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Employment and labor laws in California 2024 guide

An employer's guide to labor laws, payroll, benefits, and taxes in California.

California at a Glance

State capital

Sacramento

Population

39.78 million

State motto

"Eureka"

Key industries

Tech, Entertainment, Agriculture, Tourism

Major economic hubs

Silicon Valley, Los Angeles, San Francisco

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Introduction to employment laws in California

Overview

California is often considered one of the best states to work in because of its robust legislation around working hours, minimum wage rates, and employee benefits. It is crucial that businesses hiring in California pay close attention to its specific laws.

Like any state, California is governed by a patchwork of federal and state laws which might seem complex at first. In this guide, we’ll help keep you compliant as you onboard and manage workers in California.

Employing in California: Key employment laws and practices

Standard work hours

In California, full-time employment typically spans 40 hours over a five-day workweek. However, the actual work hours may vary based on the industry, job role, and the specific terms of an employment contract.

For full-time employees, work hours are usually stipulated in their employment contract. A compliant contract must detail the expected number of work hours, remuneration, and any other terms of employment. Employers must clarify these details to ensure compliance with California employment laws.

Self-employed professionals or independent contractors have more flexibility in setting their work hours, but they are not covered by California’s labor laws concerning working hours and overtime pay.

Minimum wage and overtime

The state minimum wage is $16 per hour, but some cities in California have set their own higher rates. For instance, San Francisco offers a minimum hourly wage of $18.67 as of 2024. Employers must remain aware of these variations, especially if they operate across multiple cities.

Overtime regulations in California differ from federal law. Non-exempt employees are entitled to overtime pay if they work more than eight hours (up to 12) in a workday at 1.5x their regular rate. Beyond 12 hours, double the regular pay rate applies.

City

Minimum hourly rate (2024)

Los Angeles

$17.27

Pasadena

$17.50

San Diego

$16.85

San Francisco

$18.67

San Jose

$17.55

Insurance and benefits

In California, employers are required to offer various types of insurance coverage and benefits to their employees in compliance with state laws. This includes health insurance, dental and vision coverage, unemployment insurance, disability insurance, workers’ compensation insurance, and retirement benefits like 401(k) plans.

Health insurance is mandatory for businesses with 50 or more full-time employees. Smaller businesses, while not legally required to offer health insurance, may still choose to provide it as part of their compensation packages.

Employers in California are also required to offer paid sick leave. Employees are entitled to at least one hour of paid sick leave for every 30 hours worked. Additionally, California has robust family and medical leave laws that go beyond federal requirements.

Benefit

Detail

Health insurance

Mandatory for businesses with 50 or more full-time employees

Dental and vision coverage

Typically offered as part of the compensation package

Unemployment insurance

Mandatory for all employers

Disability insurance

Mandatory for all employers

Workers’ compensation insurance

Mandatory for all employers

Retirement benefits (e.g., 401(k) plans)

Optional but commonly provided by employers

Paid sick leave

At least one hour for every 30 hours worked

Family and medical leave

Comprehensive coverage beyond federal requirements

Meal and rest periods

In California, employers are mandated to provide both meal and rest periods to their employees. The California Labor Code stipulates that employees are entitled to a 30-minute unpaid meal break for every five hours of work. However, if the workday is less than six hours, the meal break can be waived by mutual consent of the employer and employee. Furthermore, if an employee works more than 10 hours, employees are entitled to a second meal period of 30 minutes.

Anti-discrimination laws

California has taken a firm stance against discrimination in the workplace. The state’s Fair Employment and Housing Act (FEHA) provides broad protections against discrimination based on numerous categories including race, color, national origin, religion, age (40 and over), sex, pregnancy, childbirth or related medical conditions, sexual orientation, gender identity and gender expression, among others.

California’s anti-discrimination laws extend beyond those protected at the federal level by incorporating additional categories, such as genetic information, marital status, HIV/AIDS status, medical condition, political affiliations or activities, military or veteran status, and status as a victim of domestic violence, sexual assault or stalking.

These protections apply to hiring and firing decisions, promotions, training opportunities, and other conditions of employment.

California law also provides protection against retaliation. This means that employers cannot retaliate against employees who oppose any discriminatory practices or who file a complaint, testify, or assist in proceedings under FEHA.

Multiplier makes it easy to manage benefits for California employees.

Leave policies

In addition to the federally mandated leaves of absence, California law gives employees the right to several types of leaves. These include paid sick leave, for which employees accrue at least one hour for every 30 hours worked. The law requires that employers provide up to 48 hours or six days of paid sick leave per year.

California also has a Paid Family Leave program that allows employees to take up to six weeks of partial pay each year while taking time off work to bond with a new child or take care of a seriously ill family member.

