Labor and Employment Law Overview: California

Federal law and guidance on this subject should be reviewed together with this section.

Author: XpertHR Editorial Team

Summary

• California law prohibits an employer from discriminating and retaliating against employees in a variety of protected classes. Employers must also provide pregnancy accommodations, provide equal pay, allow wage discussions, allow employees to access their personnel files and protect whistleblowers. See EEO, Diversity and Employee Relations.
• California permits preemployment drug testing and background checks, but limits salary history inquiries. See Recruiting and Hiring.
• In California, there are requirements relating to the minimum wage, overtime, meal and rest breaks, breastfeeding breaks and child labor. See Wage and Hour.
• California has laws that relate to employee pay and benefits, including temporary disability insurance, paid family leave insurance, health care continuation, wage deductions and wage notice requirements. See Pay and Benefits.
• Under California law, employees are entitled to certain leaves or time off, including family and medical leave, paid sick leave, pregnancy disability leave, domestic violence leave and emergency responder leave. See Time Off and Leaves of Absence.
• California law requires employers to provide a safe working environment for their employees, including the development of a written Injury and Illness Prevention Program. California also prohibits smoking in the workplace and using a hand-held cell phone while driving. See Health and Safety.
• When employment ends, California employers must comply with applicable final pay, job reference and mass layoff notification requirements. See Organizational Exit.

Introduction to Employment Law in California

Many consider California the state with the most proscriptive variances from federal law, including broader antidiscrimination protections, a higher minimum wage, paid family leave insurance and paid sick leave.

Select California employment requirements are summarized below to help an employer understand the range of employment laws affecting the employer-employee relationship in the state. An employer must comply with both federal and state law.

An employer must also comply with applicable municipal law obligations affecting the employment relationship, in addition to complying with state and federal requirements.

EEO, Diversity and Employee Relations

Key California requirements impacting EEO, diversity and employee relations are:

Fair Employment Practices

The California Fair Employment and Housing Act (FEHA) prohibits employers with five or more employees from discriminating in the terms and conditions of employment. Protected characteristics include:

• Race;
• Religion;
• Color;
• National origin and ancestry;
• Physical or mental disability;
• Medical condition;
• Genetic information;
• Marital status;
• Sex (including breastfeeding and related conditions);
• Sexual orientation;
• Gender identity/gender expression;
• Pregnancy (including childbirth and related medical conditions);
• Age; and
• Military and veteran status.

Harassment is a form of illegal discrimination that is prohibited under the FEHA.

The FEHA also prohibits retaliation against a person who opposes, reports or assists another person in opposing unlawful discrimination.

Pregnancy Accommodation

The FEHA requires an employer to provide reasonable accommodations to an employee because of pregnancy, childbirth or a related medical condition. Examples of reasonable accommodations include modified duties, schedules or equipment.

Religious Accommodation

The FEHA explicitly provides for religious accommodation in employment. The FEHA requires an employer to show significant difficulty or expense to prove undue hardship, versus the de minimus standard under federal law.

Disability Accommodation

An employer is obligated to provide reasonable accommodations to qualified individuals with disabilities. The FEHA makes it a separate violation for an employer to fail to engage in the interactive process.

Equal Pay

California prohibits discrimination on the basis of sex, race and ethnicity in the payment of wages for substantially similar work. As a defense against a wage discrimination claim, an employer must show that the pay differential is based on a bona fide factor other than sex, such as seniority, merit, quality or quantity of production, education, training or experience. Prior salary, on its own, does not justify a wage differential.

Discussion of Wages

An employer may not prohibit employees from disclosing, discussing or inquiring about their own wages or the wages of another employee and may not discriminate or retaliate against employees for engaging in such conduct.

Access to Personnel Files

California employers must provide current and former employees with access to their personnel files. The employer must make the records available for inspection by the requester at reasonable times and intervals, but generally no later than 30 calendar days after receiving a written request. The employer may charge a fee that equals the actual cost of copying the materials.

Whistleblower Protections

A California employer may not make, adopt or enforce any rule, regulation or policy preventing an employee from being a whistleblower. Also, an employer may not retaliate because an employee:

• Is a whistleblower;
• Refuses to participate in an activity that would result in a violation of a state or federal statute or a violation of or noncompliance with a state or federal rule or regulation; or
• Exercises his or her rights as a whistleblower in any former employment.

A whistleblower is an employee who discloses information to a government or law enforcement agency where the employee has reasonable cause to believe that the information discloses:

• A violation of a state or federal statute;
• A violation of or noncompliance with a state or federal rule or regulation; or
• Unsafe working conditions or work practices in the employee’s employment or place of employment.

Be aware that where there is overlap between federal, state and/or local law, complying with the law that offers the greatest rights or benefits to the employee will generally apply.

