California Employer Compliance Checklist: Pay, Leave, Hiring & Notices

The central compliance question is not “Do we have an office in California?” It is: which people perform work in California, where do they work, how are they classified, what industry rules apply, and how many workers does the law count for this requirement?

California compliance at a glance

Thresholds are not interchangeable. For example, the 15-employee pay-transparency threshold is not the CalSavers test, and a local ordinance can count workers differently from a state statute. Maintain a live workforce-count worksheet with the legal entity, worker’s location, role, employment status and applicable city.

Start with the four baseline decisions

1. Map the workforce. Identify every employee and contractor who works in California, including remote employees. Record their work city, not only the company’s headquarters.
2. Identify the applicable wage order and exemption status. A salary title alone does not make someone exempt from overtime. The relevant wage order and the actual duties matter.
3. Classify the worker before issuing an offer or a 1099. Do not use an LLC, an invoice or a contractor agreement as a substitute for the classification analysis.
4. Check state, city and industry overlays. Review the employee’s work location for local minimum wage, leave, scheduling, healthcare, fair-chance and notice rules; then check any industry rule such as health-care or fast-food wage requirements.

Pay, hours and leave: the operational core

Minimum wage and exempt salaries

California’s statewide minimum wage is $16.90 per hour from January 1, 2026, for employers of all sizes. Cities and counties may set a higher rate, and some health-care and fast-food roles have separate rules. Use the Labor Commissioner’s current minimum-wage page as the starting point, then verify the employee’s municipality and industry.

For many commonly used white-collar exemptions, the 2026 salary floor is $70,304 annually ($16.90 × 2 × 40 hours × 52 weeks). That figure is only one part of the test: the employee must also satisfy the applicable duties requirements. Treat a role labelled “manager,” “lead” or “salaried” as nonexempt until the duties analysis supports a different conclusion.

Overtime, meal periods and rest periods

For a typical nonexempt employee, California generally requires time-and-a-half for hours over eight in a workday or 40 in a workweek, and double time after 12 hours in a workday. The first eight hours on the seventh consecutive day of work in a workweek are generally time-and-a-half; hours beyond eight that day are generally double time. The state’s overtime guidance and the applicable wage order control; valid alternative-workweek schedules and some industries have distinct rules.

These rules come from Labor Code section 512 guidance and the wage orders. An on-duty meal period is narrow: the work must genuinely prevent relief from duty and the agreement must be written and revocable. Remote work does not erase the obligation to record all work time, including time worked outside a planned schedule.

Paid sick leave: set the policy, show the balance, keep the records

Most covered employees accrue one hour of paid sick leave for every 30 hours worked, unless the employer uses a compliant alternative accrual method or frontloads leave. Employees must be able to use at least 40 hours or five days per year, whichever is more. A 10-hour-per-day employee therefore needs access to at least 50 hours to receive five days. Employees generally begin using accrued leave on their 90th day of employment.

The employer must display the required poster, provide the sick-leave information in the hiring notice, show available paid-sick-leave balance on the pay stub or a document issued on the same day as the paycheck, and keep accrual/use records for three years. See the Labor Commissioner’s updated paid sick leave FAQ and official poster and notice resources. A local ordinance may require a more generous benefit; when the rules differ, compare each element rather than assuming the state minimum ends the analysis.

Onboarding and recurring notices: use the official documents

Do not reconstruct the section 2810.5 notice from fragments of an offer letter and handbook. DLSE says it must be on its own form. Electronic delivery can work only if the employee can acknowledge receipt and print a copy. Keep the completed copy and proof of delivery.

Illustrative pay-notice field entry:
Regular rate: $24.00 per hour. Overtime rate: $36.00 per hour. Double-time rate: $48.00 per hour. Basis of wage payment: hourly. Regular payday: 15th and last day of each month.
Use the current DLSE Notice to Employee form for all other required fields, including the employer and workers’ compensation information. This example is a way to complete rate fields, not a replacement for the statutory form.

Pay stubs and final wages

Each wage statement must meet Labor Code section 226. Build payroll controls around itemized hours, rates, gross and net wages, deductions, pay period, employee identity and employer information; the paid-sick-leave balance also has its own disclosure rule. Do not rely on a generic payroll template without checking California fields.

