Top 4 Human Resource Tips for Small Businesses in California

Human resources management for small businesses often requires effective systems and acute awareness of labor laws. In California, the wide range of employee-focused laws makes HR responsibilities more intensive. With this quick guide for California human resources departments, you can stay on top of the state's requirements. 

What Is Different About HR in California?

Compared to other states, one of the most notable differences in California HR rules is the number of regulatory agencies that enforce the labor laws. Most states have around two or three regulatory bodies — California has six. Many California laws take precedence over other state laws and may even supersede federal laws in some cases.

Corporations and larger companies often have the resources to manage the extensive HR demands in California. But for smaller businesses, working with HR processes in the state can feel like working in an entirely new country. Understanding some of the nuances of these laws can empower small businesses to stay compliant. 

HR Tips for Small Businesses in California

Small businesses have fewer employees to consider than large corporations, but this often leaves them with fewer resources for managing compliance. Keep these labor laws in mind for managing your employees in California. 

1. Wage and Hour Differences

California's employee-focused labor laws emphasize wages and payouts. First, the minimum wage in the state is $15.50 an hour — an impressive hike from the federal minimum wage of $7.25. 

With the minimum wage as high as it is, the state also has minimum salary requirements for professional, administrative, and executive employees to prevent misclassification. In 2023, the minimum salary is $64,480. Bear in mind that minimum wages may vary by region or city that supersede state laws.

The state's wage laws also have strict requirements related to time restraints on paychecks. If an employee receives a late paycheck, the state's labor code allows up to $200 in recovery and 25 of the amount unlawfully withheld. HR teams should keep a strict schedule for distributing paychecks to keep payments on time, every time.

2. Overtime

According to the Fair Labor Standards Act (FLSA), employees are entitled to 1.5 times their standard pay when working more than 40 hours in a week. This overtime payment requirement still applies in California, but it applies by the day, rather than the week. If an employee works over eight hours in a day, they are entitled to 1.5 times their standard pay. 

Additionally, an employee must receive double time if they work more than 12 hours a day. HR teams should be mindful of these overtime regulations when tracking time worked. An employee can work less than 40 hours a week and still need overtime pay. 

3. Leave of Absence and Vacation

Most states have a few leave requirements for employees, while California has over 20 different leaves to account for. These leaves include paid time off for voting, bereavement leave for up to five days, and up to four months of leave for pregnancy. Additionally, employees with remaining vacation leave are entitled to payouts at the end of the year. “Use-it-or-lose-it” policies are not permitted. 

HR departments need to have a clearly defined system for keeping track of used and unused leave. Being aware of all required leaves is also critical for keeping your policies compliant with state laws. Spreadsheets can be a helpful tool for small businesses, but you may also invest in software to track leave for each employee.

4. Requirements Exclusive to California

Leave, overtime, and wage laws are not the only laws that differentiate California from other states. Some other notable policies to be aware of include:

• Hiring laws: While there are various laws to be mindful of when you've employed a professional, California also has a range of restrictions for the hiring process. For example, you cannot inquire about salary history information or criminal records when interviewing someone for a position. Companies are also required to list a pay scale for every vacancy they advertise. 
• Non-compete agreements: Many states allow companies to have non-compete clauses for employees that prohibit them from working for competitors when the employment relationship ends. These agreements are not permitted in California as they are viewed as being against public policy. The state may allow for intellectual property assignment, confidentiality, and non-disclosure agreements in some cases.
• Harassment prevention: Employers that have five or more employees are required to provide an hour-long harassment prevention training course for all employees. Additionally, supervisors must undergo two hours of training every two years. Keep these events in your calendar to send out reminders to your team when they're required to participate.

Get the Legal Support You Need From Business Consumer Alliance

A membership with Business Consumer Alliance connects you with the legal support you need to keep all HR processes compliant in California. Learn more about membership with our organization and become a member today.