California employment regulations reach further than federal law in almost every direction, from how a job is posted to what the final paycheck must contain. The statewide minimum wage sits at $16.90 per hour as of January 1, 2026, with higher industry floors for fast-food and healthcare work, and the rules governing classification, leave, safety, discrimination, and termination all carry their own thresholds and penalties. Missing any one of them can produce wage claims, agency investigations, and back-pay liability that costs far more than compliance would have. What follows is a working map of the obligations a California employer needs to meet.
Hiring Rules
Several restrictions attach before an employee even starts.
Criminal History and the Fair Chance Act
Employers with five or more employees cannot ask about an applicant’s criminal history before making a conditional offer.1California Civil Rights Department. Fair Chance Act FAQ If a later background check reveals a conviction and you want to rescind the offer, you must first conduct an individualized assessment weighing the nature of the offense, how much time has passed, and the duties of the job, then give the applicant a chance to respond before deciding.
Pay Transparency and Salary History
Employers with 15 or more employees must include the pay scale in every job posting, including those placed through third-party recruiters.2California Legislative Information. California Senate Bill 1162 – Employment: Salaries and Wages No employer, regardless of size, may ask about an applicant’s prior compensation or benefits history.3Department of Industrial Relations. California Equal Pay Act An applicant may volunteer that information, but you cannot solicit it.
Credit Checks
Consumer credit reports on applicants or employees are prohibited unless the role fits one of a narrow set of exceptions: managerial positions under the executive exemption, law enforcement, jobs with regular access to bank account numbers combined with Social Security numbers and dates of birth, roles with financial signing authority or the ability to transfer money for the employer, positions with access to trade secrets or proprietary information, and jobs with regular access to $10,000 or more in cash during a workday.4California Legislative Information. California Labor Code 1024.5 Outside those categories, pulling credit creates liability.
Non-Compete Agreements
Non-competes are void in California. Under SB 699, an employer cannot even attempt to enforce one, regardless of where the contract was signed or the work performed, and entering into a contract containing a void non-compete is itself a civil violation that lets the worker sue for damages and attorney’s fees.5California Legislative Information. California SB 699 – Contracts in Restraint of Trade AB 1076 also required employers to notify current and certain former employees by February 14, 2024 that any existing non-compete clauses are unenforceable. Failing to send that notice constitutes unfair competition.6California Department of Justice. Attorney General Bonta Issues Consumer Alert Reminding California Workers Their Non-Compete Agreements Are Void
Immigration-Related Protections
The California Immigrant Worker Protection Act bars employers from voluntarily admitting federal immigration agents to non-public work areas or giving them access to employee records without a judicial warrant or subpoena. An exception exists for I-9 forms requested through a formal federal Notice of Inspection.7California Department of Justice. Immigrant Worker Protection Act (Assembly Bill 450) Frequently Asked Questions Employers who skip the required workplace notices face civil penalties of $2,000 to $5,000 for a first violation and $5,000 to $10,000 for later ones.8California Legislative Information. California Labor Code 90.2 All federal I-9 obligations still apply for every hire, but you cannot use verification in a discriminatory way, such as demanding extra documents from someone who already produced valid identification.9U.S. Citizenship and Immigration Services. Form I-9 Acceptable Documents
Classifying Workers: Employee or Independent Contractor
Assembly Bill 5 codified the ABC test, which presumes every worker is an employee unless the hiring entity can prove all three of these: the worker is free from the company’s control over how the work is performed, the work falls outside the company’s usual business operations, and the worker independently operates their own trade or business of the same nature.10Department of Industrial Relations. Independent Contractor Versus Employee Fail any single prong and the worker counts as an employee for wages, overtime, unemployment insurance, and workers’ compensation.
Proposition 22 carves out app-based rideshare and delivery drivers, treating them as independent contractors when the company meets conditions such as not prescribing specific work schedules or requiring acceptance of particular service requests.11California Secretary of State. California Proposition 22 – Protect App-Based Drivers and Services Act The California Supreme Court unanimously upheld the measure in July 2024. For every other employer, the ABC test governs, and the Employment Development Department audits for payroll tax compliance. A misclassification can produce liability for unpaid payroll taxes, retroactive benefits, and penalties.
Minimum Wage, Overtime, and Paid Sick Leave
Minimum Wage
The statewide minimum wage is $16.90 per hour as of January 1, 2026, and it adjusts annually for inflation. Two industry floors sit higher. Fast-food restaurant employees covered under AB 1228 must earn at least $20.00 per hour.12Department of Industrial Relations. Minimum Wage Healthcare workers follow a tiered schedule: large hospital systems and dialysis clinics pay $24.00 per hour from July 2025 through June 2026, rising to $25.00 in July 2026, while other covered healthcare facilities range from $18.63 to $24.00 during the same period depending on size and category.13Department of Industrial Relations. Health Care Worker Minimum Wage Frequently Asked Questions Many cities impose higher local rates, so check the ordinance for each work location.
