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The 8 California Laws Every Business Leader Needs to Know About

— May 20, 2021

California currently has over four million small businesses, which employ over 7.1 million individuals.

California is well known for experimenting with new laws and regulations. When it comes to policy initiatives, California is constantly working to ensure all Californians have the chance to earn a decent wage, we all have a sustainable future by monitoring environmental impact and natural resources, and that businesses and employees work on a fair and level playing field.

However, thanks to the state’s willingness to rely on new regulatory measures, it can be extremely difficult for some businesses to stay up to date. So, we thought we would help you out by making a list of some of the Californian laws that every business leader needs to know about. Keep reading below to find out more:

  1. Business Insurance

Lots of people like the idea of starting a business in California thanks to its thriving economy. However, to open and operate a business in California, you will need the right California business insurance. You can find a provider that specializes in small business insurance. They can easily help you to find an insurance package that is perfect for your company. 

All businesses in California are expected to have insurance. Some of the insurance Californian businesses are expected to have include:

  • Workers’ compensation insurance – this covers work injuries, illnesses, and medical bills
  • Commercial auto insurance – if your business owns vehicles then you will need to take out commercial auto insurance.
  1. Minimum Wage

Way back in 2016, California passed a law that raised the national minimum wage to $11 per hour for employees who work in a small business with less than 25 employees. For businesses that have more than 25 employees, the national minimum wage was raised to $12 per hour. 

  1. Overtime

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In the past, employees working less than 40 hours a week were often shortchanged when it came to the amount of money they received for overtime. However, this has now changed. Employers now must pay overtime for the following:

  • An employee works more than 40 hours a week.
  • An employee works in excess of eight hours a day.
  • Employees work for more than six days a week.

In these cases, employees are entitled to pay at least 1 ½ times their normal hourly rate. This increases to 2 times their normal hourly rate if an employee works more than 12 hours in one single shift. 

  1. Working Off the Clock

Like most states, Californian law stops employers from forcing or asking their employees to work off the clock. Employees are entitled to their regular working wage for any hours that they complete. Salaried and exempt employees are not affected by this law. 

  1. Minimum Shift Payment

Reporting time pay or minimum shift pay guarantees at least 4 hours of pay in situations where an employee is unable to work their normal shift. This rule comes into play when:

  • An employee is sent home because of overstaffing.
  • You do not give an employee adequate notice that they are not required for a shift.
  • An employee is sent home because there is not enough work for them.

The four-hour rule applies to all employees who were scheduled to work a minimum of eight hours. Anyone else should receive half of their scheduled shift. 

  1. Annual Pay Reporting

On 31st March 2021, all employers that have over 100 employees are required by law to complete an annual Employer Information Report to the California Department of Fair Employment and Housing. This report will contain information such as gender, race, and wages. This new law has been introduced to see whether minority groups are being discriminated against in pay. 

  1. California Family Leave Rights

If your business employs more than five people, you are required to offer unpaid protected family leave for up to 12 weeks for employees to take care of their children, themselves, a parent, a grandparent, a spouse, a sibling, a partner, or another family member.

  1. Workplace Sexual Harassment

Until 2019, sexual harassment training used to only be required for businesses with over 50 employees. However, in 2019 this changed. Currently, all businesses with five or more employees are required to provide this training for their employees. This new law mandates that employees who have been with a company for two years should have completed a minimum of two hours of training.

California currently has over four million small businesses, which employ over 7.1 million individuals. All these businesses need to comply with Californian laws. However, this can be extremely difficult as Californian laws and regulations are constantly being changed or updated. If you own a business in California, then make sure you know about the laws we have talked about above. This will help your business to remain compliant. 

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