At termination, final wages are generally due immediately. If an employee quits with at least 72 hours’ notice, final wages are due on the last day; without that notice, they are generally due within 72 hours. Earned, unused vacation is included. Review the Labor Commissioner’s final-wage guidance before processing a separation; delayed final pay can lead to waiting-time penalties.

Hiring and pay transparency: what a compliant posting looks like

Since January 1, 2023, an employer with 15 or more employees must put the pay scale in a job posting if at least one employee is located in California. The Labor Commissioner interprets this to include a position that may ever be filled in California, whether in person or remotely. The employer must give the pay scale to a third party that posts the role, and the third party must include it.

“Pay scale” means the salary or hourly wage range the employer reasonably expects to pay. It is not permission to publish a placeholder range that management does not intend to use. All employers, regardless of size, must provide the pay scale to an applicant upon reasonable request and to a current employee for that employee’s current position upon request. Employers cannot seek an applicant’s salary history, although they may ask for salary expectations. The authoritative summary is the Labor Commissioner’s Equal Pay Act and Labor Code section 432.3 FAQ.

Plain-language posting example:
Base salary range: $78,000–$95,000 per year. The final base salary within this range will reflect the selected candidate’s job-related skills, experience and work location.

Before publication, have the hiring owner approve the range in writing and preserve the approval with the job requisition. Keep a record of each employee’s title and wage-rate history during employment and for three years after employment ends. A salary range does not cure a pay-equity problem: employees performing substantially similar work may be compared even if their titles differ.

Employee or contractor? Apply the ABC test before paying a 1099

Under Labor Code section 2775, a person providing labor or services for pay is presumed to be an employee for the Labor Code, Unemployment Insurance Code and wage orders unless the hiring entity proves all three parts of the ABC test:

1. A — Freedom from control: the person is free from the company’s control and direction, both by contract and in reality.
2. B — Outside the usual course: the person performs work outside the company’s usual business.
3. C — Independently established business: the person customarily operates an independent trade, occupation or business of the same kind.

Example that likely points to employee status: a product-design company brings in a “contract” designer to do its core design work full-time, on the company’s schedule, using company systems, with no practical ability to market services to others. The arrangement is likely to fail at least Part B, and possibly Parts A and C. Calling the designer a contractor or paying through an LLC does not fix that.

Example requiring a documented exception analysis: a company hires an established cybersecurity consultancy to run a defined security audit under a written statement of work. The consultancy markets the same service to multiple customers, controls its methods and hours, has a separate business location, provides its own ordinary tools and negotiates its rate. This may be closer to the business-to-business exception, but it is not automatic.

The business-to-business provision in Labor Code section 2776 has a detailed list of conditions, including a written contract, required license or registration, a separate business location, the ability to serve other clients, public marketing, own tools where consistent with the work, rate negotiation and control over hours/location. If the statutory conditions are met, the classification analysis shifts to the Borello standard; it does not disappear. Other narrow exceptions appear in sections 2777–2787. Identify the exact statutory exception and document every condition before relying on one.

Also remember the reporting rule. If a business must file a federal Form 1099-NEC or 1099-MISC for an individual, sole proprietor or single-member LLC and pays or contracts for $600 or more, it generally must report that independent contractor to EDD within 20 calendar days using DE 542. See EDD’s contractor-reporting instructions. Reporting a contractor does not validate the classification.

Benefits, safety and required protections

CalSavers

CalSavers is not a benefit that only large employers need to consider. If an employer averaged at least one California-based employee in the prior calendar year, has at least one employee age 18 or older and does not offer a qualified retirement plan, it must register or certify an exemption. Owners-only businesses, employers with only the owner’s spouse, employers that only pay independent contractors, qualifying plan sponsors, government entities, religious organizations and tribal organizations can be exempt. The 1–4 employee group’s registration/exemption deadline was December 31, 2025. Use the CalSavers employer eligibility page and the 1–4 employee guidance, not an old size-based deadline chart.

