Guide to employee benefits and HR rules in California
As an HR professional or employer with employees in California, you need to know which employee benefits the Golden State requires. Learn about the local employment laws that impact your organization.
Ready to offer personalized health benefits that help you satisfy California benefits laws? Schedule a free consultation with an HRA specialist today.
Is your organization compliant with California's employment laws?
If your organization is in California or you employ California workers, you need to know the ins and outs of benefits and HR compliance specific to the state. This guide will provide a general overview of California's regulations for small to medium-sized businesses.
We updated this guide on May 20, 2025 to bring you the latest changes in California law. PeopleKeep by Remodel Health provides HRA administration solutions and provides this guide for information purposes only. Please consult a legal advisor with any questions on how California law applies to your business.
- Chapter 1: What are employee rights in California?
- Chapter 2: Why are employment laws different in California?
- Chapter 3: What are employers required to provide in California?
- Chapter 4: What are the legally required employee benefits in California?
- Chapter 5: Health insurance in California
- Chapter 6: Wage laws in California
- Chapter 7: California pay transparency law
- Chapter 8: Child labor laws in California
- Chapter 9: Other HR and employment requirements in California
What are employee rights in California?
Employees in California have many rights under state and federal employment law. If you have or plan to hire employees in the state, you'll need to know what protected rights your employees have, no matter the size of your organization.
Some state rights include1:
At-will employment
- Both the employer and the employee have the right to end the employment relationship at any time and for any reason, provided it isn't unlawful.
- Employees covered by a collective bargaining agreement aren't subject to at-will employment rules.
Fair wages
- Employers must pay at least the state minimum wage and overtime pay.
Paid 10-minute breaks
- Employers must provide their employees with a paid 10-minute rest break for every four hours of work. Employees are entitled to one hour of pay for each workday where their rest period isn't authorized or permitted by the employer.
- The DLSE prohibits employers from requiring employees to count reasonable bathroom breaks as a rest period.
Meal breaks
- Employers must allow nonexempt employees to take a meal break of at least 30 minutes after no more than five hours of work. Employers must provide a second break time of no less than 30 minutes if the employee works for more than 10 hours in a single work period.
- Break times for meals may be unpaid.
Safety in the workplace
- Employers must ensure the workplace is safe by correcting any hazards, having a written safety plan, training employees on how to work safely, having workers' compensation insurance, and keeping track of all workplace injuries.
- The state also requires workers' compensation insurance for workplace injuries.
The ability for employees to file a claim against employers for violating their rights without retaliation
- Employees may speak up about any wages owed to them, report any injuries or hazards, file a wage claim, file other claims and complaints with the state, and join with other workers to ask for changes without retaliation from the employer.
Why are employment laws different in California?
While there are many federal laws and regulations regarding employee benefits and HR, every state is responsible for setting its own business and employment laws.
In California, local requirements prevail over other state laws if you're an out-of-state employer, and sometimes federal laws as well.
Some of the state regulatory agencies that manage employment law include:
- Department of Industrial Relations
- Labor Commissioner's Office (also known as the Division of Labor Standards Enforcement)
- Division of Occupational Safety and Health (Cal/OSHA)
As the most populous state2 in the United States, California is often considered one of the most employee-friendly states, offering greater protections for workers than federal law. This guide will highlight some of the most significant differences you need to know.
What are employers required to provide in California?
California requires employers to offer all eligible employees certain employee benefits and accommodations.
We've broken up the requirements in the sections below.
Required workplace accommodations
Employers must offer accommodations for pregnancy in the workplace. They must permit lactation breaks for breastfeeding, provided these don't interfere with the organization's operations. Employers don't have to pay employees for lactation breaks.
The California Fair Employment and Housing Act, in conjunction with the federal Americans with Disabilities Act, requires organizations with five or more employees to provide reasonable accommodations for those with physical or mental disabilities3.
This might include allowing employees to change job duties, providing medical leave, changing work schedules, relocating the work area, or providing additional aid.
Remote work reimbursement
California is one of 11 states, along with the District of Columbia, that require employers to reimburse their employees for necessary work-related expenses. Employers who don’t adhere to state mandates can suffer big consequences.
Following the outbreak of the COVID-19 pandemic and the rise of remote work, many employees have sued their employers over unpaid remote work expenses in the state of California, including Amazon4 in 2022.
Under California Labor Code Section 2802, employers must reimburse employees for all necessary expenses, including internet access and phone bills5.
Providing a remote work employee stipend is a way employers in California can alleviate the risks of remote work by allowing their employees to get reimbursed for their remote work expenses, including home office setup costs.
Retirement benefits
California was the first state to require mandatory retirement plans. The law, passed in 2012 and in effect since June 30, 2022, requires that organizations with five or more employees provide a retirement plan to their employees. Otherwise, employers must enroll in the CalSavers IRA program or face fines.
