In his first State of the Union address, President Obama proposed a temporary tax credit that can fuel job growth through small business hiring, and this may prove to be a great incentive for local San Diego businesses that have been thinking about bringing on another employee. The Wall Street Journal’s Elizabeth Williamson reports on more of the details of the President’s plan, as revealed a few days after delivering the State of the Union address. As things stand now, the Small Business Jobs and Wages Tax Cut, one of the White House’s main small business proposals, will provide businesses a $5,000 tax credit for each net new employees hired in 2010, and start-up businesses can receive half the tax credit, all subject to a cap of $500,000 as a way to make sure that most of this tax credit is used by small businesses. Potential benefits are also included for employers who increase hours or wages for existing employees, in which case the business will be reimbursed for the Social Security payroll taxes on wages increased above the rate of inflation, although currently this won’t apply to wages increased above $106,800. The same will apply to newly hired employees paid a higher wage. On its website, the White House’s fact sheet for this proposal explains that businesses will be able to receive the tax credit on a quarterly basis, adding to the incentive for employers to increase hiring and raise wages. The fact sheet also gives examples of how the tax credit will work, while also warning that the plan includes measures to prevent abuse. This is only a proposal, and Congress will have to pass the tax credit for it to go into effect. As a result, it remains to be seen what the rules and specifics of the new tax incentive will be if passed, and how it can help your San Diego business create new jobs.
If you do need to hire new employees, don’t lose sight of the legal issues that go along with hiring. A few examples here include possible discrimination when advertising for new positions, questions you can’t ask when interviewing potential employees, and the terms of employment. Federal anti-discrimination laws and additional protections under California law make discrimination illegal when based on categories that include disability, marital status, sex, age, national origin, race, sexual orientation, religion, medical condition, and so on. Exceptions are very limited (e.g. a women-only hiring policy for women’s locker room workers) and have to be evaluated on a case by case basis. Discrimination can occur in all aspects of employment, even well before hiring someone when your business advertises a job, chooses its recruitment methods, or interviews candidates for an open position. When it comes to interviews, you have to be careful not to ask questions about the applicant’s age, what his or her childcare arrangements are, about plans to have kids, or anything else that relates to a status that’s protected from discrimination if the question isn’t required to determine the applicant’s ability to do the job and isn’t legally acceptable. Discrimination laws are complex, and you need to speak with an attorney who can explain the details of how these federal and California laws apply to your business practices.
Aside from discrimination issues, when hiring a new employee you have to be clear about several terms of the employment relationship to help prevent disputes (and potentially lawsuits) later on with that employee. Misunderstandings can often be prevented with non disclosure agreements (also called NDAs or confidentiality agreements), and employee handbooks or manuals that make clear whether the employment is at-will and set out company policies without creating unintended terms of employment. These are just a few general examples, but keep in mind that many other issues can come up when dealing with prospective hires and current employees. We’ll prepare important agreements you may need and advise you on the legal aspects of running a business, including compliance with California’s harassment laws, wage and hour laws, and employee termination rules so you can avoid many common disputes that carry serious consequences. Contact San Diego Law Firm to learn more about the best employment and hiring practices and how you can minimize the risk of getting sued. Our experienced business lawyers can be reached at (619) 794-0243.