Additional information on EEO, diversity and employee relations practices in California can be found in the California Employee Handbook Table of Contents, Disabilities (ADA): California, EEO – Discrimination: California, EEO – Harassment: California, EEO – Retaliation: California, HR Management: California, Employee Discipline: California, California Workplace Labor and Employment Law Posters and Does This Law Apply to My Organization in California? Federal requirements can be found in Disabilities (ADA): Federal, EEO – Discrimination: Federal, EEO – Harassment: Federal, EEO – Retaliation: Federal, HR Management: Federal and Employee Discipline: Federal.

Recruiting and Hiring

Key California requirements impacting recruiting and hiring are:

Drug Testing

Drug testing of job applicants is allowed in California. An employer must provide applicants with notice of the drug testing requirement.

Credit Checks

Under the Consumer Credit Reporting Agencies Act, an employer may perform credit checks only for certain positions (e.g., a law enforcement position), and it must provide applicants for such positions with notice that a credit check will be performed. Further, the employer must notify applicants of any adverse action taken on the basis of the credit check.

Criminal Checks

An employer must show that any criminal history information sought is job-related and consistent with business necessity. The employer may not consider certain types of criminal history when making hiring decisions, including:

• An arrest that did not result in conviction;
• Participation in a pre-trial or post-trial diversion program;
• Convictions that have been ordered sealed, expunged or eliminated by statute;
• An arrest, detention or court disposition that occurred while a person was subject to a juvenile court; and
• A nonfelony conviction for marijuana possession that is more than two years old.

Consumer Reports

An employer may seek investigative consumer reports for employment purposes. The Investigative Consumer Reporting Agencies Act requires the employer to provide written notice to applicants before the report is procured.

Ban the Box

The California Fair Employment and Housing Act prohibits an employer with five or more employees from including any question on a job application that asks about the applicant’s criminal conviction history. This statewide “ban the box” law also prohibits covered employers from inquiring about or considering an applicant’s criminal history until the applicant has received a conditional offer.

Salary History Inquiry Restrictions

California prohibits an employer from relying on a job applicant’s salary history as a factor in determining whether to offer employment or what salary to offer. The law bans employers from asking applicants about their salary history, including compensation and benefits, orally or in writing.

An employer may consider or rely on salary history information that an applicant discloses voluntarily and without prompting, but may not rely on prior salary, by itself, to justify any disparity in compensation. In addition, an employer must provide a position’s pay scale to an applicant who makes a reasonable request for that information.

Be aware that where there is overlap between federal, state and/or local law, complying with the law that offers the greatest rights or benefits to the employee will generally apply.

Additional information on recruiting and hiring practices in California can be found in the California Employee Handbook Table of Contents, Preemployment Screening and Testing: California, Interviewing and Selecting Job Candidates: California and Does This Law Apply to My Organization in California? Federal requirements can be found in Preemployment Screening and Testing: Federal and Interviewing and Selecting Job Candidates: Federal.

Wage and Hour

Key California requirements impacting wages and hours are:

Minimum Wage

The minimum wage in California varies depending on the size of the employer. Currently, an employer with 25 or fewer employees must pay employees $11.00 per hour and an employer with 26 or more employees must pay employees $12.00 per hour.

Overtime

California law requires an employer to pay employees overtime for all hours worked in excess of 40 hours in a workweek and eight hours in a workday. An employer is also required to pay overtime to employees who work a seventh consecutive day in a workweek.

A California employer must pay overtime to nonexempt employees at the rate of one and one-half times the employee’s regular rate of pay for all hours worked in excess of 40 in any workweek; for all hours worked in excess of eight, up to and including 12 hours, in any workday; and for the first eight hours of work on the seventh consecutive day of work in a workweek. An employer is further required to pay double the employee’s regular rate of pay for all hours worked in excess of 12 in any workday and for all hours worked in excess of eight on the seventh consecutive day of work in a workweek.

Rest Breaks

A California employer must provide nonexempt employees with a paid 10-minute rest period for each four-hour work period. Rest periods must be given as close to the middle of the work period as is practicable. An employee is entitled to one hour of pay for each workday that the rest period is not authorized or permitted.

Meal Breaks

An employer in California must provide nonexempt employees with no less than a 30-minute meal period if they work more than five hours a day. A second meal period of no less than 30 minutes must be provided when the employee’s work period is more than 10 hours. An employee is entitled to one hour of pay for each shift that the meal period is not provided.

Breastfeeding Breaks

A California employer must provide a reasonable amount of break time to accommodate an employee’s need to express breast milk for her infant child. When possible, the break time should run concurrently with any break time already provided to the employee. Break time that does not run concurrently with the existing break time does not have to be paid. An employer is not required to provide an employee break time for lactation if doing so would seriously disrupt its operations.

