A California business compliance checklist covers ten moving parts: paying workers correctly, classifying them correctly, training them, keeping the workplace safe, carrying the right insurance, reporting new hires, protecting consumer data, posting chemical warnings where required, paying state taxes, and keeping your entity registration current. Each has its own deadline, its own agency, and its own penalty for getting it wrong. The sections below walk through what each one actually requires in 2026.
Pay, Overtime, and Breaks
The statewide minimum wage is $16.90 per hour as of January 1, 2026, and it applies to every employer regardless of size.1California Department of Industrial Relations. Minimum Wage Fast food restaurants covered by AB 1228 pay at least $20.00 per hour, and health care facilities under SB 525 pay between roughly $18.63 and $24.00 depending on the facility.2California Department of Industrial Relations. Health Care Worker Minimum Wage Frequently Asked Questions Many cities set higher local minimums, so check your city’s rate before setting payroll.
California calculates overtime daily, not just weekly. Any hours past eight in a day or 40 in a workweek pay at 1.5 times the regular rate. Hours past 12 in a day pay at double time. A seventh consecutive workday in a workweek pays 1.5 times for the first eight hours and double after that.3California Legislative Information. California Code LAB 510 An employee who works exactly 40 hours in a week can still earn overtime if any one shift ran past eight hours.
Meal periods are 30 minutes, unpaid, and required for any shift over five hours. The first meal break can be waived by mutual agreement if the shift stays at six hours or less. A second 30-minute meal kicks in past ten hours and can only be waived if the shift stays under 12 hours and the first meal was taken.4California Legislative Information. California Code Labor Code 512 Rest breaks are separate: a paid 10 minutes for every four hours worked or major fraction, which the state reads as anything over two hours.5Division of Labor Standards Enforcement. Rest Periods/Lactation Accommodation
Paid sick leave has been five days or 40 hours per year since SB 616 took effect January 1, 2024. Accrual stays at one hour per 30 hours worked, but the higher cap means most full-time workers hit the five-day ceiling well before year-end.6California Department of Industrial Relations. California Paid Sick Leave Frequently Asked Questions Wage statements must be accurate and itemized. Labor Code Section 226 penalties start at $50 for the first pay period, then $100 per employee per subsequent pay period, up to $4,000.7California Legislative Information. California Code LAB 226
Classifying Workers Correctly
California presumes anyone you pay for labor is an employee. To treat a worker as an independent contractor, you must prove all three prongs of the ABC test under Labor Code Section 2775: the worker is free from your control over how the work gets done, the work falls outside your usual line of business, and the worker runs an independently established trade or business of the same nature.8California Legislative Information. California Code Labor Code 2775
Prong B catches most businesses. A delivery company cannot classify drivers as contractors because deliveries are the business. Some professions are exempt and use the older Borello multi-factor test instead, but the exempt list is narrower than many employers assume. Getting classification wrong exposes you to back overtime, meal and rest premiums, unpaid payroll taxes, and penalties stacked across every affected worker.
Harassment Prevention Training
If you have five or more employees, counting temps and seasonal workers, you must provide sexual harassment prevention training. Non-supervisory staff get at least one hour; supervisors get at least two. New hires must complete training within six months of starting, and everyone retrains every two years.9California Legislative Information. SB 1343 – Employers: Sexual Harassment Training Requirements The California Civil Rights Department enforces the rule and can bring litigation or administrative action.10California Civil Rights Department. Sexual Harassment Prevention Training
Workplace Safety and Injury Reporting
Every California employer must have a written Injury and Illness Prevention Program, or IIPP. This is not optional and not limited to high-hazard industries. The IIPP identifies who runs the program, how hazards are evaluated and corrected, and how safety information reaches employees. Workers must be able to report hazards without retaliation. Records of inspections, corrections, and training stay on file for at least one year.11Department of Industrial Relations. California Code of Regulations, Title 8, Section 3203 – Injury and Illness Prevention Program
Cal/OSHA penalties are steep. A serious violation starts at an $18,000 base and can reach $25,000. Willful violations run from $11,632 to $162,851. Repeat offenses multiply the base by up to ten.12Department of Industrial Relations. California Code of Regulations, Title 8, Section 336 – Assessment of Civil Penalties A fatality or serious injury must be reported to Cal/OSHA within eight hours. Extraordinary circumstances can extend that to 24 hours at most. A “serious injury” covers hospitalization beyond observation, amputation, loss of an eye, or any injury with a realistic possibility of death. Failing to report is itself a citable violation.
