California businesses employ over 13 million people, which is why it should be no surprise that the labor laws in the state are varied and complex. With a statewide annual payroll of well over half a billion dollars annually, California employment laws must account for the needs of a wide variety of businesses and employees. If you run a California business or serve as a general counsel to one, you will be held accountable for compliance with these laws from the first day you employ even a single employee or independent contractor. Through Priori’s on demand marketplace, you can find, hire and work with top California employment lawyers to help you with these issues and more.
Employee Compensation and Benefits
All employers in California must carefully comply with all compensation and benefits laws. In California, these can be extensive—and failure to comply with any can lead to costly sanctions.
Wages and the FLSA
The Fair Labor Standards Act (FLSA) establishes fair working conditions within the United States. This dictates fair wages, establishes fair payment processes and protects against other unfair workplace conditions, such as child labor and uncompensated furloughs.
The federal minimum wage under the FSLA is currently $7.25/hr. Under California’s "Fair Wage Act of 2016,” however, the minimum wage in California was set at $10/hr in January 2016 and it will continue to raise incrementally until it reaches $15/hr in 2021. No matter what the minimum wage is currently, hourly workers should be compensated at 1.5x their normal hourly rate for overtime, defined as any hours worked beyond 40 in a single week. White collar overtime-exempt workers, on the other hand, have no claim to overtime in California, but they must be paid an annual salary equivalent to double the minimum wage to qualify.
Under the Affordable Healthcare Act, all businesses with 50 or more employees must provide health insurance to full-time employees and their dependents or face a penalty. California does not have alternate requirements for small businesses, but some small businesses may still be required to offer some form of health coverage. Under the Affordable Healthcare Act, any employee who works at least 30 hours per week is considered full-time.
Meal and Rest Breaks
In California, any employee who works at least five hours in a single day is entitled to a 30-minute meal period. This meal period does not have to be paid. Employees do have to be compensated for rest breaks, though. Every employee deserves at least a ten minute break for every four hours worked. Rest periods and meal periods cannot overlap. In addition, any mothers who are lactating must be given reasonable accommodations to take breaks to express milk for their infant child.
Under the Healthy Workplaces, Healthy Families Act, employers must offer employees who have worked at least 90 days in a company with three days of paid sick leave per year. In addition, the Family and Medical Leave Act requires employers to provide employees with additional job-protected unpaid leave for qualified medical and family reasons, including personal or family illness, family military leave, pregnancy, adoption, or the foster care placement of a child. Many companies in California also provide some additional paid leave or vacation time.
California Wage Theft Protection Act of 2011
Under the California Wage Theft Prevention Act of 2011, all employers must notify new employees of their rights related to regular and overtime wages under the California Labor Code. Most companies issue these notices within the employment contracts signed by employees. All Wage Theft Prevention Act notices must fulfill certain requirements for information given, which can be easily fulfilled using the California Labor Commissioner's template.
Discrimination and Harassment
Workplace discrimination and harassment based on race, religion, ethnicity, gender, sexuality, disability, martial status, or other protected class is illegal in California. All companies with over 50 employees must train employees on what is and is not considered workplace harassment, especially sexual harassment. Internal procedures must also be in place to stop and punish such discrimination. If a company is negligent in acting against such harassment, employees may be entitled to sue over a hostile work environment, which is why such accusations must be taken seriously. Harassed or discriminated against employees who reported the offenses to their employers and were not helped can bring a case with the California Department of Fair Employment and Housing or the federal Equal Employment Opportunity Commission.
Hiring and Termination
Federal and California labor law regulate employment and termination. Employment procedures must be fair, nondiscriminatory, and protect the basic interests of employees. Although there are few laws strictly dictating how employees must be hired, it is generally standard practice to do so with a thorough, attorney-drafted employment contract.
At-Will Employment and Termination
All jobs in California are assumed to be “at-will” employment, which means both employers and employees are free to terminate the relationship at any time for almost any reason, unless stated otherwise in an employment contract. While termination requirements are limited, protections are in place against firing employees for discriminatory other illegal reasons. When an employee has been fired, they become eligible for unemployment benefits. It’s important to note that employees let go due to widespread layoffs must be given proper notice and a small severance.
Federal law requires companies with at least 20 employees to offer continued health insurance coverage to recently let go employees for at least 18 months under COBRA. California has expanded federal coverage under Cal-COBRA. This plan allows employees of small businesses with at least 2 employees take advantage of extended coverage, as well, and extends coverage for all workers from 18 months to 36 months. Cal-COBRA is also available to full-time employees whose hours are cut to part-time and would otherwise similarly lose the right to health plan coverage.
Health and Safety in the Workplace
California is a "state-plan" state for workplace standards, which means state health and safety regulations provided by Cal/OSHA supersede federal regulations. Generally, these are still quite similar to federal workplace health and safety standards established by OSHA. All companies must determine which unique standards apply to their industry, area, and company.
If your company employs even just a single private employee in California, you must carry workers’ compensation insurance valid here. California companies must contract for worker’s compensation insurance through private carriers on the California Department of Insurance authorized insurers list.
If an employee is injured on the job, they have the right to compensation for treatment through this insurance, as well as a certain number of paid days off under California workers’ compensation laws. As an employer, you are required to give appropriate time of for any recovery time and treatments approved through a workers’ compensation claim.
Is an employee handbook necessary for small startups in California?
An employee handbook is not required for small businesses and startups in California, but you must have written harassment, discrimination and retaliation prevention policies. Having employee rights and obligations codified in a handbook can help further limit a company’s liability.
Is employee drug-testing legal in California?
Under certain circumstances. Drug-testing as a condition of employment is legal, but randomly drug testing employees after they have been hired is not legal except under certain circumstances, such as reasonable suspicion of drug use or employment in the transportation industry as a driver.
Do certain cities in California have stronger employment laws?
No matter whether your startup is located in San Francisco, San Diego, San Jose, or Sacramento, your company will generally be subject to the same employment laws. Still, certain cities and counties apply additional laws or stricter minimum wages, so it may help to discuss these differences with a California employment lawyer.