An employer must also make reasonable efforts to provide the employee with the use of a room or other location, other than a bathroom, in close proximity to the employee’s work area, for the employee to express milk in private. An employer is permitted to offer a temporary lactation location provided certain conditions are met.

Child Labor

Child labor laws in California restrict the occupations in which minors may be employed and the number of hours and times during which they may work.

For most occupations, California had adopted the federal standards into its own regulations. However, California’s regulations also forbid minors under the age of 16 from working in additional occupations, involving, among others, several types of machines, railroads, dangerous acids, scaffolding and tobacco.

California also has a complex set of requirements that govern the times during which minors may work. These requirements differ depending on the age of the minor, with separate working time restrictions set out for 16- and 17-year-olds, for 14- and 15-year-olds and for 12- and 13-year-olds.

California requires almost all minors to have a permit to work.

California also has many additional regulations that are specific to the entertainment industry.

Be aware that where there is overlap between federal, state and/or local law, complying with the law that offers the greatest rights or benefits to the employee will generally apply.

Pay and Benefits

Key California requirements impacting pay and benefits are:

Temporary Disability Insurance

California’s State Disability Insurance (SDI) program is a state-run plan administered by the Employment Development Department (EDD). SDI provides partial wage replacement to eligible workers who are unable to perform their regular or customary work due to a nonwork-related illness or injury, including pregnancy-related conditions. The program is funded entirely by taxes withheld from employees’ wages.

An employer has the option of establishing a voluntary private plan, subject to EDD approval, in lieu of the state-administered plan.

Paid Family Leave Insurance

The SDI program also provides for paid family leave (PFL) benefits under a Family Temporary Disability Insurance program. Eligible employees receive partial wage replacement when taking time off to care for a seriously ill family member (i.e., child, parent, spouse, registered domestic partner, grandparent, grandchild, sibling or parent-in-law) or to bond with a child within one year of birth or placement for adoption or foster care. Employees may take up to six weeks of PFL in a 12-month period.

Health Care Continuation

The California Continuation Benefits Replacement Act (Cal-COBRA) requires group health plans issued to employers with two to 19 employees to offer continuation coverage to qualified beneficiaries (employees and eligible dependents). Cal-COBRA mirrors the federal Consolidated Omnibus Budget Reconciliation Act (COBRA) in terms of qualifying events and timelines. Cal-COBRA’s notice requirements and premiums differ from COBRA.

Cal-COBRA also requires group health plans to offer an insured who has exhausted continuation coverage under federal COBRA the opportunity to continue coverage for up to 36 months from the date the insured’s continuation coverage began, if the insured is entitled to fewer than 36 months of COBRA coverage.

Payment of Wages

California requires that employees be paid either in cash or by checks that can be cashed in full, without fees or discounts, at an established place of business located within the state.

Direct deposit is permitted if:

• The employee chooses the financial institution;
• The financial institution has a branch in California; and
• The employee voluntarily authorizes the deposit.

Pay Statements

California employers must provide each employee with an accurate, itemized written pay statement in the form of a detachable part of a check or a separate written statement. Statements must be provided each time wages are paid, or at least semimonthly, and must contain the following information:

• Gross wages earned;
• Total hours worked (for nonexempt employees);
• Number of piece-rate units earned and the applicable piece rate (for piece-rate basis employees);
• All deductions;
• Net wages earned;
• Inclusive dates of the pay period;
• Employee’s name and last four digits of employee’s Social Security Number or employee ID number;
• Employer’s name and address;
• All applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each rate by the employee; and
• If paying overtime from a previous pay period, the previous overtime shown as a correction, and the inclusive dates for the pay period the overtime was worked.

Additional requirements exist for piece-rate employees and temporary services employees.

Pay Frequency

Employers must designate paydays in advance.

Nonexempt employees must be paid all wages earned at least twice a month (i.e., semimonthly) on regular paydays designated in advance. Overtime must be paid by the following payday for the next regular payroll period following the payroll period in which the overtime wages were earned.

Exempt employees may be paid once a month on or before the 26th of each month in which the salary is earned, including the amount yet to be earned from the 26th through the end of the month.

Wage Deductions

An employer may make deductions from an employee’s wages if required by state or federal law or court order, with the employee’s written authorization or for other permissible reasons, including but not limited to child support withholding, creditor garnishments and tax levies.

Wage Notices

The Wage Theft Prevention Act requires an employer to provide notice of certain pay-related information (e.g., the employee’s rate of pay and the basis for such rate, the employer’s regular pay period, the employer’s name) to nonexempt employees at the time of hire and any time the information changes.

Be aware that where there is overlap between federal, state and/or local law, complying with the law that offers the greatest rights or benefits to the employee will generally apply.

