A California employer compliance checklist starts with classifying your workers correctly and runs through state tax registration, workers’ compensation, new-hire paperwork, wage and hour rules, pay stub formatting, expense reimbursement, paid sick leave, final pay deadlines, mandatory training, and a written safety program. California layers obligations on top of federal law, and the penalties for missing any one item routinely exceed the cost of doing it right the first time. The state minimum wage reached $16.90 per hour on January 1, 2026, and many cities and counties enforce higher local rates.1California Department of Industrial Relations. Minimum Wage Work through the items below in order, because mistakes early in the list (misclassification especially) poison everything downstream.
Classify Every Worker Correctly
California presumes every worker is an employee. To treat someone as an independent contractor, you must satisfy all three parts of the ABC test: the worker is free from your control over how the work is done, performs work outside your usual business, and has their own independent trade of the same type.2Labor & Workforce Development Agency. ABC Test Fail any one prong and the person is your employee.
Willful misclassification brings civil penalties of $5,000 to $15,000 per worker for a first violation, and $10,000 to $25,000 per worker if the state finds a pattern.3California Legislative Information. California Labor Code 226.8 Back taxes, unpaid benefits, and wage claims pile on top. Settle classification before you register for anything else, because every obligation below assumes you know who your employees are.
Register With the State and Carry Workers’ Comp
Register with the Employment Development Department using Form DE 1 within 15 days of paying more than $100 in wages in a calendar quarter.4Employment Development Department. Instructions for Completing the Commercial Employer Account Registration and Update Form You can register online through e-Services for Business or by mail.5Employment Development Department. Fast and Secure Online Registration Registration produces the payroll tax account number you’ll use for quarterly reporting.
Withhold State Disability Insurance from employee wages at 1.3 percent for 2026, with no wage ceiling.6Employment Development Department. Contribution Rates, Withholding Schedules, and Meals and Lodging Values SDI is employee-paid, but you are responsible for withholding and remitting it.
Workers’ compensation is non-negotiable from the first employee. Get coverage through a private insurer, the State Compensation Insurance Fund, or by qualifying to self-insure through the Director of Industrial Relations.7California Legislative Information. California Code LAB 3700 Working without coverage draws a stop order that halts your use of employee labor, and you owe affected employees up to ten days of lost pay while the order stands.8California Legislative Information. California Labor Code 3710.1 Inspectors ask for policy numbers during site visits.9Division of Workers’ Compensation. Answers to Frequently Asked Questions About Workers’ Compensation for Employers
Onboard New Hires With the Right Forms and Notices
Complete the employer section of federal Form I-9 within three business days of the employee’s first day of paid work.10U.S. Citizenship and Immigration Services. Completing Section 2, Employer Review and Attestation Collect both the federal W-4 and the California DE 4 for tax withholding, because the state form handles California income tax separately.11Employment Development Department. Employee’s Withholding Allowance Certificate (DE 4)
Hand the employee a written wage notice under Labor Code 2810.5 listing the pay rate, regular payday, your legal name and address, and your workers’ compensation carrier’s contact information.12Department of Industrial Relations. Notice to Employee The same notice covers paid sick leave rights under the Healthy Workplaces, Healthy Families Act.13Department of Industrial Relations. Healthy Workplace Healthy Family Act of 2014 (AB 1522) If pay or other terms change later, issue an updated notice within seven calendar days.
Report every new or rehired employee to the California New Employee Registry within 20 calendar days of the start date using Form DE 34. A rehire counts if the person was off your payroll for at least 60 consecutive days.14Employment Development Department. California’s New Employee Registry
If you have five or more employees, the Fair Chance Act prohibits asking about criminal convictions on the application or before a conditional offer. If you later want to rescind the offer based on a conviction, you must send a written explanation and a copy of the background report, then give the applicant at least five business days to respond before deciding.15California Legislative Information. California Code GOV 12952
Post the Required Workplace Notices
Display current state posters where employees can read them during the workday, including the “California Law Prohibits Workplace Discrimination and Harassment” notice, the “Transgender Rights in the Workplace” poster for employers with five or more employees, and EDD notices covering unemployment and disability insurance.16California Civil Rights Department. Publications If 10 percent or more of your workforce speaks a language other than English, post translations in that language too.
Labor Code 1207 lets you also distribute postings by email with the documents attached, but electronic delivery supplements the physical postings; it does not replace them.17California Legislative Information. SB-657 Employment: Electronic Documents
Pay Employees Under California Wage and Hour Rules
The $16.90 statewide minimum applies to every employer regardless of size, and city or county rates often go higher.1California Department of Industrial Relations. Minimum Wage Check the rules for the location where each employee actually performs work, not just where your headquarters sits.
Overtime in California is driven by the day, not just the week. You owe time-and-a-half for hours over eight in a day, over 40 in a week, and for the first eight hours on the seventh consecutive day of a workweek. Double time kicks in beyond 12 hours in a day and beyond eight hours on that seventh consecutive day.18California Legislative Information. California Code LAB 510 Out-of-state employers routinely miss the daily trigger.
