California Labor Laws

California labor laws provide certain standards for employee treatment in the workplace. Such treatment is mandated by several federal and state laws that specify the minimum requirements for employees in the workplace, including rules regarding overtime pay, independent contractor treatment, exempt vs. non-exempt status, break or meal periods, work hours, FMLA/CFRA, sexual harassment, workers compensation, employee handbook, drug & alcohol testing, employee termination, and COBRA benefits.

Overtime Pay

With regard to overtime payment, employers must pay non-exempt employees 1.5 times more than the hourly rate for those working more than 40 hours/week. However, not all employees are eligible for overtime pay, particularly exempt employees, i.e. those receiving a yearly salary.

Independent Contractor

Generally, independent contractors are not considered exempt or non-exempt employees as such individuals are not employees of the company. Instead, the independent contractor fills out a 1099 form (as opposed to a W-2) indicating that he or she is not an employee of the company but rather self-employed and working on a temporary basis for the company. Therefore, overtime rules will not apply for such independent contractors.

Exempt vs. Non-Exempt

Employees who are exempt are generally not provided with overtime pay as these employees receive an annual salary as opposed to an hourly rate. However, as previously noted, non-exempt employees generally receive an hourly rate in which any hours over 40 are required a pay rate of 1.5 times more the hourly rate.


If an employee works a continuous five hours, then the employer must provide a 30-minute break. A second 30-minute break must be provided once the employee hits a continuous 10-hour workday. Further, employers must allow uninterrupted breaks for non-exempt employees who work at least 3.5 hours in any given day. And for a non-exempt employee who works four continuous hours, a 10-minute paid break must be provided.

Work Hours/Travel Time

Employers should provide their employees with working hours, so that employees are aware of their schedules and workweek. In addition, travel time may count toward work hours depending on the company. The company should be clear and concise in the employee handbook so that everyone is aware of the company’s policy. Companies should also be familiar with the seventh day rule. There are various federal and state requirements that impose restrictions on work hours. For example, California employers must pay workers for rest periods and other non-productive time (i.e. meal periods for working five or more hours) as well as 10-min break periods for non-exempt employees.

There are other common policies, such as “makeup” policies, that allow for an employee to take off a few hours any given day, and make up those hours either that day or another day. Therefore, it an employee has a doctor’s appoint, he or she may show up to work an hour or so late. Generally, the employer will allow the employee to make up the time that day by staying an hour later that evening.

Family Medical Leave Act and California Family Rights Act

The federal Family and Medical Leave Act (FMLA) and California Family Rights Act (CFR) provide that employers with over 50 or more employees must provide up to 12 weeks of unpaid time off to employees who qualify. Such qualifications can include a serious medical condition of the employee or an immediate family member, a birth/adoption of a child, and other few qualifying circumstances. Such leave cannot affect the employee’s position with the company.

Sexual Harassment

According to Title VII of the federal Civil Rights Act of 1964, employers cannot discriminate based on race, sex, religion, national origin, age, sexual orientation, pregnancy, or disability.  This law also covers harassment, inclusive of sexual, disability, ethnicity, and any other type of harassment against one or more employees. Furthermore, if an employee makes a formal complaint against the company or becomes a whistleblower, retaliation on the part of the employer against the employee is illegal under the law.

Workers Compensation

California workplace injuries are also covered by the federal Occupational Safety and Health Act (OSHA). This federal law requires that employers provide employees with a safe working environment, including training on using safety equipment and gear, in an effort to prevent workplace injuries, illnesses, and fatalities. Employees who suspect a violation of the law can reach out to OSHA requesting that an OSHA inspector conduct an inspection. Such a complaint made by an employee cannot be met with retaliation on behalf of the employer. Most employers are also required to carry worker’s compensation insurance, which will protect employees in the event that they suffer a workplace injury or illness. Such insurance will pay an injured employee with a percentage of his or her usual job earnings while also paying for necessary medical treatment and other rehabilitation treatment.

Employee Handbook

All employers must create a thorough employee handbook that will include all of the rights and responsibilities of employees, along with various HR policies. The handbook must include both mandatory and recommended policies. The handbook must be updated whenever a policy changes or laws governing employment practices changes. Employers in California can unilaterally terminate policies in the employee handbook without violating any implied contract of employment so long as they follow specific guidelines. However, other policies are mandatory in every employee handbook, including harassment, discrimination, and retaliation provisions.

Drug and Alcohol Testing

Drug and alcohol testing must be properly conducted. California law allows employers to require drug or alcohol testing as a condition of employment after a job offer for any reason, even as a simple company policy. However, employers cannot enforce random drug or alcohol testing unless qualifying under one of a few circumstances, particularly for those employers operating in the commercial transportation industry. 

The federal Americans with Disabilities Act (ADA) and the California Fair Employment and Housing Act (FEHA) don’t protect individuals who use drugs; however, these laws protect persons who were formerly alcohol or illegal drug abusers and who have been successfully rehabilitated. If an employer has 25 or more employees, it must reasonably accommodate any employee who wishes to enter a drug or alcohol treatment program so long as such treatment and absence of the employee doesn’t impose undue hardship on the employer.

It is up to the California employers to determine who they wish to maintain the workplace policy on the use of marijuana, as California law allows recreational use of the drug.

Employee Termination

In order for an employer to avoid a wrongful termination lawsuit, it employees must be properly terminated. Wrongful discharge that is against public policy means that the employer illegally terminated the employee. It is crucial that all decisions to terminate an employee be made for legitimate reasons, whether it be for a failure to perform, specific misconduct, or downsizing of the company due to selling off of a particular business unit or the sale of the company itself. An employer cannot retaliate against an employee for being a “whistleblower” or making a formal complaint against the company for any number of reasons, i.e. a complaint made to OSHA for failing to provide a safe workplace or a labor law complaint due to discrimination or harassment.

As previously noted, the company may terminate you due to financial hardship or downsizing of the company; therefore, a number of employees may be laid off. The state and federal Worker Adjustment and Retraining Notification (WARN) Act requires the employer to provide a 60-day notice to any employees being laid off for any reason.

COBRA Benefits

COBRA, also referred to as the Consolidated Omnibus Budget Reconciliation Act, is a covered health insurance plan in which terminated employees can utilize after separating from his or her employer. Most employers are required to provide COBRA insurance for a period of up to 18 months after the employee leaves the company.

If you need help learning more about California labor laws, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.