Running the Business · Module 2
Hiring readiness: what has to exist before the first helper's first day
The first helper is where most solo plumbing businesses either become companies or become defendants. California law does not let you call a helper without a contractor's license an independent contractor: under Labor Code 2750.5, anyone doing licensed work without a license is presumed your employee, and the license is a condition of contractor status. So the day-rate guy is an employee, with everything that implies. This lesson is the list of what must exist before that person's first day: workers' compensation, the EDD account, the paperwork on day one, the pay stub, and the minimum wage. The full hiring and payroll process, with the templates, is in the Growing phase; this is the readiness check so you do not hire before the business can.
What the full lesson covers
- A helper without a C-36 license doing plumbing work for you is your employee by law (Labor Code 2750.5), no matter what you call the arrangement or whether they invoice you. The 1099-subcontractor helper is the most common wage, tax, and workers' compensation violation in the trade.
- Before the first day: a workers' compensation policy in force (Labor Code 3700), with the certificate to CSLB within 90 days; an EDD employer account within 15 days of paying more than $100 in wages in a quarter; a payroll method that produces a compliant pay stub.
- On the first day: Form I-9 with documents within three business days, federal W-4 and California DE 4, the Labor Code 2810.5 written notice of pay rate and employer information, and the new hire report to EDD within 20 days.
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More lessons in Setting Up the Business
- 1The entity is a one-way door: why you decide sole owner, LLC, or corporation before the license issues
- 2Sole owner vs. LLC vs. S corporation for a plumbing contractor: liability, tax, cost, and the small claims limit
- 3EIN, the business bank account, and separating the money: the first bookkeeping setup that survives an audit and a lawsuit
- 4City business licenses: every city you work in, the Los Angeles business tax, and the seven-day rule