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 state unemployment taxes on behalf of customers who utilize Justworks’ PEO services, employers will need to close their California unemployment and withholding accounts prior to joining the Justworks platform. Linked here are the steps you’ll need to take: California - State Unemployment Insurance.
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.
Wage Theft Prevention Act - California
Salary History
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
Additionally, employers in California may be subject to local salary history laws, such as San Francisco’s Consideration of Salary History Ordinance.
Mineral: Salary History Bans by State*
Ban-the-Box
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
Employers in California should review whether they are subject to any local ban-the-box laws, including San Francisco and Los Angeles.
Mineral: California Applicant and Employee Screening*
Independent Contractors
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
Pay Requirements
Pay Requirements
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.
California DIR: Exemptions from the Overtime Laws
Mineral: California Minimum Wage and Overtime*
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.
California Department of Industrial Relations (DIR): Meal Periods
California DIR: Rest Periods / Lactation Accommodation
Benefit Requirements
Commuter Benefits
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.
Bay Area
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
Los Angeles
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 program designed to give employees access to a retirement savings plan when their employer does not offer a private plan meeting the minimum standards. You can read more about state retirement programs at the link below.
Health Benefits
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).
San Francisco Health Care Security Ordinance and Fair Chance Ordinance
San Francisco OLSE: Health Care Security Ordinance
Leave
Paid Sick and Safe Leave
Under California’s paid sick and safe leave laws, all employees in California are eligible to accrue and use paid sick and safe leave. You can read more in the article below.
California Sick and Safe Leave
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 Disability Insurance and Paid Family Leave
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.
California Family Rights Act and Pregnancy Disability Leave Law
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 separation of employment, regardless of the reason for the separation.
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.
Vacation Policies: Best Practices
Carryover and Accrual Caps
Personal Days and Floating Holidays
California DLSE: Vacation
Bereavement Leave
As of January 1, 2023, employers with 5 or more employees now have to offer up to 5 days of unpaid, job-protected bereavement leave following the death of a family member (spouse, child, parent, sibling, grandparent, grandchild, domestic partner, or parent-in-law).
Employers may permit the use of existing accrued paid leave (e.g. sick leave, vacation time, paid time off, compensatory time) for bereavement purposes.
FAQ - Bereavement Leave - California Civil Rights Department
California Assembly Bill No. 1949
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).
California DFEH: Employment Discrimination
Mineral: California Prohibitions on Discrimination*
Training Requirements
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.
Harassment Prevention and Inclusion Trainings in Justworks
Effective July 1, 2024:
California employers with 10 or more employees will be required to establish and maintain a workplace violence prevention plan, inclusive of training, as mandated by California’s Division of Occupational Safety and Health (Cal/OSHA). Cal/OSHA has released a model workplace violence prevention plan and fact sheet to assist employers in following the new requirements for the July deadline. Employers are encouraged to utilize Cal/OSHA's resources to develop their prevention plans in partnership with their legal counsel.
Read more here.
Separation
California employers should familiarize themselves with specific compliance issues and certain key documents for separating employees.
Terminating an Employee - California
California DIR: Paydays, Pay Periods, and the Final Wages
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*
Other Jurisdictions
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.
Notes
*Be sure you’re logged into your Justworks account with administrative permissions to access Mineral.
Disclaimer
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.