number - IRS · irs.gov
This is general information for Sacramento and Northern California businesses. We are not attorneys or tax advisors, and this is not legal or tax advice. Check the official sources, and a local pro, before you act.