California Labor Laws: How to Stay Compliant
california-compliance-laws

California Labor Laws: How to Stay Compliant

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 Know

Paycor’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.

  1. Paycheck Laws
  2. 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:

    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
    When wage statements are inaccurate or not provided at all, employers can be subject to fines starting at $50 per employee for a first offense and rising to $100 for further violations, up to a maximum of $4,000 per employee—or more, if an employee is deemed to have suffered damages. The Labor Commissioner can also impose a further civil fine of $250 per employee for a first violation and $1000 for further violations.

    Employers also need to be sure that:
    • Employees are paid at least every two weeks
    • Checks are received within 10-11 days of payday
    If employees quit, they must receive their final paycheck within 72 hours of giving notice, while terminated employees must receive their final paycheck, including wages and any accrued vacation, immediately upon termination. Employees are entitled to a full day’s salary for every day these final paychecks are delayed, up to a maximum of 30 days.

    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.

    california full page paystub

  3. Minimum Wage Laws
  4. 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.

    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.

    california-minimum-wage-alerts

  5. Minimum Shift Law
  6. 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.

    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.

    minimum hours rule

    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.

  7. Overtime Laws
  8. 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.
    These overtime wages must be paid no later than payday of the next regular payroll period.

    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.

  9. Meal & Break Laws
  10. 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.

    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.

    Penalties

    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.

    california meal break rule


    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.

    california-meal-penalty-labor-law


    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.
california compliance lunch breaks

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.

Get Payroll Expertise

More to Discover

Webinar: National Payroll Week Webinar Series: Payroll Compliance Updates & What's Ahead in 2021

Webinar: National Payroll Week Webinar Series: Payroll Compliance Updates & What's Ahead in 2021

From new salary thresholds and social security wage increases to COVID tax relief, businesses leaders have faced quite a few payroll and tax changes in 2020. As we prepare to turn the page to a new year, what new updates are on the horizon? Join Paycor’s resident payroll expert, Arlene Baker to learn about the latest updates and what you should watch out for in 2021.Speaker: Arlene Baker Arlene Baker is a Sr Compliance Analyst with over 40 years of payroll and tax experience. Arlene is a member of the National Payroll Reporting Consortium focusing on IRS compliance. Arlene has been a member of the national and local APA for 25 years and is an active member of the American Payroll Association Hotline and SPLTF Hospitality Industry...

Terminating Employee Checklist

Terminating Employee Checklist

Letting an employee go is never easy—but when it happens, no matter the root cause, companies have to act with professionalism and follow correct procedure. It’s the right thing to do, but it’s also essential for compliance. To help you make sure everything is done by the book, Paycor is providing a checklist of the right actions to take. Download Termination Checklist How to Conduct an Involuntary Termination An involuntary termination can never be taken lightly, and before making the decision official you’ll want to confirm with your legal team or advisors that you’re following the right process. If the termination is the result of poor performance or disciplinary issues, the employee may well have been issued warnings of increasing...

How to Hire Employees in California

How to Hire Employees in California

Wherever you operate, hiring new employees means not only searching for the best talent but also staying compliant. Nowhere is this more true than in California, with businesses needing to be aware of notoriously complex labor laws, relating to all stages of the employment process.For a small business, this can seem overwhelming. How can you recruit and hire great new employees while staying compliant with numerous regulations? The good news is, Paycor can help. Recruitment Best Practice Finding star talent is the same everywhere—you need to make sure that the right people know about the open position, you need to be able to filter applications to select for the skills and attributes you need, and you want a streamlined and optimized...

Types of Wages That Small Businesses Need to Know

Types of Wages That Small Businesses Need to Know

If you’re running a small business, you’ve got a lot on your plate. Right at the top of your list of priorities will be paying employees, and you don’t have time to be confused by all the different terms for kinds of wages and salaries. If you’re just starting out in business, we’ve got you covered. Here’s a breakdown of the types of employee payments that small businesses need to know. Regular Wages Most employees receive wages as part of a regular salary or based on hourly work. Businesses will have to choose the frequency of pay periods to find what works for them while abiding by any state regulations. Salary Wages Employees who receive a salary are guaranteed a fixed sum every pay period. The pay per hour worked must meet the...