Welcome to California, the “Golden State,” where opportunity and innovation abound, and the dynamism of the state’s business environment compliments its educated and cosmopolitan populace. As the area remains a major economic force, it is more important than ever for international businesses hiring in California to be able to maneuver through the complexities of the state’s constantly changing labor regulations.
That’s why we have put together this guide to introduce you to the knowledge you need to understand the nuances of hiring in California in 2024.
California Labor Laws
A number of important labor laws shape the state’s job environment as of 2024.
The most important set of civil law statutes organizing employment for the State of California is called the California Labor Code, or simply the Labor Code. The code is composed of statutes that regulate the rights and general obligations of individuals within the state of California’s authority.
While the Labor Code is the set most specifically focused on labor laws, other labor laws can also be found in the Government Code, Family Code, and Insurance Code. Additionally, state laws may conflict with federal regulations or run counter to them, so it’s critical to keep informed about the laws that apply to your business.
California Recruitment & Hiring Requirements
Initiatives around Diversity, Equity, and Inclusion (DEI) are receiving more and more attention in California. When hiring in California, companies are urged to promote inclusive work environments by taking into account elements like equitable recruiting procedures and giving every employee equal access to chances.
Current Wage and Hour Laws in California
Employers in California must abide by the minimum wage of $16 per hour in 2024 for all eligible employees.
Overtime in California is defined as any hours done above 40 in a typical workweek. It must be compensated at 1.5X the employee’s regular hourly rate.
Workers who do over 12 hours in a single day or more than 8 hours on the 7th consecutive workday in a week are also entitled to overtime pay at 2X the usual rate.
California’s overtime regulations may not apply to some workers, such as white-collar professionals, union members, and those in specialized occupations like truck drivers, physicians, or teachers.
Ensuring Workplace Health and Safety in California
According to California law, your company must have an efficient system for communicating safety concerns or guidelines with your workers. When hiring in California, companies are also required to have readily available training and instruction on safe work practices as part of their Injury and Illness Prevention Program (IIPP).
Cal/OSHA is the state organization that looks into and upholds health and safety regulations in California workplaces.
What are the Essential Employee Leave and Benefits in California?
Payroll
According to California’s Labor Code, all employers must give their workers an itemized statement of earnings and deductions on payday. This pay statement must contain the following: the employer’s legal name and address, the worker’s legal name and last 4 digits of their Social Security number, the total amount of gross and net wages earned, dates of the pay period, hourly rate, total number of hours worked, and all deductions.
Most firms in California are required to pay their workers at least twice a month. This should be organized quickly when hiring in California.
Breaks
Employers are required to give their staff a paid 10-minute rest period every 4 hours of work. In the event that their employer forbids them from taking a break while working, employees are entitled to an extra hour of pay.
Employers are not permitted to consider legitimate restroom breaks as rest time.
After working for no more than 5 hours, employers need to permit non-exempt workers an unpaid meal break lasting at least 30 minutes.
If an employee works more than 10 hours in a single work period, the employer is required to provide a 2nd meal break lasting at least 30 minutes.
Leave
As of right now, Californian employers are not required by law to offer their staff any vacation time, paid or unpaid.
Under the FMLA (Family and Medical Leave Act), companies with 5+ employees must offer up to 12 weeks of job-protected leave annually for medical leave, birth or adoption, or qualifying reasons for active duty military personnel and their families.
Employers are also required to offer a leave of absence in order to fulfill social or civic obligations.
Offering better leave benefits, such as providing paid vacation leave, is seen as a powerful tool for attracting the best talent when hiring in California.
Maternity
Due to pregnancy, childbirth, or a connected illness, employees may be eligible for up to 12 weeks unpaid disability leave from employers with 5+ employees. Employers are also required by the California Pregnancy Disability Leave Act (PDL) to make reasonable accommodations and move affected workers to a less demanding or dangerous position.
Employers must provide time for unpaid breastfeeding breaks, but they can be scheduled in order to avoid conflicts.
Health Insurance
State laws do not mandate health insurance, but federal law mandates that firms with 50+ full-time workers offer minimum essential coverage benefits.