Provide a 30-minute unpaid meal break before the end of the fifth hour of work, and a second 30-minute meal break before the end of the tenth hour. Either can be waived by mutual agreement if the shift stays under six hours (first meal) or 12 hours (second meal, only if the first was taken).19California Legislative Information. California Code LAB 512 Give a paid 10-minute rest break for every four hours worked or major fraction, scheduled in the middle of each work period when practical. Shifts under three and a half hours require none.20Department of Industrial Relations. IWC Wage Order 5
Miss a required meal or rest break and you owe the employee one extra hour of pay at their regular rate for that workday. Meal and rest violations stack, so a day where both are missed costs two hours of premium pay.21California Legislative Information. California Labor Code 226.7 Timekeeping discipline is what makes these claims hard to defend when they’re filed as a class action.
Issue Compliant Pay Stubs and Keep Records
Labor Code 226 requires every pay stub to show nine items: gross wages earned, total hours worked (except for exempt employees), piece-rate units and rates where applicable, all deductions, net wages earned, the pay period start and end dates, the employee’s name with only the last four digits of the Social Security number or an employee ID, the employer’s legal name and address, and all hourly rates in effect with hours worked at each rate.
Missing any one item exposes you to $50 for a first violation and $100 for each later violation per employee per pay period, plus attorney’s fees if sued.22California Legislative Information. California Labor Code 226 Keep payroll records, including hours worked and wages paid, for at least three years.23California Legislative Information. California Code LAB 1174
Reimburse Business Expenses
Labor Code 2802 requires you to reimburse employees for all necessary expenses they incur doing their job. That covers personal cell phone bills used for work, mileage and vehicle costs for business driving, internet service for remote workers, and tools or supplies the employee buys at your direction.24California Legislative Information. California Code LAB 2802
Many employers reimburse driving at the IRS standard mileage rate, which is 72.5 cents per mile for 2026.25Internal Revenue Service. The Standard Mileage Rates and Maximum Automobile Fair Market Values Have Been Updated for 2026 The IRS rate is a benchmark, not a legal ceiling. If an employee’s actual costs exceed the rate you use, you may owe the difference. A written reimbursement policy applied consistently is the safer practice.
Provide Paid Sick Leave
Under the Healthy Workplaces, Healthy Families Act, employees accrue at least one hour of paid sick leave per 30 hours worked, and you must make at least 40 hours (five days) available per year. Employees can use the time for their own health, to care for a family member, or for purposes related to domestic violence and certain qualifying acts of violence.26Department of Industrial Relations. California Paid Sick Leave: Frequently Asked Questions The required sick leave notice is folded into the 2810.5 wage notice at hire, but your handbook should spell out current accrual and usage rules.
Deliver Final Pay on Time
When you fire or lay off an employee, all earned and unpaid wages are due immediately at discharge. No grace period.27California Legislative Information. California Code Labor Code LAB 201 When an employee quits without notice, you have 72 hours to deliver final wages. If they gave at least 72 hours’ notice, the final check is due on their last day.28California Legislative Information. California Code Labor Code LAB 202
Miss the deadline and waiting time penalties start running. The employee’s daily wage keeps accruing as a penalty for each calendar day the wages remain unpaid, up to 30 days. Weekends and holidays count. The clock stops only when you pay or when the employee sues.29California Legislative Information. California Labor Code 203 For an employee earning $200 a day, 30 days of penalties adds $6,000 to what you already owe. A good-faith dispute over the amount can be a defense, but only if you pay the undisputed portion on time.
Complete Mandatory Training and Written Plans
If you have five or more employees, provide sexual harassment prevention training on a recurring two-year cycle. Supervisors need at least two hours; non-supervisors need at least one. New non-supervisory hires must complete training within six months of hire, and new supervisors within six months of taking the role.30California Legislative Information. California Code GOV 12950.1 Classroom, online, or shorter segments all work as long as the hours add up.
Since July 1, 2024, most employers must maintain a written workplace violence prevention plan under Labor Code 6401.9. The plan has to name the people responsible for it, give employees a way to report threats without retaliation, describe emergency response, and lay out how incidents will be investigated.31California Legislative Information. California Labor Code 6401.9 You can run it standalone or fold it into your Injury and Illness Prevention Program. Keep a violent incident log and training records.
Maintain a Written Safety Program
Every California employer must keep a written Injury and Illness Prevention Program. It needs a named person with authority over safety, a system for identifying and evaluating hazards through periodic inspections, and procedures for investigating injuries or illnesses to prevent repeats.32California Legislative Information. California Code LAB 6401.7 Document all safety training with dates, topics, and attendees. A well-kept program is the strongest defense against a Cal/OSHA citation.
Outdoor worksites bring extra duties. Once the temperature reaches 80°F, the heat illness prevention standard requires shade structures and access to drinking water, plus training on symptoms and emergency response.33Department of Industrial Relations. Cal/OSHA Heat Illness Prevention Guidance and Resources
Cal/OSHA adjusts penalty maximums each year. For 2025, general and regulatory violations top out at $16,285, serious violations at $25,000, and willful or repeat violations at $162,851, with a minimum of $11,632 for a willful violation.34California Department of Industrial Relations. Cal/OSHA Increases Civil Penalty Amounts for 2025 Those are per-violation amounts, so a single inspection that finds several deficiencies can produce a bill large enough to end a small business.