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The California HR Landscape: A Closer Look

The California HR Landscape: A Closer Look

Human resources (HR) is a critical function for any business, responsible for managing the relationship between employers and employees. It plays a key role in developing, reinforcing, and changing an organization’s culture. In California, however, HR can be one of the most challenging aspects of running a business. The state’s employment laws are some of the most employee-friendly in the country, which can make it challenging for small businesses to operate efficiently.

With generous wage and hour laws and paid leave benefits, California is among the most employee-friendly jurisdictions globally. While this is great for employees, it’s quite the administrative nightmare for small business owners. So, what exactly makes California so different than every other state in the U.S.? Let’s dive into the world of HR in California and explore the factors that shape the decisions of HR professionals and business owners.

Employment Laws

One of the main reasons why HR in California is so challenging for businesses is due to the state’s complex employment laws. California has some of the most stringent employment laws in the country, covering everything from overtime pay to sick leave to discrimination in the workplace. Laws in California, such as the Fair Employment and Housing Act (FEHA), prohibit employers from discriminating and retaliating against employees in various protected classes. In addition, employers are required to:

  • Provide pregnancy accommodations 
  • Provide equal pay
  • Allow for wage discussions 
  • Allow employees to access personal files 
  • Protect whistleblowers

These laws can be difficult for businesses to navigate, and the penalties for violating them can be expensive. 

Overtime Rules

The Fair Labor Standards Act (FLSA) entitles non-exempt employees to overtime pay for any hours worked over 40 a week. This is stricter than the federal standard of overtime pay after 40 hours in a week. It ultimately means that businesses must carefully manage their employees’ schedules and workloads to avoid costly penalties for overtime violations. On the flip side, employees can earn extra income for their hard work and dedication.

Paid Sick Leave Benefits

California’s paid leave benefits are a hot topic that every employee and employer should explore. These laws require employers to provide paid sick leave to all employees, which can be challenging for small businesses with limited resources. With California being one of the few states in the country to offer such generous benefits, employees can take time off from work to care for their health or that of a loved one without fear of losing their job or financial security.

Paid family leave gives employees up to eight weeks to take time off work to:

  • Care for a seriously ill family member
  • Bond with a new child
  • Participate in a qualifying life event because of a family member's military deployment 

Anti-Harassment Requirements 

Harassment in the workplace is a serious issue that can have devastating effects on employees and businesses. That’s why anti-harassment policies are critical to creating a safe and respectful work environment for all employees. Such policies clearly define what constitutes harassment and what steps will be taken if an incident occurs. Providing employees with a clear understanding of what is and isn’t acceptable behavior, anti-harassment policies help prevent harassment from occurring in the first place.

Since California is employee-favored, the state requires all businesses to have a written anti-harassment policy, as well as a reporting and investigation procedure. All companies with over 50 or more employees in California are required to do the following:

  • Provide one hour of sexual harassment and abusive conduct prevention training to nonsupervisory employees
  • Provide two hours of sexual harassment and abusive conduct prevention training to supervisors and managers once every two years

This training must occur within the employee’s first six months on the job. In addition to race, sex, and age, the training must also address harassment based on gender identity and sexual orientation.

Timely Payment Of Wages

In California, timely payment of wages isn’t just good practice; it’s the law! Employers must pay their employees’ wages on time and in full, including all overtime and bonuses earned. This means that employees can rest assured they’ll receive their hard-earned wages on time, without any delays or excuses.

Failure to comply with timely payment laws can result in the following:

  • Costly legal penalties 
  • Damaged reputation 
  • Low employee morale 

For each late paycheck, California’s Labor Code allows the recovery of up to $200 plus 25% of the amount unlawfully withheld, per employee, per payroll period.

Layoffs And Business Closures

The federal Worker Adjustment and Retraining Notification Act (WARN) in California is a vital piece of legislation protecting employees and their families during economic uncertainty. This act requires employers to provide advance notice to their employees in the event of a plant closure, mass layoff, or major relocation. This notice gives employees ample time to prepare for potential job loss and make necessary arrangements for their future. Employers who fail to comply with the WARN Act may face significant legal and financial penalties, including back pay penalties of up to $500 a day for each day of violation for a maximum of 60 days. This act isn’t just a legal obligation for employers but a moral responsibility to treat employees with dignity and respect.

Consider Outsourcing Your HR Functions

The intent of California’s HR laws isn’t to burden businesses but to protect the workers. HR in California is a dynamic and ever-evolving field that requires careful attention to legal compliance, employee well-being, and business success. From overtime rules, paid leave benefits, and anti-harassment policies, California’s HR landscape is filled with exciting and crucial topics that employers and employees must understand and navigate. While California’s employee-friendly laws and regulations can make it challenging for businesses to operate, they also create opportunities for companies to differentiate themselves as responsible and caring employers. By staying informed and proactive about HR issues, companies in California can attract and retain top talent, maintain legal compliance, and build a workplace culture that values and respects all employees.

Have you considered outsourcing your HR functions to a professional employer organization (PEO)? Partnering with a PEO such as GMS is an excellent option for small business owners in California who want to streamline their HR functions and focus on their core business operations. Our HR experts are trained in the latest HR laws and regulations at GMS. We help business owners navigate complex employment laws in California, such as wage and hour regulations, anti-discrimination laws, and paid leave laws.

Megan Croley, GMS' Regional Client Services Manager, expressed, "From unique overtime rules and generous paid family leave benefits to the illegality of non-competes and the relatively new pay data reporting requirement, business owners are clearly navigating a complex set of rules and regulations in California. That can be intimidating! Knowing when to tap into the right resources for help makes all the difference. GMS has been serving clients in California since 2021. We assess your organization and provide guidance, policies, training, and more to avoid missteps."

HR functions are time-consuming and distract business owners from focusing on their core business operations. Investing in HR isn’t just a smart business decision; it’s a commitment to creating a better future for your employees. Contact us today to learn more.

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