While mandatory to offer, CalSavers doesn’t require employers to pay any fees or contribute to their employees’ IRAs. You only need to facilitate any employee deductions. Employees have 30 days to decide whether to participate.
If you offer a retirement plan for your employees, you must file an exemption through CalSavers.
Failure to comply with the law could result in fines of $250 per employee after 90 days and $500 per employee after 180 days of non-compliance.
What are the legally required employee benefits in California?
Job-protected leave
Organizations with five or more employees must provide up to 12 weeks of unpaid, job-protected leave each year for medical leave, birth or adoption, taking a child into foster care, or a qualifying exigency for active-duty military personnel and their families.
Paid family leave
Organizations must provide up to eight weeks of paid family leave for employees who take leave to care for a family member, bond with a newborn child or a new adopted child, or for a qualifying exigency for activity duty military and their family.
Sick leave
Employees must receive paid sick leave for the diagnosis, care, or treatment of the employee's or a family member's existing medical conditions or preventative care. Employers must also provide sick leave for victims of domestic violence, sexual assault, or stalking.
Emergency response leave
Employers must offer unpaid time off to employees who respond to emergency duties as volunteer firefighters, peace officers, or rescue personnel.
Organ and bone marrow donation leave
Employers must grant employees up to 60 days of leave annually for bone marrow or organ donation. The initial 30 business days of this leave must be paid, while the following 30 days can be unpaid.
Other leave requirements
- Workers' compensation insurance
- School activities leave
- School discipline leave
- Jury duty leave
Government leave
- Judicial leave
- Voting leave: Employees can take up to two hours off to vote (paid)
- Election officials leave
- Military leave
Rest leave
- Civil Air Patrol leave
- Literacy leave
- Drug and alcohol rehabilitation leave
- Day of rest requirements (seventh day of rest rule)
Other benefits
- Employee expense reimbursement, including remote work costs
- Retirement plans through CalSavers
- Remote work reimbursement
Cal-COBRA
- California Continuation of Benefits Replacement Act (Cal-COBRA)
- Requires organizations with two to 19 employees on a group health plan to offer COBRA. This is an extension of federal COBRA
What benefits aren't required by law in California?
Most benefits aren't required by law in the state of California6. This includes voluntary benefits like paid vacation time, paid holidays, life insurance, and severance pay.
Although these benefits aren't mandatory, choosing to offer them means you'll have to follow state regulations on how they're offered and managed. You must provide any benefits promised in an employment contract.
Even if these types of benefits aren't required, offering them can help attract and retain talent, enhance job satisfaction, and boost employee morale.
Popular benefits include:
Health insurance in California
While health insurance isn't required by state law, federal law requires employers with 50 or more full-time equivalent employees (FTEs) to provide health insurance benefits with minimum essential coverage (MEC).
Offering health insurance benefits to your employees is a great way to attract and retain top talent.
While traditional group health insurance is a popular option, rising premium costs have made it challenging for small to medium-sized businesses to offer the benefit.
There are some alternatives for small business owners who can't offer group coverage due to minimum contribution or minimum participation requirements, or who can't afford to pay the high price of California insurance premiums.
See our page on offering small business health insurance in California for more information.
Health reimbursement arrangement (HRA)
A stand-alone health reimbursement arrangement (HRA) is an employer-funded health benefit that allows you to reimburse your employees, tax-free, for their individual health insurance monthly premiums and qualifying medical expenses.
You can reimburse a wide range of expenses with an HRA, including:
- Preventive care
- Emergency care
- Prescription drugs
- Over-the-counter medication
- Dental expenses
- Vision expenses
This alternative form of health coverage gives you full control over your benefit while allowing employees greater flexibility in how they use it. Some HRAs, such as the individual coverage HRA (ICHRA), can also satisfy the federal regulations for applicable large employers (ALEs).
Learn more about the HRAs you can offer with PeopleKeep
Qualified small employer HRA (QSEHRA)
A powerful first-time benefit or alternative to group health insurance made specifically for small employers.
Individual coverage HRA (ICHRA)
A health benefit that enables employers to cover the individual insurance plans their employees choose.
Group coverage HRA (GCHRA)
A health benefit that employers can use to help employees with their out-of-pocket expenses. It pairs with a group plan.
Wage laws in California
Wages in California are subject to various state laws. We've compiled the most important requirements to know below.
Minimum wage laws
California has a state minimum wage rate that exceeds the federal minimum wage.
|
Date in effect |
Minimum wage rate for all employees in the state |
|
January 1, 2025 |
$16.50/hour |
In 2017, California started annual minimum wage increases. During this transition, businesses with 25 employees or fewer had a separate minimum wage until the state minimum wage topped out at $15.50 in 2023.