The state’s Family School Partnership Act allows parents, grandparents, and guardians to take time off from work to participate in their children’s school or childcare activities.

The state also mandates disability leave and pregnancy disability leave, allowing eligible employees to receive partial wage replacement when they are unable to work due to disability or pregnancy. Bereavement leave, though not mandated by state law, is offered by many employers as a part of their benefits package.

Furthermore, California HR compliance entails providing military leave in accordance with the federal Uniformed Services Employment and Reemployment Rights Act (USERRA) and the state’s own Military and Veterans Code.

Leave type

Leave duration

Paid/unpaid

Sick leave

Up to six days per year

Paid

Family leave

Up to six weeks per year

Partially paid

Disability/Pregnancy leave

Varies

Partially paid

Bereavement leave

Varies

Typically paid

Military leave

Varies

Unpaid

Termination laws

In California, most employment relationships are “at-will”: Either the employer or the employee can terminate the employment relationship at any time, with or without cause. There are certain exceptions to the “at-will” rule, such as cases of discrimination, retaliation or when there is an employment contract specifying terms of termination.

It is customary for employees to give two weeks’ notice, although it isn’t stipulated by law.

Upon termination, final wages are due immediately and must include all accrued but unused vacation time. If an employee resigns without notice, final wages are due within 72 hours.

California law does not require employers to provide severance pay upon termination. However, if an employer chooses to offer severance pay, they must comply with the terms of their established policy or employment contract.

Easily onboard employees in California?

Safety and health

Workplace safety and health are paramount in California’s labor laws. The California Occupational Safety and Health Act (Cal/OSHA) includes comprehensive regulations designed to ensure safe and healthy working conditions for all employees.

Employers are required to have an effective written Injury and Illness Prevention Program (IIPP) that identifies and corrects workplace hazards.

The law also mandates employers to provide safety training to employees, maintain records of work-related injuries and illnesses, provide access to restroom facilities, and ensure proper ergonomics to reduce any risk of repetitive motion injuries among other obligations.

Taxes in California

On top of federal income tax withholding, employers in California must also withhold state income tax from employees’ wages. The amount depends on the employee’s tax bracket, which is determined by their filing status and amount of wages.

Employers withhold State Disability Insurance (SDI) tax from the employee’s paycheck, which funds short-term disability insurance and paid family leave benefits for employees.

Employers are subject to Unemployment Insurance (UI) tax, which provides temporary payments to individuals who are unemployed through no fault of their own.

Additionally, employers in California are subject to the Employment Training Tax (ETT), which provides funds to train employees in targeted industries to increase their competitiveness in the marketplace.

Lastly, employers and employees contribute to Social Security and Medicare taxes as mandated by the Federal Insurance Contributions Act (FICA).

Tax Type

Tax Rate

Federal Income Tax

Varies

State Income Tax

Varies

SDI Tax

1.0%

UI Tax

Varies

ETT

0.1%

Social Security Tax

6.2% (employer and employee each)

Medicare Tax

1.45% (employer and employee each)

Managing California employees with an Employer of Record (EOR)

Hiring in California involves complying with a diverse set of employment laws. From minimum wage stipulations to overtime rules, understanding these laws is crucial for maintaining HR compliance.

If you’re a company hiring US employees from abroad, Multiplier’s Employer of Record (EOR) solution allow you to employ full-time workers in California legally and without having to set up local entities. This simplifies the process of hiring in California and staying on the right side of compliance.

With Multiplier’s Global Payroll Platform, running payroll operations in California becomes a simple, streamlined task. Pay your U.S. workforce on time while taking care of local taxes, contributions, and withholdings. And our global benefits administration ensures your employees access fully compliant, competitive benefits, such as insurance coverage, pension plans, and more.

Book a demo today and streamline your HR procedures and compliance operations.

FAQs

According to California employment laws, full-time employment typically refers to a workweek that consists of 40 hours.

Yes, non-exempt employees are entitled to overtime pay in California. This includes 1.5 times their regular pay rate for work over eight hours (but less than 12) in a workday, and double their regular pay rate if they work over 12 hours in a day.

The state minimum wage in California is $16 per hour. However, cities can set their own minimum rates. For example, San Francisco’s minimum hourly rate for 2024 is $18.67, while in Los Angeles it is $17.28.

The standard onboarding timeline for hiring an employee in California can vary, but it typically spans from a few weeks to an entire year, depending on the domain, profession, and role. With Multiplier’s platform, the minimum onboarding time (MOT) is just two working days, which begins after the employee has submitted all required information. For non-US citizens, a work eligibility assessment may be required, which can add three extra days to the onboarding time.

California HR compliance laws stipulate that employees must be paid at least once per month. However, private sector salaries are usually paid twice per month. For Multiplier customers, payments are made on the 15th and the last day of each month.

Managing employees in California?

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