Hiring New Employees in California: A Legal Guide
California has some of the most employee-friendly labor laws in the nation, requiring employers to navigate specific documentation, wage requirements, and workplace protections when hiring. Employers must comply with state-specific regulations including paid sick leave, meal and rest breaks, and stringent anti-discrimination provisions that go beyond federal requirements.
Failure to comply with California's employment laws can result in significant penalties, including fines, back pay requirements, and potential class action lawsuits. Even small businesses should consider consulting with an employment attorney familiar with California law before establishing hiring practices.
Key Considerations
Scenarios
Decisions
Scenarios
Decisions
Scenarios
Decisions
Relevant Documents
Employee Handbook
A comprehensive document outlining company policies, procedures, work rules, benefits, and expectations. Provides important information to new employees and serves as a reference for all staff.
Employment Application Form
A standardized form for collecting information from job applicants including work history, education, skills, and references. This helps employers make informed hiring decisions and serves as documentation of the hiring process.
Employment Contract
A comprehensive legal agreement between employer and employee detailing all terms and conditions of employment including duties, compensation, benefits, termination procedures, and confidentiality requirements.
Employment Offer Letter
A formal document outlining the terms of employment including position, salary, benefits, start date, and other conditions. This establishes clear expectations and serves as evidence of the employment agreement.
Non-Compete Agreement
A contract that restricts an employee from working for competitors or starting a competing business for a specified period after employment ends. Enforceability varies significantly by state.
Non-Disclosure Agreement
Protects your confidential information, trade secrets, and intellectual property that you may need to share with the manufacturer during the course of your relationship. This should be signed before detailed discussions begin.
Relevant Laws
California Fair Employment and Housing Act (FEHA)
FEHA prohibits employment discrimination based on protected characteristics including race, religion, color, national origin, ancestry, physical or mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, and military/veteran status. Employers with 5 or more employees must comply with FEHA when hiring.
California Equal Pay Act
Requires employers to pay employees of different genders, races, and ethnicities equally for substantially similar work. When hiring, employers should ensure their compensation offers don't perpetuate pay disparities based on protected characteristics.
Ban-the-Box Law (Fair Chance Act)
Prohibits employers with 5 or more employees from asking about criminal history on job applications or inquiring about conviction history before making a conditional job offer. This law aims to reduce barriers to employment for people with criminal records.
California Salary History Ban
Employers cannot ask job applicants about their salary history, and cannot rely on salary history to determine whether to offer employment or what salary to offer. Employers must provide a pay scale for a position upon reasonable request.
E-Verify Requirements
While California prohibits localities from requiring private employers to use E-Verify, all employers must complete Form I-9 verification for new hires. California law also prohibits employers from using E-Verify to check existing employees or applicants before offering a job.
Mandatory Sexual Harassment Training
Employers with 5 or more employees must provide at least 1 hour of sexual harassment prevention training to all employees and 2 hours to supervisors within 6 months of hire or promotion, and every 2 years thereafter.
New Employee Documentation Requirements
Employers must provide new hires with specific documentation including a DE 2515 Disability Insurance Pamphlet, DE 2511 Paid Family Leave pamphlet, DE 2320 Unemployment Insurance pamphlet, and written notice of sick leave rights under the Healthy Workplaces, Healthy Families Act.
Wage Theft Prevention Act
Requires employers to provide new non-exempt employees with a written notice containing specific information about pay rates, pay day, employer information, and workers' compensation coverage at the time of hire.
Regional Variances
Bay Area
San Francisco has additional employer requirements including the Fair Chance Ordinance (limiting background checks and when criminal history can be considered), higher minimum wage ($18.07 as of July 2023), and the Health Care Security Ordinance requiring employers with 20+ employees to spend a minimum amount on employee healthcare.
Berkeley has its own minimum wage ordinance, paid sick leave requirements that may exceed state law, and specific fair workweek provisions for certain industries requiring advance notice of work schedules.
Oakland enforces its own minimum wage ($15.97 as of January 2023), paid sick leave ordinance (allowing employees to accrue 1 hour for every 30 hours worked), and has a Ban the Box ordinance restricting when employers can ask about criminal history.
Southern California
Los Angeles has a higher minimum wage ($16.78 for employers with 26+ employees), Fair Chance Initiative prohibiting employers from asking about criminal history until after a conditional offer, and specific paid sick leave requirements allowing employees to accrue 48 hours annually.