Overtime
California calculates overtime on both a daily and weekly basis. Non-exempt employees earn 1.5 times their regular rate for hours beyond eight in a single day or beyond 40 in a workweek. Hours beyond 12 in a day pay at double the regular rate, as do hours beyond eight on the seventh consecutive day worked in a workweek.14Department of Industrial Relations. FAQ – Overtime Employers used to the federal weekly-only rule frequently miss the daily trigger, and wage claims follow quickly.
Paid Sick Leave
Every California employer must provide at least five days or 40 hours of paid sick leave per year. Employees accrue at a minimum rate of one hour for every 30 hours worked, starting on their first day, and can use the leave after their 90th day of employment. Frontloading the full 40 hours at the start of the year is an alternative to tracking accrual. Unused leave carries over, though employers may cap total accrual at 80 hours and annual usage at 40.15California Legislative Information. California Labor Code 246 Some local jurisdictions require more.
Meal and Rest Breaks
Non-exempt employees who work more than five hours must receive a 30-minute unpaid, duty-free meal break. A second 30-minute meal break applies to shifts over ten hours.16Department of Industrial Relations. Division of Labor Standards Enforcement – Meal Periods Rest breaks run on a separate clock: 10 paid minutes for every four hours worked, taken as close to the middle of the work period as practical, and they cannot be combined with meal breaks. If you fail to provide a required meal or rest break, you owe the employee one additional hour of pay at their regular rate for that workday. That premium applies once per type of missed break per day, not once per individual break missed.17Department of Industrial Relations. Rest Periods/Lactation Accommodation
Wage Statements and Final Paychecks
Every pay period, employers must provide an itemized written wage statement showing gross wages, total hours worked, all deductions, net wages, pay period dates, applicable hourly rates with hours worked at each rate, and the employer’s legal name and address.18California Legislative Information. California Labor Code 226 Missing a single required element can trigger statutory penalties.
On termination, all wages including accrued vacation are due at the time of separation. An employee who quits without notice must receive final wages within 72 hours; one who gives at least 72 hours’ notice must be paid on their last day. Missing those deadlines produces waiting-time penalties equal to the employee’s daily pay for each day wages remain unpaid, up to 30 days.19Department of Industrial Relations. Paydays, Pay Periods, and the Final Wages
If any part of an employee’s compensation involves commissions, you must have a written contract that spells out how commissions are calculated and when they are paid, deliver a signed copy to the employee, and obtain a signed receipt. When a commission agreement expires but both sides keep working under its terms, the terms are presumed to continue until replaced or until either side ends the relationship. Short-term productivity bonuses, temporary incentive payments that only increase base pay, and profit-sharing plans generally do not qualify as “commissions” for these purposes.
Discrimination, Harassment, and Required Training
Who and What FEHA Covers
The Fair Employment and Housing Act applies to employers with five or more employees and prohibits discrimination based on race, color, national origin, ancestry, religion, age (40 and older), disability, sex, gender, sexual orientation, gender identity, gender expression, medical condition, genetic information, marital status, military or veteran status, and reproductive health decisions.20California Civil Rights Department. Employment Discrimination The list runs broader than federal Title VII. Employers must provide reasonable accommodations for disabilities and pregnancy-related conditions unless doing so would impose an undue hardship.
CROWN Act
FEHA’s definition of “race” explicitly includes traits historically associated with race, such as hair texture and protective hairstyles like braids, locs, and twists.21California Legislative Information. California Government Code 12926 Grooming policies that look neutral but disproportionately affect people of color can violate the law. Legitimate safety or hygiene rules that require hair to be secured remain permissible; blanket bans on natural hairstyles do not.
Harassment Prevention Training
Every employer with five or more employees must provide sexual harassment prevention training on a two-year cycle. Supervisors need two hours; non-supervisory employees need one. New supervisors must complete training within six months of assuming the role, and new non-supervisory hires within six months of their start date.22Civil Rights Department. Sexual Harassment Prevention Training Information For Employers Employers are also responsible for preventing harassment by non-employees such as clients or vendors. Workers can file complaints with the California Civil Rights Department, which may investigate and pursue legal action on their behalf.23California Civil Rights Department. Complaint Process
Workplace Safety
Every California employer must maintain a written Injury and Illness Prevention Program. It has been required by law since 1991 and must include nine specific elements: a designated person responsible for implementation, a system for ensuring employees follow safe work practices, a method for communicating with employees about hazards in a language they understand, procedures for identifying and evaluating workplace hazards, procedures for investigating injuries or illnesses, procedures for correcting unsafe conditions, employee training, a way for employees to access the written program, and recordkeeping.24Division of Occupational Safety and Health (Cal/OSHA). Developing Your Workplace Injury and Illness Prevention Program Cal/OSHA enforces the requirement and conducts inspections. State standards are often stricter than federal OSHA on heat illness prevention, wildfire smoke exposure, and workplace violence in healthcare settings, and the written program on paper is not enough: the agency expects to see it in practice.
