California Employment Law Essentials

The golden rule of California employment law: whatever protects the employee most, wins.

California employers must follow federal law, California law, and any local ordinance — and where they differ, the most employee-protective standard applies. California almost always exceeds the federal floor, so for most day-to-day issues, California rules govern.

At-will — with strong exceptions

Employment is at-will by default (Labor Code §2922), but California recognizes robust exceptions: terminations that violate public policy, breach an implied contract, or amount to unlawful discrimination/retaliation are not permitted.

The California enforcers

California's floor is more than double the federal one — and several industries have their own higher rates.

California has daily overtime — a major difference from federal law.

California strictly regulates breaks — and missed breaks cost a premium.

• Meal periods: a 30-minute, unpaid, duty-free meal must begin before the end of the 5th hour of work. A second 30-minute meal is required before the end of the 10th hour. (The first can be waived by mutual consent if the shift is ≤6 hours; the second if ≤12 hours and the first wasn't waived.)
• Rest breaks: a paid 10-minute rest for every 4 hours worked "or major fraction thereof" — none if under 3.5 hours, generally one for 3.5–6 hours, two for over 6–10, three for over 10–14.
• Premium pay: miss a required meal or rest period and the employer owes one hour of pay at the regular rate (one premium per category, per day).

California's exemption tests are stricter than federal — both the salary and the duties bar are higher.

• Salary test: exempt white-collar employees must earn at least 2× the state minimum wage for full-time work — $70,304/year in 2026 ($5,858.67/month). This rises automatically with the minimum wage.
• Duties test: the employee must spend more than 50% of their time on exempt (executive/administrative/professional) duties — a quantitative test, unlike the federal "primary duty" standard.
• Special rates: the computer-software professional exemption requires $58.85/hour (2026); the licensed physician/surgeon exemption $107.17/hour.

California is exacting about how and when employees are paid.

Itemized wage statements (Labor Code §226)

Each pay stub must show nine categories of information, including gross wages, total hours, all hourly rates, net wages, the pay period, and the employer's legal name and address. Defective stubs carry statutory penalties.

Final pay & waiting-time penalties

Late final pay triggers "waiting-time" penalties (Labor Code §203): the employee's daily wage for each day late, up to 30 days.

California requires paid sick leave for nearly all employees.

• Amount: at least 40 hours or 5 days per year (raised by SB 616, effective 2024).
• Accrual: at least 1 hour for every 30 hours worked — or employers may "front-load" the full amount.
• Availability: employees can start using leave by the 90th day; the full 40 hours/5 days must be available by the 200th day.
• Carryover: accrued leave carries over (caps apply), unless the full amount is front-loaded each year.
• Local laws: many cities (LA, San Francisco, San Diego, etc.) require more.

California layers many protected leaves on top of federal FMLA.

The Fair Employment and Housing Act is broader than federal law on almost every dimension.

• Lower threshold: FEHA's discrimination rules apply to employers with 5+ employees (vs. 15 federally). Its harassment provisions apply to all employers — even with one employee.
• More protected categories: beyond the federal list, FEHA covers (among others) marital status, gender expression, medical condition, genetic information, military/veteran status, and more.
• Mandatory harassment training (SB 1343): employers with 5+ employees must train supervisors (2 hours) and non-supervisors (1 hour) within six months and every two years.
• Accommodation & interactive process obligations mirror — and often exceed — the ADA.

California has some of the country's strongest equal-pay and pay-transparency rules.

• California Equal Pay Act: equal pay for substantially similar work regardless of sex, race, or ethnicity; differences must be justified by seniority, merit, production, or another bona-fide factor.
• Salary history ban: employers may not ask about an applicant's prior pay, and must provide the pay scale for a position on request.
• Pay scale in job postings (SB 1162): employers with 15+ employees must include the pay scale in job postings.
• Pay data reporting: employers with 100+ employees file annual pay data with the Civil Rights Department.

California uses a strict, presumption-flipping test (from Dynamex / AB 5).

A worker is presumed an employee unless the hiring entity proves all three "ABC" prongs:

1. A — the worker is free from the company's control and direction in performing the work;
2. B — the work is outside the usual course of the company's business;
3. C — the worker is customarily engaged in an independently established trade or business of the same type.

