California
Make employment in California easy. Let us handle payroll, benefits, taxes, compliance, and even stock options for your team in California, all in one easy-to-use platform.
- Capital City
Sacramento
- Currency
United States Dollar ($, USD)
- Population size
39,200,000
Facts & Stats
- Capital City
Sacramento
- Currency
United States Dollar ($, USD)
- Population size
39,200,000
- VAT - standard rate
7% (Higher in some cities)
Spread along 840 miles of stunning Pacific coastline, California offers a diverse landscape of sprawling urban centers, sun-soaked beaches, and towering redwood forests.
But it's not just the breathtaking scenery that sets the Golden State apart. From the glitz and glamour of Hollywood to the tech revolution of Silicon Valley, California has always been synonymous with innovation and progress. With a rich cultural heritage that celebrates diversity and creativity, this vibrant state is the definition of opportunity — making it a hugely desirable destination for top talent and companies alike.
Grow your team in California with Remote
If you want to hire in California, you’ll need to own a legal entity there — or partner with a global employment solutions provider, like Remote.
We can employ top talent in California on your behalf and manage complex HR tasks such as onboarding, payroll, benefits, and taxes. You can also pay and manage your contractors in California through Remote.
Risks of misclassification
California, like many other countries, treats self-employed individuals or contractors and full-time employees differently. Misclassification of contractors in California may lead to fines and penalties for the offending company.
Employing in California
In California, workers’ rights are protected by numerous employment and labour laws, at both the state and federal level. As a result, employees enjoy protection from discrimination based on age, religion, sexual orientation, gender, and race.
Here are the key things you need to know about hiring in California.
Hours of work in California
The regulations and edicts around working hours and overtime are primarily covered by the California Labour Code.
What is considered full-time employment in California?
Full-time employment is generally considered to be 40 hours per week.
Do pay employees get overtime in California?
Non-exempt employees are entitled to overtime pay of:
1.5x their regular pay rate if they work more than eight hours (but less than 12) in a workday
Double their regular pay rate if they work more than 12 hours in a workday
Under the federal Fair Labour Standards Act, employees are generally (but not always) exempt from overtime if they:
Earn more than the state or federal exemption threshold
Perform a role with duties that are considered executive or managerial
Work in a certified or licensed profession, such as law, accounting, architecture, or engineering
In California, the monthly pay threshold for exemption is currently $5,373.33.
Note that the federal pay threshold for exemption is currently being reviewed in the US.
Minimum wage in California
The minimum state wage is $16 per hour. However, cities are entitled to set their own minimum rates. In some of California’s biggest urban centers, for instance, the 2023 minimum hourly rates are as follows:
Los Angeles: $16.78
Pasadena: $16.93
San Diego: $16.30
San Francisco: $18.07
San Jose: $17
Note that, for small employers (i.e. businesses with 25 or fewer employees), minimum rates can be lower.
Onboarding timeline in California
We can help you get your new employee started in California fast, with a minimum onboarding time (MOT) of just 2 working days. Note that the MOT is dependent upon registration with the local authorities, and begins after the employee has submitted all the required information on the Remote platform.
For non-citizens of the US, a work eligibility assessment may be required, and can add three extra days to the onboarding time. If a follow-up is needed, there may be additional delays.
Please note that payroll cut-off dates can impact the actual first day of employment. Remote’s payroll cut-off date is the 10th of the month, unless otherwise specified.
Payroll cycle in California
Under state law, employees must be paid at least once per month (employees in some occupations must be paid more frequently). Private sector salaries are usually paid twice per month.
For Remote customers, employee payments are made twice per month in equal instalments, payable in arrears. The first payment is made on the 15th of the month and the second payment is made on the final day of the month. If relevant, bonus payments, commissions, and expense reimbursements are included in the second payment of the cycle.
Competitive benefits in California
Remote can help you craft a competitive benefits package to attract and retain the best global talent. Our benefits experts understand the trends, requirements, and expectations of the California labour market, allowing your employees to feel appreciated and thrive.
Our benefits packages in California usually include some or all of the following:
Pension or 401(K)
Medical Insurance
Vision Insurance
Dental Insurance
Life Insurance
Health Saving Plan (HSA)
Long term disability insurance (LTD)
Flexible Spending Account (FSA)
Are employers required to provide health insurance in California?
Under the Affordable Care Act, organisations with a headcount of 50 or more must offer statutory health insurance to their full-time employees.
Most employers also offer some level of supplemental health insurance. While this can lead to a relative rise in employment costs, it’s an essential benefit that ensures your people have access to routine care and are covered in the event of an emergency.
