Solo founder, about to hire my first W-2 employee. Completely overwhelmed by all the requirements. What's the minimum paperwork I actually need before their start date? Based in Delaware but employee is in California.
Minimum requirements for hiring in California (one of the strictest states):
Before start date:
- Offer letter (at-will statement, salary, start date)
- Get EIN from IRS if you don't have one
- Register as employer with CA EDD
- Get workers' comp insurance (required in CA)
On/before first day:
- W-4 (federal tax withholding)
- I-9 (employment eligibility, keep Section 2 within 3 days)
- DE 4 (CA state tax withholding)
- New hire report to CA within 20 days
honestly just use Gusto or Rippling. they handle all of this for you — federal/state registration, W-4, I-9, new hire reporting, workers comp, payroll taxes. $40-80/month per employee. worth it to not mess up compliance
California employee = California problems. You'll need to comply with CA law even though your company is in Delaware. This includes: meal/rest break requirements, overtime after 8 hours/day (not just 40/week), sick leave, and a bunch of mandatory notices.
This is terrifying. What about an employment agreement? Do I need one or is offer letter enough?
Offer letter is legally sufficient but I recommend a short employment agreement that covers:
- At-will employment (important!)
- IP assignment (anything they create belongs to company)
- Confidentiality
- Non-solicitation (if not CA resident — CA bans non-competes but non-solicits are gray area)
Templates exist online but worth having an employment lawyer review, especially for CA. Maybe $500-1000.
UPDATE: Signed up for Gusto, they walked me through everything. CA registration took about a week to process. Employee starts Monday with all paperwork sorted. Total cost: $79/month + ~$800 for employment agreement review. Peace of mind is worth it.
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