Workers’ compensation and workplace safety

California employers must secure workers’ compensation coverage or lawfully self-insure. Post the required Notice to Employees where employees can see it; it must identify the carrier or self-insured status, claims information and emergency information. The posting rule appears in Title 8, section 9881. Do not pass workers’ compensation premium costs to employees.

Since July 1, 2024, most general-industry employers must have a written workplace violence prevention plan, training, incident log and related records under Labor Code section 6401.9, subject to specified exceptions. Cal/OSHA provides a model plan and implementation guidance. Do not assume that a remote or small team is outside the rule without checking the statutory exception against the actual workplace.

Harassment prevention training

An employer with five or more employees must provide interactive sexual-harassment prevention training: one hour to nonsupervisory employees and two hours to supervisors, within six months after assuming the role and every two years afterward. The California Civil Rights Department guidance explains the training format and timing. Maintain completion records and calendar the next two-year cycle.

Local ordinances: three examples of why the employee’s city matters

Read the primary local materials before applying a threshold: San Francisco’s HCSO overview, the City of Los Angeles FCIHO rules, notice and sample letters, and San José’s ordinance, notice and FAQs. Local minimum wage and paid-sick-leave rules are also common. A company with no California office can still have a local compliance issue because an employee works in that city.

A 30-day employer compliance sprint

1. Days 1–3: Export the workforce roster. Mark California work location, employee/contractor status, wage order, exempt/nonexempt status, pay rate, city and work schedule.
2. Days 4–7: Compare every nonexempt rate against the state, local and industry minimum; test overtime, meal and rest rules; correct timekeeping gaps before the next payroll.
3. Days 8–12: Audit onboarding. Confirm EDD registration, workers’ compensation, section 2810.5 notice, sick-leave poster/notice, DE 34 reporting and payroll-statement fields.
4. Days 13–16: Review all open and templated job postings. Add an approved pay scale where required; remove salary-history questions from applications and recruiter scripts.
5. Days 17–21: Reassess every California contractor under the ABC test. For each claimed exception, save the exact statute, written contract and evidence for each condition.
6. Days 22–25: Verify CalSavers status; calendar harassment-training renewals; adopt or update the workplace violence prevention plan.
7. Days 26–30: Review the employee’s city for local ordinances, deliver the current annual rights notice if not already delivered, and assign one owner for each recurring deadline.

For workers: how to raise a problem and preserve your options

1. Save your offer letter, job posting, section 2810.5 notice, pay stubs, time records, sick-leave balance, schedule, communications and any written policy. Use copies you may lawfully retain; do not take confidential client or trade-secret material.
2. Ask a precise written question. For example: “Please provide the pay scale for my current position under California Labor Code section 432.3.” Keep the request and response.
3. For unpaid wages, missed breaks or final-pay issues, review the Labor Commissioner’s wage-claim process. Do not wait for an employer to “fix it next cycle” without documenting the issue.
4. For retaliation connected to reporting a labor-law or safety issue, use the Labor Commissioner’s retaliation and Equal Pay claim process. In most cases the retaliation deadline is one year from the adverse action, though exceptions exist.
5. For employment discrimination based on a protected characteristic, consult the California Civil Rights Department complaint process. Deadlines and the correct forum can differ from a wage claim.

California labor protections apply regardless of immigration status. The Labor Commissioner says it does not ask people seeking assistance or protection under California labor law to disclose immigration status. For a broader cross-border context, see Jobicy’s guide to legal implications of remote work for employers.

When to stop and get legal advice

Use California employment counsel or a qualified HR/payroll adviser before taking action if the issue involves a contractor who performs core business work, a salary exemption, a collective-bargaining agreement, a layoff or termination, a worker in several states or cities, a healthcare/fast-food/public-works role, a pay-equity concern, an investigation, a complaint, or a local ordinance. These are fact-sensitive areas where a copied policy or a generic internet checklist can create liability.

Sources and version note: State and city sources in this article were reviewed August 2026. California statutes, city ordinances, agency forms, posters, wage rates and coverage rules change. Recheck the live official page before issuing a policy, making a classification decision, publishing a role or taking action against a worker.