6 California Labor Laws Every Business Owner Should Know
If you are planning on opening a business in the Golden State, it’s important that you understand the California labor laws. In 2020 the state took measures to expand employee and independent contractor labor rights. Proposition 22 was controversial legislation that extended California law in terms of who is considered an employee and what rights they have. Are you concerned about labor laws and your responsibilities? Keep reading to learn more about six labor laws every business owner should know.
1. California Labor Laws Affecting Minimum Wages
California state labor laws are above average when it comes to minimum wages that exceed the national mandate of $7.50/hr. In California, companies with more than 25K employees have a minimum wage of $13/hr.
The wage will increase annually until it reaches $15/hr by 2023. This change has impacted small businesses the most.
2. Overtime and Double Time
Employees working less than 40 hours a week often times get shortchanged when it comes to overtime. Under California law, employers pay overtime for the following:
- Employee exceeds eight (8) hours in a workday
- Employee exceeds forty (40) hours in a workweek
- Employee exceeds six (6) days in a workweek
In these instances, the employee earns pay, equal to 1 1/2 times their hourly rate for hours. This applies to hours worked in excess of their normal work schedule.
Double time applies when an employee exceeds 12 hours in a single shift.
3. Working Off the Clock
As with most states, California law prohibits employers from asking or forcing employees to work off the clock. Not only is the employee entitled to their regular hourly rate, but also overtime or double time if it applies.
Exempt and salaried employees typically do not apply to this law.
4. Expense Reimbursement
California labors laws outline expense reimbursements for employees. They include work-related expenses and losses. The expenses must be required for the employee to perform their job.
Section 2802 defines what’s necessary or reasonable expenses.
5. Minimum Shift Payment
Minimum shift pay, or reporting time pay, is guaranteed four hours of pay in cases where an employee cannot work their regular shift. The rule goes into effect when an employee:
- is not given an adequate notice not to come in
- is sent home because of overstaffing
- is sent home because there is no work
The four hours apply to employees scheduled to work at least eight hours. Others receive half of their scheduled shift.
6. Final Paychecks
In California, employers must give employees their final paycheck at the time of termination or lay-off. They have 72 hours to submit final payments to employees that tender their resignation.
If the employer does not pay on time, the employee is entitled to one day of pay for every day their final check is delayed. The penalty allows the employee up to 30-days of additional pay as a penalty.
Don’t Get Penalized
California labor laws are clear and they come with penalties. These examples are not all-inclusive and should be researched further.
Small business owners need legal counsel to address labor laws and their full meaning. Click here to schedule a consultation to ensure you’re in compliance.