Santa Monica has its own minimum wage ordinance, hotel worker living wage requirements, and a local paid sick leave law that may provide more generous benefits than state requirements.
San Diego enforces the Earned Sick Leave and Minimum Wage Ordinance requiring employers to provide at least one hour of paid sick leave for every 30 hours worked with different accrual caps than state law.
Central Valley
Fresno generally follows state employment laws without significant additional local requirements, but has specific zoning restrictions that may affect home-based businesses and certain types of commercial operations.
Sacramento has a Worker Protection Ordinance that provides supplemental paid sick leave for COVID-related absences beyond state requirements and specific protections for hotel workers.
Suggested Compliance Checklist
Prepare job description and posting
1 days after startingCreate a clear job description that accurately reflects the position's duties, required qualifications, and essential functions. Ensure the job posting complies with California's Fair Employment and Housing Act (FEHA) by avoiding discriminatory language related to protected characteristics (race, religion, gender, age, disability, etc.). Include salary range information to comply with California's pay transparency laws.
Create Employment Application Form
2 days after startingDevelop an application form that complies with California law. Do not include questions about criminal history (to comply with 'Ban the Box' law), salary history (prohibited under Labor Code Section 432.3), or other protected characteristics. Include a statement about reasonable accommodations for applicants with disabilities.
Conduct compliant interviews
14 days after startingTrain interviewers on legal interview practices in California. Avoid questions about protected characteristics, criminal history, salary history, and other prohibited topics. Document interview questions and responses for each candidate to demonstrate fair hiring practices.
Perform background checks with authorization
16 days after startingObtain written authorization before conducting background checks. California has specific requirements under the Investigative Consumer Reporting Agencies Act (ICRAA) and the Consumer Credit Reporting Agencies Act (CCRAA). Provide notice of intent to obtain a background check and obtain written authorization from the candidate.
Create Background Check Authorization Form
16 days after startingDraft a form that complies with both federal Fair Credit Reporting Act (FCRA) and California's ICRAA/CCRAA requirements. Include clear disclosure of the background check, separate from other documents, and obtain written authorization from the candidate.
Prepare Employment Offer Letter
18 days after startingDraft an offer letter that includes position title, start date, compensation, benefits, at-will employment status (if applicable), and any contingencies (background check, reference check, etc.). In California, be sure to include information about paid sick leave, and if applicable, information about the company's paid family leave policies.
Draft Employment Contract
19 days after startingIf using a formal employment contract (beyond an offer letter), ensure it complies with California law. Include clear terms regarding compensation, benefits, duties, termination provisions, and at-will status (if applicable). Be aware that non-compete clauses are generally unenforceable in California.
Prepare Non-Disclosure Agreement
20 days after startingDraft an NDA that protects company confidential information and trade secrets. In California, NDAs cannot prohibit disclosure of unlawful acts in the workplace, including harassment or discrimination (SB 331, the 'Silenced No More Act'). Ensure the NDA is reasonable in scope and duration.
Prepare Non-Compete Agreement
21 days after startingBe aware that traditional non-compete agreements are generally void and unenforceable in California under Business and Professions Code Section 16600. Instead, focus on protecting trade secrets and confidential information. Consider alternative approaches like non-solicitation provisions (for customers and employees) that may be enforceable if properly drafted.
Complete Form I-9 Employment Eligibility Verification
23 days after startingFederal law requires completion of Form I-9 to verify identity and employment authorization. The employee must complete Section 1 by their first day of work. Employers must complete Section 2 within 3 business days of the employee's first day. Examine original documents in person unless using authorized remote verification procedures.
Complete Form W-4 Employee's Withholding Certificate
23 days after startingHave the employee complete the federal W-4 form to determine federal income tax withholding. This form must be completed before the first payroll is processed. Keep the completed form in the employee's file.
Complete State Tax Withholding Form (DE 4)
23 days after startingHave the employee complete California's DE 4 form for state income tax withholding. If the employee does not complete this form, withhold state income tax based on the same filing status and allowances as their federal W-4.
Set up Direct Deposit Authorization
24 days after startingIf offering direct deposit, provide the employee with a direct deposit authorization form. In California, employers cannot require direct deposit as a condition of employment (Labor Code Section 213(d)).
Collect Emergency Contact Information
24 days after startingHave the employee provide emergency contact information. This is not legally required but is a best practice for workplace safety and emergency response.