Because Remote is the employer of record (EOR), it’s important for us to offer the same core benefits to all employees to ensure fair and non-discriminatory hiring practices. This protects both your business and ours.
Note that we do not add a markup on any benefits premiums or administration costs.
Do part-time employees get benefits in California?
Organisations with fewer than 50 employees are not required to offer health insurance to their part-time employees. However, if you offer health coverage to one part-time employee, you must offer group coverage to all your part-time team members.
Are employers required to offer 401k in California?
Yes. Organisations must offer a retirement plan to their employees. You can either choose your own qualified savings plan, or enrol your employees into the state-sponsored CalSavers Program.
Note that this only applies if your business:
Has at least five employees
Does not already offer a qualified savings plan
Failure to enrol can result in a fine of $250 per employee after the first 90 days, and $500 per employee after 180 days.
Taxes in California
Employment taxes and statutory fees affect both your payroll and your employees’ paychecks in California.
Note that employees may be liable for additional local taxes in certain cities and jurisdictions.
Employer taxes
Employment Tax | |
|---|---|
6% | Federal unemployment insurance tax (FUTA) (charged on the first $7,000 an employee earns per year) |
1.5% to 6.2% | State unemployment insurance tax (SUTA) |
0.1% | Employment training tax (ETT) |
6.2% | FICA (Social security) |
1.45% | FICA (Medicare) |
Employee taxes
Payroll Tax | |
|---|---|
1.1% | State disability insurance (SDI) |
10% to 37% | Federal income tax |
1% to 12.3% | State income tax |
6.2% | FICA (Social security) |
1.45% | FICA (Medicare) |
Types of leave
Holiday | In California, there is no state or federal law that requires employers to provide paid or unpaid holiday leave to their employees, although many organisations do. |
Sick leave | Under the state’s Healthy Workplaces, Healthy Families Act, eligible employees accrue at least one hour of paid sick leave for every 30 hours worked. Employers can either provide a lump sum of sick leave at the beginning of each year, or allow employees to accrue it over time. Can an employer deny sick time in California? Under the federal Family and Medical Leave Act (FMLA), eligible employees are entitled to up to 12 weeks of unpaid sick leave per year, provided they: Have worked for the same employer for at least 12 months Work in a location where at least 50 people are employed by the company within a 75-mile radius Do part-time employees get sick pay in California? Yes. Under state law, part-time employees are entitled to sick pay. |
Parental and maternity leave | Under state law, employees are eligible for up to eight weeks of paid family leave in a 12-month period. This can be used for bonding with a new child (within one year of their birth or placement (in the case of adoption or foster care)), or for caring for a family member with a serious health condition. Under the FMLA, employees are also entitled to up to 12 weeks of unpaid maternity or paternity leave. Maternity leave The state’s Pregnancy Disability Leave (PDL) law requires employers to provide up to four months of unpaid job-protected leave for employees who are disabled due to pregnancy, childbirth, or a related medical condition. The leave may be taken before or after the birth of the child. |
Bereavement leave | Companies with five or more employees must provide up to five days of unpaid bereavement leave. |
Jury duty | Employees must report for jury duty if summoned (unless exempt). Jurors are typically on call for two weeks. Do employers have to pay for jury duty in California? No. Private sector employers are not required to pay employees on jury service, but they must provide unpaid leave, and cannot penalise or terminate an employee on jury duty. Some employers provide paid leave. |
Military leave | Under federal law, employers must grant leave to employees who are members of the military or the National Guard for military duty or training. These employees have the right to take time off for their military obligations, and employers are prohibited from discriminating against them based on their military service. |
Employment termination
Termination process
Like nearly all US states, California is an at-will state. This means both employers and employees can end the employment relationship without reason, provided it is legal.
Remote’s legal experts can help you navigate terminations to ensure employees are only let go fairly, negating any potential legal complications.
Wrongful termination laws in California
Employees are protected from wrongful termination by several laws, including the Fair Employment and Housing Act (FEHA) and the California Labour Code.
Notice period
Employers and employees are not required to provide notice of termination, unless otherwise stated in the employment contract.
Despite this, it's usually customary for employees to provide two weeks' notice when leaving an organisation.
Severance pay
Employers are not legally required to provide severance pay (unless it is stipulated in the employee's contract or in the company policy).
However, upon termination, employers must pay any accrued but unused holiday time, in addition to any due wages.
Probation period
There is no requirement to provide a probation period for employees, although many companies implement internal probation policies. These policies typically involve a formal performance evaluation after a specified period, such as three or six months.