Tips can’t count as part of minimum wage in California, as they can in some other states. The state banned tip credits in 2019. Employers must pay tipped workers the full minimum wage before tips.
Additionally, some employees, such as outside salespeople, family members, and camp counselors, are exempt from being paid minimum wage.
Exempt employees must earn at least twice the state minimum wage for full-time employment for their monthly salary7. For 2025, this is a $68,640 annual salary.
Local minimum wages
In addition to the state minimum wage, you may be subject to paying a higher minimum wage if you have employees working in various cities. That's because some cities and counties in the state have a higher wage requirement.
|
Place |
2025 minimum wages |
Applies to |
|
$17/hour |
All employers |
|
|
$18.30/hour |
All employers |
|
|
$18.67/hour |
All employers |
|
|
Burlingame |
$17.43/hour |
All employers |
|
$18.20/hour |
All employers |
|
|
$17.07/hour |
All employers |
|
|
$17.45/hour |
All employers |
|
|
$18.34/hour |
All employers |
|
|
$19.36/hour |
All employers |
|
|
$17.39/hour |
All employers |
|
|
$17.30/hour |
All employers |
|
|
$17.47/hour |
All employers |
|
|
$17.36/hour |
Organizations with 26 or more employees |
|
|
$16.50/hour |
Organizations with 25 or fewer employees |
|
|
$23/hour |
For hotel workers |
|
|
$17.97/hour |
For concessionaire workers |
|
|
$18.20/hour |
All employers |
|
|
$17.27/hour |
All employers |
|
|
$20.32/hour |
Hotels with 60 or more rooms |
|
|
$17.27/hour |
All employers |
|
|
$17.27/hour |
All employers |
|
|
$17.10/hour |
All employers |
|
|
Milpitas |
$17.70/hour |
All employers |
|
Mountain View |
$19.20/hour |
All employers |
|
$17.27/hour |
Organizations with 100 or more employees |
|
|
$17/hour |
Organizations with 26-99 employees |
|
|
$16.42/hour |
Organizations with less than 26 employees |
|
|
$16.50/hour |
All employers |
|
|
$17.94 |
Hotel workers with health benefits |
|
|
$23.91 |
Hotel workers without health benefits |
|
|
$18.20/hour |
All employers |
|
|
$17.50/hour |
All employers |
|
|
$17.97/hour |
All employers |
|
|
Redwood City |
$18.20/hour |
All employers |
|
$17.20/hour |
All employers |
|
|
Sacramento |
$16.50 |
All employers |
|
$17.32/hour |
All employers |
|
|
$17.25/hour |
All employers |
|
|
$18.67/hour |
All employers |
|
|
$17.95/hour |
All employers |
|
|
San Leandro |
$16.50/hour |
|
|
$17.95/hour |
All employers |
|
|
San Mateo (unincorporated) |
$17.46/hour |
All employers |
|
$18.20/hour |
All employers |
|
|
$17.27/hour |
All employers |
|
|
$20.32/hour |
Hotels and businesses operating on hotel property |
|
|
$17.45/hour |
All employers |
|
|
$18.02/hour |
Organizations with 26 or more employees |
|
|
$16.96/hour |
Organizations with fewer than 26 employees |
|
|
South San Francisco |
$17.70/hour |
All employers |
|
$19.00/hour |
All employers |
|
|
$19.65/hour |
All employees |
|
|
$19.61/hour |
Hotel employees |
Overtime pay
You must pay employees 1.5 times their regular rate of pay for any overtime hours worked. In California, this means any hours over eight in one day or over 40 in a week for most occupations.
You must also pay employees double-time for all hours over 12 in one day or eight hours on a seventh work day.
The table below shows how this works in practice for someone who makes $16.50/hour and works for 13 hours.
|
Hours worked |
Total wages |
|
Initial eight-hour shift at $16.50 per hour |
$132 |
|
Four overtime hours up to the maximum of 12 at 1.5 times their wage, or $24.75 per hour |
$99 |
|
One hour over 12 hours, which must be paid double time, or $33 per hour |
$33 |
|
Total for a 13-hour workday |
$264 |
Pay statements
California requires organizations to provide accurate, itemized pay statements with each paycheck, or at least semimonthly.
Pay statements must include the following:
- Gross wages earned
- Total hours worked for nonexempt employees
- The number of piece-rate units earned for piece-rate employees
- All state and federal deductions
- Net wages earned
- Dates of the payroll period
- Employee's first and last name and the last four digits of their Social Security Number or employee ID number
- Employer's name and address
- Hourly rates and the number of hours worked
- Overtime hours
Final pay
When an employee leaves, you must provide their unpaid wages immediately upon their final work day if they gave advance notice of at least 72 hours. You can mail final wages within 72 hours if your employee provided no notice to you.