Workers’ Compensation and Payroll Taxes
Workers’ Compensation Insurance
Every California employer with one or more employees must carry workers’ compensation insurance, and employees cannot be asked to contribute to the premium.25Division of Workers’ Compensation. Answers to Frequently Asked Questions About Workers’ Compensation for Employers Operating without coverage is a criminal misdemeanor. A first conviction carries up to one year in county jail, a fine of at least $10,000 or double the amount of premium that should have been paid (whichever is greater), or both. A second or later conviction raises the minimum fine to $50,000 or triple the unpaid premium.26California Legislative Information. California Labor Code 3700.5 Employers must also post a notice about coverage; failing to post can bring a civil penalty of up to $7,000 per violation.
State Payroll Taxes
California employers must register with the Employment Development Department and electronically file tax returns, wage reports, and payroll tax deposits. The employer-side obligations for 2026 are:
- Unemployment Insurance (UI): employer-paid tax on the first $7,000 of each employee’s wages. New employers pay a rate of 3.4% for the first two to three years, with experience-rated adjustments after that.
- Employment Training Tax (ETT): a 0.1% employer-paid tax on the first $7,000 of each employee’s wages.
- State Disability Insurance (SDI): employee-paid through payroll withholding at 1.3% of wages, with no taxable wage ceiling. SDI funds both disability benefits and Paid Family Leave.
All new hires must be reported to the state’s New Employee Registry within 20 days of their start date.27Employment Development Department. Household Employer’s Guide
Family and Medical Leave
California Family Rights Act
CFRA provides eligible employees up to 12 weeks of unpaid, job-protected leave per year for their own serious health condition, to care for a family member with a serious health condition, or to bond with a new child. It applies to employers with five or more employees, well below the federal FMLA’s 50-within-75-miles threshold, and it covers a broader set of relationships including grandparents, grandchildren, siblings, and adult children.28California Civil Rights Department. Family Care and Medical Leave: Quick Reference Guide To qualify, an employee must have worked for you at least a year and logged at least 1,250 hours in the preceding 12 months.
Paid Family Leave and Pregnancy Disability Leave
Paid Family Leave provides partial wage replacement for up to eight weeks within a 12-month period when an employee takes time off to bond with a new child, care for a seriously ill family member, or support a family member’s military deployment.29Employment Development Department. Paid Family Leave PFL is funded through the SDI payroll withholding and does not provide job protection on its own; that protection comes from CFRA or FMLA when the employee qualifies.
Pregnancy Disability Leave is separate. Employees disabled by pregnancy, childbirth, or a related condition receive up to four months per pregnancy, measured as the number of working days or hours the employee would normally work during one-third of a year (roughly 17⅓ weeks), and the leave does not need to be taken all at once.30California Civil Rights Department. Pregnancy Disability Leave Fact Sheet A pregnant employee can stack PDL with CFRA bonding leave afterward, which can produce around seven months of combined leave.
Ending the Employment Relationship
At-Will and Its Limits
California is an at-will state, so either party can end the relationship for any lawful reason without advance notice. You cannot fire someone for a discriminatory reason, in retaliation for exercising a legal right, or for other reasons that violate public policy. Employees who believe they were wrongfully terminated can file with the Civil Rights Department or sue for reinstatement, back pay, or damages. The final-paycheck deadlines described earlier apply at termination, and waiting-time penalties run up to 30 days of daily wages when payment is late.19Department of Industrial Relations. Paydays, Pay Periods, and the Final Wages
California WARN Act
Employers that operate a facility with 75 or more employees must give 60 days’ written notice before ordering a mass layoff of 50 or more workers within a 30-day period, closing a plant that affects 50 or more employees, or relocating operations more than 100 miles away.31Justia Law. California Labor Code 1400-1408 – Relocations, Terminations, and Mass Layoffs That threshold is lower than the 100-employee federal WARN trigger. Notice goes to affected employees, the Employment Development Department, the local workforce investment board, and local government officials. Narrow exceptions apply, such as a physical calamity or an act of war, and even then the employer must give as much notice as possible.
Separation Agreements and the Silenced No More Act
Any provision in a severance or separation agreement that prohibits an employee from disclosing information about unlawful acts in the workplace, including harassment or discrimination of any kind, is unenforceable. If the agreement contains a nondisparagement clause or any other restriction on discussing workplace conditions, it must include language making clear that the employee keeps the right to disclose information about unlawful conduct.32California Legislative Information. California SB 331 – Settlement and Nondisparagement Agreements Employers must also give the employee at least five business days to consult an attorney before signing, though the employee can voluntarily waive that waiting period as long as the decision is knowing and uncoerced.