If you can make it there, you’ll make it anywhere. We’re not talking about the Big Apple—the state of California may just 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 the state. No other state has that honor—so what’s special about California?
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
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 has 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.
2. Paid Leave Benefits
California’s paid family leave rules are among the most liberal in the country, offering employees up to six 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.
Though employers don’t foot the bill directly (the benefit is funded by an employee-paid tax) they still need set up the payroll deductions to make it happen. What’s more, under state law they’ll also need to ensure that sick leave balances display on employee pay stubs, so workers are aware of how many days they have available. 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. With a law set to take effect on January 1, asking about salary history soon will be, too. Starting in 2018, it will be unlawful for government or private employers to request job applicants’ pay history. 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 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 or mass layoff. California defines 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. New York, the state’s closest competitor when it comes to pro-employee legislation, is inching closer to a similar measure.
5. Anti-Harassment Requirements
Sexual harassment has emerged as one of the defining employment issues of 2017. California makes it a requirement for all businesses to have a written anti-harassment policy, as well as a reporting and investigation procedure.
In the state, anti-harassment training isn’t just best practice—it’s a compliance necessity. Under California law, businesses with 50 or more employees are required to enroll supervisors for a minimum of 2 hours of training, 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.
Spot a trend? The intent of California’s rules 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.
In Namely’s new guide,California Labor Laws 2018, we broke down the nuances of HR, payroll, and benefits in the Golden State. It's everything you need to know about HR's toughest state. Download the guide by clicking below.