You must also pay out unused vacation time, as California considers paid vacation time as wages.
Warehouse quota laws
Assembly Bill 701, which went into effect in 2022, protects warehouse workers from quotas that violate state and federal labor laws. Employers must provide information on their employees' quotas.
California pay transparency law
Senate Bill 1162 went into effect on January 1, 20238. This requires all employers with 15 or more employees to share their pay scale for any open positions. This also applies to organizations out-of-state with 15 or more employees who have at least one employee in California. Remote organizations open to hiring in the state must also provide this information in job posts.
According to the law, your salary range shouldn't include bonuses, commissions (unless the position's salary is based on commission), tips, or employee benefits.
Neglecting to include this information in job postings can lead to fines ranging from $100 to $10,000.
Child labor laws in California
California minors need employment certificates, otherwise known as work permits9. These permits are issued either by the California Department of Labor or through the schools the minors attend.
Minors also face specific limitations regarding work hours and nighttime employment. These rules vary based on age groups: those younger than 16 years old and those between 16 and 17 years old.
Younger than 16 years old
Children younger than 16 years old can work up to eight hours per day and 48 hours per week, during school break periods. When school's in session, they can work only three hours on school days and up to 18 hours per week. From June 1 through Labor Day, they can't work between 7 p.m. and 7 a.m.
Between 16 and 17 years old
Minors between 16 and 17 can work up to eight hours per day and 48 hours per week, during school break periods. When school's in session, they can work 4 hours per day. But they can't exceed 28 hours combined with school activities. They can't work from 10 p.m. (or 12:30 a.m. before non-school days) to 5 a.m.
Other HR and employment requirements in California
In addition to employee benefits and compensation laws, there are other unique HR rules that you need to know about.
"Captive Audience" meeting ban
California employers can't require their employees to attend mandatory meetings on religious or political matters, including anti-unionization10.
Freelance Worker Protection Act (FWPA)
A freelance worker's contract must be in writing. An employer must sign the contract, give a copy of it to the worker, and retain it for four years.
The professional services outlined in the FWPA include multiple categories of freelance-style work, including:
- Marketing
- HR
- Graphic design
- Photography
Independent contractors vs. employees
Unlike other states that rely on the "right to control" test to determine if a worker is a contractor or an employee, California has established a series of rules that employers must satisfy.
A worker is an independent contractor in California if all three of the rules below apply:
- They are free from the control and direction of the hiring entity
- They perform work that is outside the usual course of business for the organization
- They are engaged in an independently established trade, occupation, or business of the same nature as the work they are performing for the organization
Failure to correctly classify your employees can result in serious repercussions.
Harassment training
All employees of organizations with five or more employees must complete an hour or more of harassment prevention training, while managers and supervisors must complete two hours every two years.
Harassment training must include practical examples of sexual harassment and harassment based on gender identity, gender expression, and sexual orientation11.
This is important for organizations to comply with because managers and employers can be held liable for harassment in the workplace if it continues once reported.
Non-compete agreements
California doesn't allow non-compete agreements or prohibit former employees from working for your competitors for a specific amount of time. However, you can still enforce confidentiality agreements.
Hiring practices
While federal law already prohibits discrimination and denial of equal employment opportunities based on personal attributes such as race, sexual orientation, and national origin, California's FEHA is generally more inclusive.
FEHA prohibits discrimination in hiring practices based on:
- Race (including hair texture, protective hairstyles, and other race-related characteristics)
- Ancestry or national origin (including languages)
- Religious matters
- Age (over 40)
- Mental or physical disabilities
- Sex or gender, including sexual orientation
- Medical conditions
- Genetic information
- Marital status
- Military or veteran status
- Whether or not someone has a driver's license12
- The perception that someone is a member of a protected class or is associated with someone who is a member of a protected class
California also has laws protecting job applicants and their privacy, including not providing fingerprints or photos to third parties, prohibiting requirements for applicants to provide their social media usernames and passwords, prohibiting employers from asking about salary histories, and prohibiting employers from asking about an applicant's criminal history until an offer has been made.
Employers also may not require a polygraph as a condition of employment.
Publication of voluntary social compliance audits
California employers who have opted for a voluntary social compliance audit must post a link to the audit results on their website.
Frequency asked questions
No, however, the federal government requires organizations with 50 or more full-time equivalent employees to provide health insurance that meets minimum essential coverage (MEC).
Learn more about the requirements for applicable large employers
Looking to enhance your benefits package?
Speak with a PeopleKeep by Remodel Health HRA specialist who can help you answer questions and help you select the right health benefits package for your team.
Contributors:
Chase Charaba
Content Marketing Manager
Elizabeth Walker
Content Marketing Specialist
Holly Bengfort
Content Marketing Specialist