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5 Key California HR Compliance Challenges

Being in HR in California may be the hardest place in the country to be an HR professional. The HR Certification Institute goes as far as to even offer a separate credential, the PHRca, just for HR in California. No other state has that honor—so what’s special about California HR laws?

For business owners and HR professionals alike, understanding and adhering to California's complex employment laws is a formidable challenge. Known for its stringent labor standards, California sets a unique stage for HR management, making it critical for businesses to seek proficient HR services in California.  

Our guide delves into the nuances of California HR compliance, offering valuable insights for business owners seeking expert HR services in California to navigate the evolving landscape of California employment law.

The Golden State is among the most employee-friendly jurisdictions in the world, with generous wage and hour laws and paid leave benefits. That’s good news for workers, but a bit of an administrative headache for HR. While the majority of states align with federal requirements, California has always gone its own way. In many ways, being an HR practitioner in the state is like working in a different country altogether.

Below are some of the reasons why California is such a unique place to do business.

1. Overtime Rules

Understanding California's overtime rules is crucial for businesses to ensure compliance with state-specific labor laws. 

The Fair Labor Standards Act (FLSA) entitles employees to overtime pay for any hours worked over 40 in a week. That’s HR 101, and as complex as calculating overtime gets for the majority of states. California HR laws bring a different approach.

The standard workday in California is eight hours long. Any time spent working beyond that is considered overtime—even if the employee doesn’t end up working more than 40 hours that week. Simply put, overtime is calculated on a daily, not weekly basis in the state. In comparison, a New York employee could work four 10-hour days in a week and still not be entitled to any overtime.

Overtime is still paid out at 1½ times the employee’s regular rate, but with one exception. If an employee works over 12 hours in a day, they are due "double time”—or twice their regular rate of pay. Not to mention that the change to teleworking in California has its own case study on the California government website

2. Paid Leave Benefits

California’s paid family leave rules are among the most liberal in the country, offering employees up to eight weeks to bond with a new child or care for an ill family member. While paid leave activists have scored wins across the country, what makes California’s program so notable is its generosity. Starting this January, leave will need to be paid out at a rate no less than 60-70 percent of regular wages, depending on the beneficiary’s salary. In San Francisco, that number is even higher: 100 percent of wages.

California's paid leave benefits are among the most generous in the nation, presenting unique challenges and opportunities for companies operating in the state. Though employers don’t foot the full bill directly (the benefit is funded by an employee-paid tax), they still need to set up the payroll deductions to make it happen. That means investing in a payroll vendor capable of accommodating those needs.

Keep in mind that even vacation time is subject to state rules. California considers accrued PTO as a part of overall earnings and requires that it be paid out to departing employees. That payout has to happen along with their last check, due within 72 hours of their departure or on their last day, depending on whether he or she voluntarily quit or was fired. It’s for this reason that “unlimited” vacation policies often raise legal questions in the state. If PTO is considered part of an employee’s earnings, how do you pay out an unlimited policy if he or she terminates?  

3. Hiring Laws

Simply getting employees through the door can be a challenge for California recruiters. Asking about criminal and credit history is already off-limits for most roles. It's also illegal to ask about salary history for government or private employers. If a candidate voluntarily provides that information without being asked, the employer may consider it in making a compensation decision. While similar to other state bans, California’s carries a unique provision: if asked, employers must provide applicants with the opening’s pay range.

The state also has some strict rules governing the use of screening and employment eligibility confirmation systems. Misusing E-Verify (an online tool used to verify employment eligibility) to check the immigration status of current employees or candidates carries a penalty of up to $10,000 per offense.

4. WARN Laws and Noncompetes

It’s never easy to say goodbye, and that’s doubly true when parting ways with employees in California. The state’s aptly-abbreviated WARN (Worker Adjustment and Retraining Notification) law requires employers to give 60-days notice to workers before a closing, mass layoff, or relocation. California HR laws define an applicable layoff as 50 or more employees in a 30-day span. The penalty for noncompliance is stiff—up to $500 for each day that the layoff goes unreported to the state and a minimum of 60 days back pay with benefits for each employee let go.

In highly competitive industries, some employers limit where employees can work post-termination. Want to get an edge by adopting one of these “non-compete” agreements? In California, non-competes are illegal. Section 16600 of the California Business and Professions Code makes it unlawful to pursue action against a job-hopping employee unless he or she is a company owner. 

5. Anti-Harassment Requirements

Sexual harassment has emerged as one of the defining employment issues. California makes it a requirement for all businesses to have a written anti-harassment policy, as well as a reporting and investigation procedure. California's stringent anti-harassment training requirements underscore the state's commitment to creating a safe and equitable workplace.

In the state, anti-harassment training isn’t just best practice—it’s a compliance necessity. Under California HR laws, businesses with 50 or more employees are required to provide 1 hour of sexual harassment and abusive conduct prevention training to nonsupervisory employees and 2 hours of sexual harassment and abusive conduct prevention training to supervisors and managers once every two years. The training must take place within the employee’s first six months on the job. In addition to race, sex, and age, it must also address harassment based on gender identity and sexual orientation. You’ll also need to keep proof of attendance, like completion certificates or recordings, for at least two years.

The complexities of California labor standards demand thorough knowledge and strategic HR management in California, ensuring that businesses not only comply but also protect employee rights in California. Navigating the HR landscape in California can be daunting, but with the right knowledge and resources, business owners can ensure compliance and foster a positive work environment. Contact us for specialized HR services tailored to California's unique employment laws.

Spot a trend? The intent of California’s HR laws isn’t to burden businesses, but to protect workers. That said, HR, unfortunately, finds itself in the position of making sense of it all and keeping businesses compliant.

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