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What California Labor Laws Apply to Small Businesses?
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Workforce Management

What California Labor Laws Apply to Small Businesses?

California business is known for being on the cutting edge of innovation—and are their labor laws. The Golden State is home to some of the most complex labor legislation in the country and businesses risk big fines for non-compliance. The good news is, some of California’s most challenging employment laws are only applicable to companies with a certain number of employees.

If you’re a small business in California, here’s what you need to know about labor law coverage:

1) Minimum Wage Laws

California not only has a high minimum wage, which applies to all non-exempt employees who work “on the work”, but many cities within the state set higher minimum wage for their jurisdictions. Unlike some states, employers must also pay tipped workers the full minimum wage

What Companies are Covered?

Both the statewide and city-specific minimum wages depend on company size. The statewide minimum wage in 2020 is $12 per hour for those with 25 employees or fewer, and $13 per hour for companies with at least 26 employees.

Many city-specific minimum wages are also higher if a company has at least 26 employees. One city, Novato, has a third level of minimum wage for companies 100+ employees.

2) Paycheck Laws:

California requires that all employees receive itemized pay statements (pay stubs) containing all the following information:

  1. Employee name
  2. The final four digits of Social Security Number (SSN) or Employee ID Number (EIN)
  3. Name and address of the employer
  4. The start and end dates of the pay period
  5. Gross wages (without deductions)
  6. Total hours worked by the employee (for non-exempt employees)
  7. Breakdown of hourly rates for regular vs. overtime hours
  8. All deductions (tax withholdings, 401(k) contributions)
  9. Net wages earned (gross wages minus deductions)
  10. Amount of sick leave and vacation time accrued

Inaccurate or missing paystubs can be punished with fines.

What Companies are Covered?

All businesses in California are subject to this law.

3) Predictive Schedule Laws

To fight unfair scheduling practice and to help employees achieve work life balance, many jurisdictions have begun to implement predictive schedule laws. These typically require that schedules be posted 14 days in advance and mandate “predictability pay” when there are late changes.

There’s no statewide law yet, but both San Francisco and Emeryville have predictive schedule laws.

What Companies are Covered?

In San Francisco, the law only applies to chain stores with 40+ stores worldwide and 20+ employees locally. In Emeryville, this is restricted only to retail or fast food companies with 56+ employees worldwide and 20+ employees locally.

4) Minimum Shift Laws

One aspect of predictive scheduling laws that does apply statewide is guaranteed payment for scheduled shifts. If an employee is scheduled and must report for work but that shift is then cancelled or the employee is sent home, an employer must still pay half the hours of the scheduled shift, up to a maximum of 4 hours. If a shift is scheduled for less than 4 hours, an employer must pay for 2 hours. However, this does exclude events like power outages and natural disasters.

What Companies are Covered?

All businesses in California are subject to this law.

5) Overtime Laws

Businesses in California face big fines if they don’t correctly calculate (and pay) employee overtime.

When a non-exempt employee has worked…

  • More than 8 hours, they earn time-and-a-half (1.5x their regular rate).
  • More than 12 hours, they earn double time (2x their regular rate).
  • More than 40 hours in a week, they earn time-and-a-half.
  • 6 days in a work week, on the 7th day they earn time-and-a-half.
  • More than 8 hours on their 7th day of work in a week, they earn double time.

What Businesses Are Covered?

All sizes of businesses in California must abide by the state’s overtime laws, but the threshold for overtime exemption does differ depending on how many employees you have.

For businesses with fewer than 26 employees, the threshold in 2020 is $49,920.

For businesses with 26 or more employee, the threshold in 2020 is $54,080.

6) Meal and Break Laws

It’s important that employees are given sufficient time for meals and breaks. Generally, this means a paid rest break of at least 10 minutes for every 4 hours worked. An unpaid meal break of at least 30 minutes for every 5 hours worked.

An hour’s pay is due for every day sufficient rest wasn’t provided and a further hour’s pay is due for every day in which a meal break wasn’t provided. These must be added to an employee’s next pay check.

What Companies are Covered?

All businesses in California are subject to this law.

How Paycor Can Help

You can’t leave labor laws to chance. Paycor offers the technology and expertise you need to stay compliant in all fifty states, improve efficiency and regain the time you need to focus on what matters most—your people.

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