Workers’ Compensation, SDI, and New Hire Reporting
If you have at least one employee, you must carry workers’ compensation insurance through a private carrier, the State Compensation Insurance Fund, or an approved self-insurance program. There is no small-business exemption. Operating without coverage is a misdemeanor punishable by up to a year in county jail, a fine of at least $10,000 or double the premium owed (whichever is greater), or both. A second offense raises the minimum fine to $50,000.13California Legislative Information. California Code Labor Code 3700.5
State Disability Insurance withholding is 1.3 percent of wages in 2026, with no taxable wage cap. SB 951 removed the ceiling in 2024, so high earners now pay SDI on their full salary.14Employment Development Department. Contribution Rates, Withholding Schedules, and Meals and Lodging Values
Report every new hire to the Employment Development Department within 20 calendar days of their first day. This covers rehires separated for at least 60 consecutive days. A late report costs $24 per occurrence; filing intentionally false information jumps to $490.15Employment Development Department. California New Employee Registry FAQs
Consumer Privacy
The California Consumer Privacy Act, as amended by the California Privacy Rights Act, applies if you meet any one of three thresholds: annual gross revenue above the CPI-adjusted figure of $26,625,000, personal data of 100,000 or more consumers or households, or more than half of annual revenue from selling or sharing personal information.16California Privacy Protection Agency. Updated Monetary Thresholds in CCPA
If you qualify, you must disclose at or before collection what personal information you collect, why, and which third parties receive it. Consumers can request deletion, correction, or an end to the sale or sharing of their data. You need a visible opt-out mechanism and must respond to a verifiable request within 45 days, with one 45-day extension allowed if you notify the consumer. The CPRA created a “sensitive personal information” category covering Social Security numbers, financial credentials, precise geolocation, biometrics, health information, and racial or ethnic origin, and consumers can limit how you use it.17Privacy.ca.gov. What Is Personal Information?
The California Privacy Protection Agency enforces the law. Penalties, CPI-adjusted, run up to $2,663 per violation and $7,988 for intentional violations or those involving a minor.16California Privacy Protection Agency. Updated Monetary Thresholds in CCPA Per-incident figures compound fast when a breach touches thousands of consumers.
Proposition 65 Chemical Warnings
Proposition 65, formally the Safe Drinking Water and Toxic Enforcement Act of 1986, requires businesses to warn people before exposing them to any of the hundreds of chemicals the state has identified as causing cancer or reproductive harm.18OEHHA. About Proposition 65 Warnings go on product packaging, at building entrances, on retail shelf tags, or on websites for products shipped into California. The warning must be seen before the exposure, so placement and wording both matter.
Failure-to-warn penalties can reach $2,500 per violation per day.18OEHHA. About Proposition 65 Enforcement does not depend on a state agency acting. Private individuals and organizations can sue businesses directly, and they do so frequently. The Attorney General, district attorneys, and certain city attorneys can also bring actions. Daily penalties plus private enforcement make even small labeling oversights expensive.
Franchise Tax and the LLC Fee
Most corporations and LLCs doing business in California owe an $800 minimum franchise tax each year to the Franchise Tax Board whether or not the business earned revenue.19State of California Franchise Tax Board. Corporations Corporations formed on or after January 1, 2020 are exempt from the minimum in their first taxable year. The parallel first-year exemption for LLCs under AB 85 expired at the end of 2023, so LLCs formed in 2024 or later owe the $800 from year one.20Franchise Tax Board. FTB Pub 3556 – Limited Liability Company Filing Information
LLCs also owe an income-based fee on top of the $800 minimum:
- $250,000 to $499,999: $900
- $500,000 to $999,999: $2,500
- $1,000,000 to $4,999,999: $6,000
- $5,000,000 or more: $11,790
An LLC with $500,000 in California income pays at least $3,300 to the FTB before any income tax.20Franchise Tax Board. FTB Pub 3556 – Limited Liability Company Filing Information Standard corporations file by the 15th day of the fourth month after the taxable year ends (April 15 for calendar-year filers). S corporations, partnerships, and most LLCs file by the 15th day of the third month (March 15 for calendar-year filers).21Franchise Tax Board. e-file Calendars Most cities and counties also require a local business license, with fees that vary by location and business type.
Statement of Information Filings
Every California business entity must keep its registration current with the Secretary of State by filing a Statement of Information. Corporations file annually; LLCs file every two years.22California Legislative Information. California Code CORP 150223California Legislative Information. California Code CORP 17702.09 The form lists officers, directors, or managers, the principal office address, the type of business, and the agent for service of process.
Missing this filing carries a $250 penalty and risks suspension by the Franchise Tax Board or Secretary of State.24Franchise Tax Board. Common Penalties and Fees A suspended business cannot use its name, enforce contracts, or defend itself in court. Reviving the entity means clearing every delinquent return, every unpaid balance with penalties and interest, and submitting a revivor request to the FTB, which can take weeks during which the business is legally frozen.25Franchise Tax Board. Closing a California Business Entity Of everything on this checklist, the Statement of Information is among the simplest to file and the most disruptive to miss.