The California Compliance Challenge
California offers businesses incredible opportunities—if it were a country, it would have the 5th largest economy in the world. But for HR leaders, operating in the Golden State means dealing with notoriously complicated and ever-evolving labor laws. Failing to meet labor standards means heavy fines and the risk of class actions, so finding a way to get (and stay) compliant isn’t optional.
The good news is, Paycor offers HR leaders the technology and expertise to tackle these compliance challenges, whether at state, local or federal level. Our platform unifies time and attendance with payroll, which is important, since California labor laws cover everything from employee schedules to what’s written on paychecks.
The 5 California Labor Laws You Need to KnowPaycor’s dedicated compliance team keeps our product and our customers up to date with the latest regulatory changes. Let’s walk through some of the most important labor laws you’ll need to be aware of if you’re operating in California and how our system can help you stay on the right side of the law.
- Paycheck Laws
- Employee name
- The final four digits of Social Security Number (SSN) or Employee ID Number (EIN)
- Name and address of the employer
- The start and end dates of the pay period
- Gross wages (without deductions)
- Total hours worked by the employee (for non-exempt employees)
- Breakdown of hourly rates for regular vs. overtime hours
- All deductions (tax withholdings, 401(k) contributions)
- Net wages earned (gross wages minus deductions)
- Amount of sick leave and vacation time accrued
California isn’t the only state to require that employers provide pay stubs (or “itemized wage statement”) to employees, but failure to do so accurately and in full can cost employers.
There’s a long list of information that pay stubs need to provide to comply with California labor law:
Employers also need to be sure that:
- Employees are paid at least every two weeks
- Checks are received within 10-11 days of payday
How Paycor Helps: Full-Page Pay Stubs
Paycor Payroll makes it easy to produce fully itemized wage statements which include all the relevant information required by California labor law and any industry-specific regulations. Rather than having to collect the data yourself, the process is automated, so you can always get your paychecks out on time and error-free, and store all wage statements for your records.
The statewide minimum wage in California in 2020 is $13 per hour (or $12 for businesses with 25 or fewer employees), though many localities have higher rates—rising as high as $16.84 in Emeryville. These minimum wages apply to all employees, with a few limited exceptions. Unlike other states, tipped workers in California must also receive the full minimum wage from their employer.
Minimum Wage Laws
If you operate in multiple Californian cities, you’ll need to make sure that staff are never paid less than the minimum wage for where they are working. If you aren’t paying attention to what the law requires for hours worked, you’re opening yourself up to wage and hour lawsuits.
How Paycor Helps: Minimum Wage Alerts
Keeping track of all federal, local and state minimum wage laws is too important to be left to luck. Paycor Payroll will alert you if an employee is ever set to receive a wage lower than the minimum for the location in which they are working. These mistakes can easily happen if employees are regularly switching between roles in various cities, especially around the Bay Area.
Create proper guardrails by setting minimum wage levels for individuals or department, and receive a notification if for any reason an employee’s pay rate is set below this.
Scheduling staff in California requires more care than in other states. Why? Because if you schedule a worker but then send them home at the beginning of their shift since they aren’t required, you still need to pay them for at least half the hours for which they were scheduled. This doesn’t apply if the shift cancellation is outside an employer’s control, like due to a power outage or natural disaster.
Minimum Shift Law
Since the standard shift length is 8 hours, this is often described as a 4-hour minimum pay requirement. If an employee’s shift is less than 4 hours, they are guaranteed a minimum of 2 hours’ pay. However, if an employee’s shift is longer than 8 hours, their guaranteed pay is still limited to 4 hours.
How Paycor Helps: Automated Minimum Hours
This law is designed to target businesses who deliberately schedule more staff than they need—but there are still plenty reasons an employee may not be required to work. With Paycor Time, employers can automate minimum hour requirements, so that if a shift is ever cancelled after an employee has reported for work, or if they are sent home early for some other reason, their guaranteed hours will transfer to their next paycheck.
Of course, paying employees for work they don’t do isn’t an efficient way to run a business, so it’s best to avoid this whenever possible With Paycor Scheduling, businesses can optimize schedule for peak efficiency, avoiding both under-staffing and over-staffing.
The next compliance challenge for companies operating in California is overtime. The overtime law may not be that complicated, but correctly calculating overtime pay can be—and you don’t want to end up in court for getting it wrong. Here’s what you need to know:
When an 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 the 7th day of the workweek, they earn double time.
How Paycor Helps: Overtime Rules with Paycor Time
With enough employees working enough hours, it becomes unmanageable to personally track all the relevant overtime rates. The good news is, Paycor Time can do that for you. Simply apply all the overtime rules you require and the correct overtime pay will be calculated and applied automatically.
In California, breaks for meals and rests can prove surprisingly tricky territory for compliance. Employers must grant sufficient time for these breaks, and can be exposed to big penalties if they don’t. And if employees don’t take the breaks, employers need to ensure they adjust their timesheets accordingly.
Meal & Break Laws
Generally, employers must provide a paid rest break of at least 10 minutes for every 4 hours worked.
In effect, one rest break is required for shifts lasting over 3.5 hours, a second for shifts longer than 6 hours and another for every 4 hours additional hours.
You must also provide an unpaid meal break of at least 30 minutes every 5 hours. (There is a limited exception: if an employee is working no more than 6 hours, the meal break can be waived with mutual consent of employee and employer.)
However, meal breaks are only required if a shift is at least 5 hours. As meal breaks are unpaid, they are not included as time worked, and so a second meal break is required only for shifts lasting at least 10.5 hours. A third meal break is mandatory for shifts lasting at least 16 hours.
Even though rest breaks are paid while meal breaks are unpaid, the penalties for denying them are the same: employers must pay 1-hour's wages for every day a rest or break wasn't taken in full. (Note: the penalty stays the same even if multiple breaks weren’t provided). The penalty for an employer who has never offered meal or rest breaks can rise to 2-days’ worth of wages for every day worked for the 3 previous years.
How Paycor Helps: Automated Break Rules
Paycor Time allows employers to create meal and break rules and track exceptions, so that timesheets and payroll are always reliable. Employers can create whatever break rules they need, for wherever they operate, and it’s simply to set rules that are compliant with California Labor Law.
It’s also easy to set rules governing exceptions. If an employee break is missed, or is shorter than it should be, the system can automatically allocate an extra hour’s pay. Clients just need to create a ‘Penalty’ rule.
It’s also possible to create rules to avoid paying extra when an employee takes ‘overages’—additional breaks beyond the standard permitted. With all the rules in place, you can be confident that your employees are getting the breaks they deserve and that your business is fully compliant.
Paycor Is Here for You
Paycor builds HR software for leaders of medium & small business. For 30 years, we’ve been listening to and partnering with leaders, so we know what they need: HCM technology that saves time, powerful analytics and expert HR advice to help them solve problems and achieve their goals.
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