Workers who quit their jobs and work for companies with 2-19 employees may be eligible for continuous coverage under Cal-COBRA (Consolidated Omnibus Budget Reconciliation Act). Cal-COBRA allows employees to continue with their group health insurance after employment ends or hours are reduced for a period of 18 to 36 months. This state scheme may also be accessible to those who have already used up all of their Federal COBRA benefits.
Retirement
California passed a law in 2012 mandating that companies employing 5 or more people offer their staff members access to retirement plans. If not, companies risk fines and will have to sign up for the CalSavers IRA program. Those companies hiring in California in 2024 should be aware of the variety of retirement or pension plans available in the state.
Calculating Tax and Social Security in California
When organizing the payroll process for your workers, employers must manage a number of deductions and payments.
FICA taxes for Social Security and Medicare are deducted first when determining take-home pay. Following each pay period, a company deducts 1.45% for Medicare tax and 6.2% for Social Security tax. A 0.9% Medicare surtax is additionally due if a salary exceeds $200,000. Employers then meet the employee’s full FICA tax obligations, matching both 1.45% Medicare tax and 6.2% Social Security tax contributions.
There are 7 federal income tax brackets in the US, ranging from 10 to 37%.
California then has 9 different state tax brackets ranging from 1% to 12.3%. Income, marital status, and the employee’s position as head of the household may all affect the applicable tax bracket.
Additionally, a 1% tax on mental health services is imposed by California on incomes above $1 million.
What You Need to Know about Employee Termination in California
In California, employment relationships work at will, meaning that companies can fire employees for any reason, with some exceptions, such as termination based on a discriminatory basis.
The timing of an employee’s last payment depends on the circumstances surrounding their termination or dismissal.
Final paychecks are due at the time of termination for fired employees or within 72 hours for employees who resign, quit or are laid off.
5 Tips for Employers Hiring in California
Stay Informed About California Labor Laws
California encourages strong labor regulations and is consistently improving various rules on topics such as minimum wage, overtime, food and rest breaks, and more. That’s why keeping up with legislative developments and ensuring your business’s policies comply with California’s labor laws are key. In addition to third-party employment law experts like INS Global, the California Division of Labor Standards Enforcement (DLSE) website is a useful source for information.
Compliance with Wage and Hour Laws
The penalties for going against wage and hour laws in California are very severe. Before hiring in California, make sure your business complies with all applicable laws, including minimum wage and overtime, and maintain a close watch on any changes.
Create Comprehensive Employment Contracts and Policies
Written contracts should explicitly state the terms and circumstances of employment, including job responsibilities, pay, benefits, and termination policies. Employee handbooks can also address the policies, processes, and code of conduct of the organization. Even though California is an at-will employment state, having well-crafted employment contracts can help safeguard your company.
Prevent Workplace Harassment and Discrimination
California has strict regulations against discrimination and harassment in the workplace. Create and disseminate a transparent anti-discrimination and anti-harassment policy. This should guide your systems throughout the employment journey, from hiring in California through to dismissing employees responsibly.
Regularly teach staff members and managers to prevent, identify, and resolve these problems. Investigate and resolve issues immediately to establish a welcoming and safe workplace.
Implement Proper Safety Measures
In California, occupational safety is highly valued. Ensure your workplace complies with all safety requirements and that staff members receive the required training and observe the regulations set forth by the California Occupational Safety and Health Administration (Cal/OSHA). Evaluate occupational dangers regularly and take the necessary precautions to reduce exposure.
Hiring in California with INS Global: Global and Local Support for Every Challenge
Understanding labor regulations around hiring in California in 2024 will require more than simply compliance; it will also require adjusting to a changing and dynamic business environment as the employment landscape changes.
The complicated web of employment laws in California requires expertise and dedication. It’s faster and easier to grow when you work with an Employer of Record (EOR) in California like INS Global, whether you’re expanding domestically or internationally.
INS Global’s Californian EOR can serve as your company’s legal employer in-state and handle all HR-related duties, freeing up your staff to focus on projects that will help you reach your expansion objectives.
From day-to-day support to legal knowledge during unique situations, INS Global is committed to ensuring your firm succeeds when hiring California’s changing job market.
Get in touch with our group of expert expansion consultants today to find out how to start hiring in California successfully.
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