Submit New Hire Reporting Form
40 days after startingReport new hires to the California Employment Development Department (EDD) within 20 days of their start date. This can be done online through the EDD's e-services portal or by submitting Form DE 34.
Provide required notices and posters
25 days after startingCalifornia requires numerous workplace notices and posters, including minimum wage, paid sick leave, workers' compensation, discrimination/harassment, pregnancy rights, and more. Ensure all required notices are posted in a conspicuous location or provided electronically if employees work remotely.
Enroll employee in workers' compensation insurance
25 days after startingAll California employers must have workers' compensation insurance, even if they have only one employee. Add the new employee to your workers' compensation coverage and provide them with the required information pamphlet about workers' compensation rights.
Process Benefits Enrollment Forms
30 days after startingIf offering benefits (health insurance, retirement plans, etc.), provide the employee with enrollment forms and information. California has specific requirements for certain benefits, such as paid sick leave (mandatory) and health insurance (if applicable under the ACA).
Provide Employee Handbook
25 days after startingGive the employee a copy of your company's handbook, which should include policies on harassment, discrimination, leave, benefits, workplace conduct, and other important information. In California, handbooks should address specific state requirements like paid sick leave, pregnancy disability leave, and the California Family Rights Act (CFRA).
Provide meal and rest break policy
25 days after startingCalifornia has strict meal and rest break requirements. Provide written information about the employee's right to meal periods (30 minutes for shifts over 5 hours) and rest breaks (10 minutes for every 4 hours worked). Document that this information was provided.
Provide paid sick leave information
25 days after startingCalifornia requires employers to provide paid sick leave. Provide written notice of sick leave policies, including accrual rates, usage limits, and carryover provisions. This can be included in the employee handbook and must be provided on wage statements.
Set up payroll and overtime compliance
26 days after startingEnsure your payroll system is set up to comply with California's wage and hour laws, including minimum wage requirements, overtime calculations (time-and-a-half for hours over 8 in a day or 40 in a week, double-time for hours over 12 in a day), and mandatory paid sick leave accrual tracking.
Conduct new hire orientation and training
30 days after startingProvide orientation that includes information about company policies, procedures, and required training. California requires sexual harassment prevention training for all employees (1 hour for non-supervisory employees, 2 hours for supervisors) within 6 months of hire and every 2 years thereafter.
Review exempt/non-exempt classification
15 days after startingEnsure the employee is properly classified as exempt or non-exempt under California law. California has stricter exemption requirements than federal law, including higher salary thresholds and more stringent duties tests for exemptions.
| Task | Description | Document | Days after starting |
|---|---|---|---|
| Prepare job description and posting | Create a clear job description that accurately reflects the position's duties, required qualifications, and essential functions. Ensure the job posting complies with California's Fair Employment and Housing Act (FEHA) by avoiding discriminatory language related to protected characteristics (race, religion, gender, age, disability, etc.). Include salary range information to comply with California's pay transparency laws. | - | 1 |
| Create Employment Application Form | Develop an application form that complies with California law. Do not include questions about criminal history (to comply with 'Ban the Box' law), salary history (prohibited under Labor Code Section 432.3), or other protected characteristics. Include a statement about reasonable accommodations for applicants with disabilities. | Employment Application Form | 2 |
| Conduct compliant interviews | Train interviewers on legal interview practices in California. Avoid questions about protected characteristics, criminal history, salary history, and other prohibited topics. Document interview questions and responses for each candidate to demonstrate fair hiring practices. | - | 14 |
| Perform background checks with authorization | Obtain written authorization before conducting background checks. California has specific requirements under the Investigative Consumer Reporting Agencies Act (ICRAA) and the Consumer Credit Reporting Agencies Act (CCRAA). Provide notice of intent to obtain a background check and obtain written authorization from the candidate. | - | 16 |
| Create Background Check Authorization Form | Draft a form that complies with both federal Fair Credit Reporting Act (FCRA) and California's ICRAA/CCRAA requirements. Include clear disclosure of the background check, separate from other documents, and obtain written authorization from the candidate. | Background Check Authorization Form | 16 |
| Prepare Employment Offer Letter | Draft an offer letter that includes position title, start date, compensation, benefits, at-will employment status (if applicable), and any contingencies (background check, reference check, etc.). In California, be sure to include information about paid sick leave, and if applicable, information about the company's paid family leave policies. | Employment Offer Letter | 18 |
| Draft Employment Contract | If using a formal employment contract (beyond an offer letter), ensure it complies with California law. Include clear terms regarding compensation, benefits, duties, termination provisions, and at-will status (if applicable). Be aware that non-compete clauses are generally unenforceable in California. | Employment Contract | 19 |