Prong B is the hardest: if the worker does the company's core work, they're almost certainly an employee. Some occupations have statutory exemptions (AB 2257) that revert to the older multi-factor Borello test.

California restricts what you can ask and when you can consider it.

• Fair Chance Act ("ban-the-box"): employers with 5+ employees may not ask about conviction history until after a conditional offer, and must do an individualized assessment (with notice and a chance to respond) before rescinding based on a record.
• Salary history ban: don't ask about prior pay; provide pay scale on request.
• Background checks (ICRAA): California adds disclosure/authorization requirements on top of the federal FCRA.
• New-hire notices: provide the Labor Code §2810.5 wage notice and other required notices to non-exempt hires.

If the job requires it, the employer generally pays for it.

Labor Code §2802 requires employers to reimburse all necessary business expenses employees incur doing their jobs — including a reasonable share of personal cell-phone use for work, mileage, required tools, and reasonable remote-work costs (internet, supplies). Employers also can't make most deductions from wages for cash shortages, breakage, or ordinary business losses.

California's hostility to non-competes is among the strongest in the nation.

Under Business & Professions Code §16600, contracts that restrain someone from engaging in a lawful profession or trade are void — non-competes generally can't be enforced against California employees. Recent laws (SB 699 and AB 1076) went further:

• Non-competes are void even if signed in another state for work in California.
• Employers were required to notify current and certain former employees that any non-compete is void.
• Narrow exceptions remain (e.g., in connection with the sale of a business).

Three California-specific exposures worth knowing.

Cal/OSHA & workplace violence prevention

Cal/OSHA enforces stringent safety standards (including heat-illness rules). Since July 1, 2024, most employers must maintain a written Workplace Violence Prevention Plan (SB 553), with training and an incident log.

PAGA

The Private Attorneys General Act lets employees sue to recover civil penalties for Labor Code violations on the state's behalf — a major driver of California litigation. A 2024 reform adjusted penalties, added cure opportunities, and tightened standing, but PAGA exposure remains significant.

Cal-WARN

California's mini-WARN applies to covered establishments with 75+ employees (vs. 100 federally), generally requiring 60 days' notice of mass layoffs, relocations, or closures.

Key California changes that took effect January 1, 2026.

• AB 692 Ban on "stay-or-pay" clauses — broadly prohibits agreements that make employees repay training, relocation, or similar costs if they leave before a set time.
• Wage theft Stronger penalties — added penalties (up to 3× the wages owed) when wage judgments go unpaid beyond 180 days.
• Cal-WARN Enhanced layoff notices — notices must now include additional details (e.g., workforce-board coordination and CalFresh food-assistance information).
• Wages $16.90 state minimum wage and a $70,304 exempt salary floor take effect.

The numbers you'll reach for most (verify before relying; local rules may exceed these).

A starting baseline for California employers. Ticks save in your browser.

• Paying at least the highest applicable minimum wage (state, local, or industry).
• Calculating daily & weekly overtime (and 7th-day rules) for non-exempt staff.
• Providing compliant meal & rest breaks; paying premiums when missed.
• Exempt employees meet the $70,304 salary AND the >50% duties test.
• Wage statements meet §226; final pay issued on time (immediate on discharge).
• At least 40 hours / 5 days paid sick leave; required leaves honored (CFRA, PDL, etc.).
• FEHA policies, complaint process, and SB 1343 training in place.
• Pay scales in job postings; no salary-history questions; Fair Chance process followed.
• Reimbursing §2802 business expenses; no unlawful non-competes.
• Workplace Violence Prevention Plan; 2026 notices (SB 294) issued by Feb 1.

Primary California sources — when this course and an official source differ, the official source wins.

• DIR — Dept. of Industrial Relations: dir.ca.gov
• Labor Commissioner (DLSE): dir.ca.gov/dlse
• Minimum wage & FAQs: dir.ca.gov/dlse/faq_minimumwage.htm
• Civil Rights Department (FEHA): calcivilrights.ca.gov
• Paid sick leave: dir.ca.gov/dlse/paid_sick_leave.htm
• EDD (PFL/SDI/unemployment): edd.ca.gov
• Cal/OSHA: dir.ca.gov/dosh