Time Off and Leaves of Absence

Key California requirements impacting time off and leaves of absence are:

Family and Medical Leave

The California Family Rights Act (CFRA) requires employers with 50 or more employees to provide eligible employees with up to 12 weeks of job-protected leave in a 12-month period for the employee’s or a covered family member’s serious health condition or for the birth or placement for adoption or foster care of a child. While the CFRA and the federal Family and Medical Leave Act (FMLA) parallel each other to a large degree, there are areas in which they differ, such as covered family members and what is considered a serious health condition.

Paid Sick Leave

Under the Healthy Workplaces, Healthy Families Act (HWHFA), eligible employees may take paid sick leave for the following reasons:

• Diagnosis, care or treatment of the employee’s or a covered family member’s existing health condition;
• Preventive care for the employee or a covered family member; and
• For an employee who is a victim of domestic violence, sexual assault or stalking to obtain legal, medical or social services.

Employees may accrue and use up to 24 hours (or three days) of paid sick leave per year. Total accrual, including carryover of unused accrued time, may not exceed 48 hours (or six days) per year.

Other Time Off Requirements Affecting California Employers

In addition to the CFRA and HWHFA, a California employer is also required to comply with more than a dozen other leave and time off laws, such as:

• Pregnancy disability leave (covering employers with five or more employees);
• New parent leave (covering employers with 20 or more employees);
• Kin care leave;
• Family-school partnership leave (covering employers with 25 or more employees);
• School-required leave;
• Organ and bone marrow donation leave (covering employers with 15 or more employees);
• Domestic violence leave;
• Crime victim leave;
• Jury duty leave;
• Voting leave;
• Military leave;
• Civil Air Patrol leave (covering employers with 15 or more employees);
• Literacy leave (covering employers with 25 or more employees);
• Drug and alcohol rehabilitation leave (covering employers with 25 or more employees);
• Family military leave (covering employers with 25 or more employees); and
• Day of rest requirements.

Be aware that where there is overlap between federal, state and/or local law, complying with the law that offers the greatest rights or benefits to the employee will generally apply.

Health and Safety

Key California requirements impacting health and safety are:

Occupational Safety and Health

California operates its job safety and health programs covering the private sector under a state plan approved by the federal Occupational Safety and Health Administration (OSHA).

Under the California Occupational Safety and Health Act (Cal/OSH Act), a California employer must provide and maintain a safe and healthful workplace for employees and, to that end, is required to develop and maintain a written, effective Injury and Illness Prevention Program that includes, among other things, instruction on safe workplace practices.

Smoke-Free Workplace

California bans smoking, including the use of e-cigarettes, in enclosed spaces of places of employment. An employer needs to take reasonable steps to prevent smoking in the workplace, such as posting “no smoking” signs.

Safe Driving Practices

Drivers in California are prohibited from holding and operating a hand-held cell phone or electronic wireless communications device, but are permitted to use the voice-operated and hands-free functions on the phone or device. However, a driver may use a single swipe or tap of the finger to operate a hand-held phone or device that is mounted on the windshield, dashboard or center console.

Be aware that where there is overlap between federal, state and/or local law, complying with the law that offers the greatest rights or benefits to the employee will generally apply.

Organizational Exit

Key California requirements impacting organizational exit are:

Final Pay

An employer must pay final wages immediately to an employee who is terminated and upon resignation to an employee who provides at least 72 hours’ notice of the intent to resign. If an employee provides fewer than 72 hours’ notice of the intent to resign, then an employer may generally mail final wages within 72 hours.

California law does not permit “use it or lose it” vacation policies. Vacation accruals may be capped, but may not be forfeited. Therefore, unused, accrued vacation must be paid out at the end of employment.

Wages owed to a deceased employee must be paid to the surviving spouse or conservator of the estate. Probate of the will need not have occurred before payment is made. The employer must pay up to $15,000 net for wages due for personal services and unused vacation time. The party requesting payment must present to the employer reasonable proof of identity and an affidavit or a declaration under penalty of perjury making certain statements of fact.

References

California law affords a qualified privilege to an employer who communicates about a former employee’s job performance or qualifications to a prospective employer. The communication must be made in good faith.

Mass Layoff Notifications

The California Worker Adjustment and Retraining Notification Act (Cal-WARN Act) provides employees and their families time to prepare for a prospective job loss by requiring an employer to provide advance notice of a plant closing or mass layoff. While the state law is modeled after the federal Worker Adjustment and Retraining Notification Act (WARN Act), there are areas in which they differ, such as the definition of covered employer.

Be aware that where there is overlap between federal, state and/or local law, complying with the law that offers the greatest rights or benefits to the employee will generally apply.