| Prepare Non-Disclosure Agreement | Draft an NDA that protects company confidential information and trade secrets. In California, NDAs cannot prohibit disclosure of unlawful acts in the workplace, including harassment or discrimination (SB 331, the 'Silenced No More Act'). Ensure the NDA is reasonable in scope and duration. | Non-Disclosure Agreement | 20 |
| Prepare Non-Compete Agreement | Be aware that traditional non-compete agreements are generally void and unenforceable in California under Business and Professions Code Section 16600. Instead, focus on protecting trade secrets and confidential information. Consider alternative approaches like non-solicitation provisions (for customers and employees) that may be enforceable if properly drafted. | Non-Compete Agreement | 21 |
| Complete Form I-9 Employment Eligibility Verification | Federal law requires completion of Form I-9 to verify identity and employment authorization. The employee must complete Section 1 by their first day of work. Employers must complete Section 2 within 3 business days of the employee's first day. Examine original documents in person unless using authorized remote verification procedures. | Form I-9 Employment Eligibility Verification | 23 |
| Complete Form W-4 Employee's Withholding Certificate | Have the employee complete the federal W-4 form to determine federal income tax withholding. This form must be completed before the first payroll is processed. Keep the completed form in the employee's file. | Form W-4 Employee's Withholding Certificate | 23 |
| Complete State Tax Withholding Form (DE 4) | Have the employee complete California's DE 4 form for state income tax withholding. If the employee does not complete this form, withhold state income tax based on the same filing status and allowances as their federal W-4. | State Tax Withholding Form | 23 |
| Set up Direct Deposit Authorization | If offering direct deposit, provide the employee with a direct deposit authorization form. In California, employers cannot require direct deposit as a condition of employment (Labor Code Section 213(d)). | Direct Deposit Authorization Form | 24 |
| Collect Emergency Contact Information | Have the employee provide emergency contact information. This is not legally required but is a best practice for workplace safety and emergency response. | Emergency Contact Information Form | 24 |
| Submit New Hire Reporting Form | Report new hires to the California Employment Development Department (EDD) within 20 days of their start date. This can be done online through the EDD's e-services portal or by submitting Form DE 34. | New Hire Reporting Form | 40 |
| Provide required notices and posters | California requires numerous workplace notices and posters, including minimum wage, paid sick leave, workers' compensation, discrimination/harassment, pregnancy rights, and more. Ensure all required notices are posted in a conspicuous location or provided electronically if employees work remotely. | - | 25 |
| Enroll employee in workers' compensation insurance | All California employers must have workers' compensation insurance, even if they have only one employee. Add the new employee to your workers' compensation coverage and provide them with the required information pamphlet about workers' compensation rights. | - | 25 |
| Process Benefits Enrollment Forms | If offering benefits (health insurance, retirement plans, etc.), provide the employee with enrollment forms and information. California has specific requirements for certain benefits, such as paid sick leave (mandatory) and health insurance (if applicable under the ACA). | Benefits Enrollment Forms | 30 |
| Provide Employee Handbook | Give the employee a copy of your company's handbook, which should include policies on harassment, discrimination, leave, benefits, workplace conduct, and other important information. In California, handbooks should address specific state requirements like paid sick leave, pregnancy disability leave, and the California Family Rights Act (CFRA). | Employee Handbook | 25 |
| Provide meal and rest break policy | California has strict meal and rest break requirements. Provide written information about the employee's right to meal periods (30 minutes for shifts over 5 hours) and rest breaks (10 minutes for every 4 hours worked). Document that this information was provided. | - | 25 |
| Provide paid sick leave information | California requires employers to provide paid sick leave. Provide written notice of sick leave policies, including accrual rates, usage limits, and carryover provisions. This can be included in the employee handbook and must be provided on wage statements. | - | 25 |
| Set up payroll and overtime compliance | Ensure your payroll system is set up to comply with California's wage and hour laws, including minimum wage requirements, overtime calculations (time-and-a-half for hours over 8 in a day or 40 in a week, double-time for hours over 12 in a day), and mandatory paid sick leave accrual tracking. | - | 26 |
| Conduct new hire orientation and training | Provide orientation that includes information about company policies, procedures, and required training. California requires sexual harassment prevention training for all employees (1 hour for non-supervisory employees, 2 hours for supervisors) within 6 months of hire and every 2 years thereafter. | - | 30 |
| Review exempt/non-exempt classification | Ensure the employee is properly classified as exempt or non-exempt under California law. California has stricter exemption requirements than federal law, including higher salary thresholds and more stringent duties tests for exemptions. | - | 15 |
Frequently Asked Questions
In California, you must provide new employees with several documents, including: a W-4 form, I-9 form, DE 4 form (California state withholding), Workers' Compensation pamphlet, Sexual Harassment information pamphlet, Paid Family Leave pamphlet, Disability Insurance pamphlet, and a written notice about sick leave policies. You must also provide the DLSE-NTE form (Notice to Employee) that includes wage information, pay schedule, and employer information within 7 days of hire.
