Nobody ever said running a business was a walk in the park. As an employer, you have a lot of balls in the air, and compliance is just one of them. One really, really important one that, if dropped, could cost you a whole lot of money.
In addition to federal regulations, each state has their own share of employment laws that business owners need to be aware of. Here, we’re highlighting some of these key state-specific requirements and laws, and offering guidance to help you keep up.
Bear in mind, this list is not comprehensive, and there may be local or industry-specific employment requirements that your business needs to comply with. It’s best to consult with counsel to ensure compliance with all applicable laws, as Justworks does not provide legal advice.
Payroll Tax Accounts
Because Justworks reports California state unemployment taxes on your behalf, you’ll need to close your California unemployment and withholding accounts prior to joining our platform. Here are the steps to do that.
Recruiting & Hiring Practices
Onboarding Requirements for New Hires
Employees of Justworks customers will be provided directly via email with a number of notices required for new workers in California. Additionally, Justworks account administrators will have access to a version of the required Notice of Pay Information, which must be completed by you, the worksite employer, before being furnished to each employee not exempt from California minimum wage and overtime requirements.
You can read more about the required notices at the Mineral link below, and more on the required Notice of Pay Information in the Wage Theft Prevention Act section further along in this guide.
Mineral: New Hire Toolkit | California*
California Employment Development Department: Required Notices and Pamphlets
California Department of Fair Employment and Housing: Posters, Brochures and Fact Sheets
Wage Theft Prevention Act
Justworks account administrators will also receive an email with information on how to distribute wage notices and set up a paid sick leave policy. A template of the wage notice required for California employees can be found in the Document Center for administrators who have at least one employee with a work address in California.
Employers in California are prohibited from asking job applicants about their salary history and are expressly precluded from using prior pay to justify certain wage disparities. The state’s Equal Pay Act also has additional requirements, such as providing a compensation scale to candidates upon request, and is more expansive than federal law in numerous other ways.
California Department of Industrial Relations (DIR): California's Equal Pay Act: FAQ
California law prohibits employers from, among other things, asking about or considering criminal background information on a job application or at any point before a conditional offer is made and provides further guidelines regarding the consideration of criminal history once a conditional offer has been extended.
California’s Department of Fair Employment and Housing (DFEH): Criminal History in Employment
When classifying workers as employees or independent contractors, there are a few things to consider, including the different tests that apply under different federal and state employment laws, and potential penalties and other liabilities for misclassifying employees as independent contractors. Certain state laws apply tests that are more stringent than the guidance provided by federal agencies, such as the IRS and Department of Labor, to apply in conjunction with federal laws.
You can read our general Help Center article on contractors and our blog post on California’s Assembly Bill (AB) 5, and view information on how to determine if someone is a contractor or employee in California in the relevant section at the link below.
California DIR: Independent Contractors vs Employee
California rules on overtime, minimum wage, and exempt salary thresholds can be found here: California Pay Requirements.
California has exemption regulations that differ in some ways from the federal Fair Labor Standards Act and employers should review when determining whether an employee is exempt from minimum wages and overtime requirements.
Meal & Rest Breaks
Employees must be given a paid 10-minute break for each 4-hour period of work. In addition, employees who are scheduled to work for 5 hours are entitled to an off-duty, 30-minute meal period, which may be unpaid for nonexempt employees. Certain exceptions exist for various industries, including the motion picture and broadcasting industry.
Some California localities require employers to provide certain commuter benefits to employees. Justworks can help customers satisfy local requirements by providing access to pre-tax deductions towards commuter costs via ConnectYourCare.
Employers with 50 or more employees (working 20 or more hours per week) in the Bay Area must comply with the Bay Area Commuter Benefit Program requirements, including registering their business and offering certain types of commuter benefits to their employees.
Metropolitan Transportation Commission: Bay Area Commuter Benefit Program
For employers in the Bay Area not required to comply with the Bay Area Commuter Benefit Program, local commuter benefits ordinances exist for:
- San Francisco: employers with 20 or more employees
- Richmond: employers with 10 or more employees
- Berkeley: employers with 10 or more employees
Effective January 1, 2021, employers in Los Angeles with 50-249 employees at a single worksite will be required to offer their full-time employees the option to set aside pre-tax wages for specific transportation service costs.
State Retirement Program
CalSavers is the state of California’s new program designed to give employees access to a retirement savings plan when their employer does not offer a private plan.
San Francisco’s Health Care Security Ordinance (HCSO) requires that employers spend a minimum amount each quarter on their employees’ health care or coverage. The ordinance applies to all employers with 20 or more employees and all nonprofit organizations with 50 or more employees. Among other requirements, employers must complete an Annual Reporting Form and submit that form to the city’s Office of Labor Standards Enforcement (OLSE).
Paid Sick Leave
Under California’s paid sick leave law, all employees in California are eligible to accrue and use up to 24 hours or 3 days (whichever is greater) of paid sick leave each calendar year (or other 12-month period).
Disability Insurance & Paid Family Leave
California State Disability Insurance (SDI) is a partial wage-replacement program for California workers, encompassing two benefits: Disability Insurance (DI) and Paid Family Leave (PFL).
California Family Rights Act and Pregnancy Disability Leave
Employers with 5 or more employees must provide job-protected leave to their California employees for various qualified reasons.
Vacation, Personal Days, and Floating Holidays
Under California law, earned vacation time is considered wages earned for work performed. Accordingly, vacation pay cannot be forfeited, even upon termination of employment, regardless of the reason for the termination.
Also part of the aforementioned nonforfeiture rules, California does not allow employers to enact so-called “use-it-or-lose-it” vacation policies, where employees would have to forfeit unused vacation at the end of the year. Instead, an employer may choose to implement an accrual cap.
Employers should further note that in California, paid personal days or floating holidays that can be used at any time during the year are treated as paid vacation days, and are subject to the same requirements as paid vacation.
Harassment & Discrimination
California requires that employers create a workspace environment free from discrimination and harassment, and develop a harassment, discrimination, and retaliation prevention policy that includes all of the components set forth in California’s regulations regarding the Fair Employment and Housing Act (FEHA).
Employers with 5 or more employees that operate in California must provide two hours of sexual harassment prevention training to supervisors and at least one hour of sexual harassment prevention training to all nonsupervisory employees within 6 months of hire (and within 6 months of becoming a supervisor, where applicable). Training must be provided at least once every two years.
California DFEH: FAQ: Sexual Harassment
California DFEH: Sexual Harassment and Abusive Conduct Prevention Training
California DFEH: Harassment Guide for California Employers
Justworks has teamed up with EVERFI to offer customers free access to a suite of trainings, which meet or exceed California minimum standards.
California employers should familiarize themselves with specific compliance issues and certain key documents for terminating employees.
Business Closings and Layoffs
Federal and California state law impose certain notice and other obligations on businesses before conducting large-scale business closures, layoffs, or relocations. Under California law, businesses with as few as 75 employees may be covered. For more information on these laws, visit the links below.
U.S. Department of Labor: Worker Adjustment and Retraining Notification (WARN) Act Advisor
California’s Employment Development Department: Worker Adjustment and Retraining Notification (WARN) Information for Employers
Mineral: California Layoffs*
Many jurisdictions in California have local laws and ordinances which include more stringent requirements than California law. Your legal counsel can assist you in determining what laws apply to your business and to ensure compliance with all applicable laws.
*Be sure you’re logged into your Justworks account with administrative permissions to access Mineral.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.