Yes, California is an at-will employment state, which means that either the employer or employee can terminate the employment relationship at any time, with or without cause, and with or without notice. However, California has significant exceptions to at-will employment, including protections against termination that violates public policy, anti-discrimination laws, or implied contract terms.
As of 2023, California's minimum wage is $15.50 per hour for all employers regardless of size. Some cities and counties in California have higher local minimum wages that may apply. Additionally, California has implemented a separate minimum wage of $20 per hour for fast food workers starting April 1, 2024. Employers must comply with whichever minimum wage is highest—federal, state, or local.
Yes. California law requires employers to provide a 30-minute unpaid meal break for employees who work more than 5 hours (which can be waived by mutual consent for shifts of 6 hours or less), and a second meal break for shifts over 10 hours. Additionally, employers must provide paid 10-minute rest breaks for every 4 hours worked or major fraction thereof. Failure to provide these breaks can result in premium pay penalties of one hour of pay for each day a meal or rest break violation occurs.
California has more generous overtime rules than federal law. Employers must pay 1.5 times the regular rate of pay for: hours worked beyond 8 in a single workday, hours worked beyond 40 in a single workweek, and for the first 8 hours worked on the seventh consecutive day in a workweek. Double time (2x regular pay) is required for hours worked beyond 12 in a single workday and hours worked beyond 8 on the seventh consecutive day of work in a workweek.
No. California law (Business and Professions Code Section 16600) generally prohibits non-compete agreements, making them unenforceable with very limited exceptions. California has some of the strongest prohibitions against non-compete agreements in the country. As of 2024, employers are prohibited from even asking employees to sign non-compete agreements, and existing non-competes are void.
Under California's Healthy Workplaces, Healthy Families Act, employers must provide paid sick leave to all employees (including part-time and temporary) who work in California for 30 or more days within a year. Employees must accrue at least 1 hour of paid sick leave for every 30 hours worked, or employers can provide at least 24 hours (3 days) of sick leave upfront at the beginning of each year. As of 2024, the minimum requirement has increased to 40 hours or 5 days of paid sick leave.
Background checks are not legally required for most positions in California, but if you choose to conduct them, you must comply with both federal and California-specific laws. California has 'ban-the-box' legislation that prohibits employers with 5+ employees from asking about criminal history before making a conditional job offer. California also restricts the use of credit checks and requires specific disclosures and authorizations for background checks under the Investigative Consumer Reporting Agencies Act (ICRAA) and the Consumer Credit Reporting Agencies Act (CCRAA).
For California employees, you must withhold federal income tax, Social Security, and Medicare (FICA taxes), as well as California state income tax. You must also withhold for State Disability Insurance (SDI) and Employee Training Tax (ETT). As an employer, you're responsible for paying federal and state unemployment insurance taxes (FUTA and SUTA), and Employment Training Tax (ETT). You must register with the California Employment Development Department (EDD) before hiring employees.
While not legally required, having an employee handbook is highly recommended in California. If you do create one, certain policies are essential under California law, including: anti-harassment and discrimination policies, meal and rest break policies, paid sick leave policies, and at-will employment disclaimers. California requires specific language for many policies, and handbooks should be regularly updated to comply with California's frequently changing employment laws. Having employees acknowledge receipt of the handbook is also important for documentation purposes.