California Payroll Services, Built for CA Compliance

California’s minimum wage was formerly based on the number of employees a business had. But as of the start of 2023, it’s now $15.50 per hour for everyone, though it’s higher in many cities and counties, such as Berkeley and San Francisco in Northern California and Los Angeles and San Diego in Southern California. If your local government sets a higher wage, then you need to follow the higher standard.

California does not have a separate minimum wage rate for minor vs. adult employees, nor can employers use a worker’s tips as a credit toward paying the full hourly minimum wage.

With each paycheck, you’ll need to provide a pay stub that lists the following information:

• The pay period’s start and end dates

• The total hours worked

• The total piece-rate units earned and the

• The amount of accrued sick time

• The amount of gross wages earned, separated by regular and overtime

• Deductions held for taxes and benefits

• The pay rate

• The amount of net wages earned

• The name of the employee and the last four digits of their SSN

• The name and address of your business

California employees must be paid at least twice each month using one of these schedules:

• Wages earned between the 1st and the 15th of the month must be paid by the 26th of the month.

• Wages earned between the 16th and the end of the month must be paid by the 10th of the following month.

• Pay periods paid on a more frequent basis, must be paid within seven calendar days of the end of the pay period.

• Paydays must be designated in advance and posted

Your business type could influence the pay period you choose, so visit California’s Department of Industrial Relations for more information.

In California, a “workday” is defined as any consecutive 24-hour period that begins at the same time each day, and a “workweek” is any consecutive seven-day period that begins on the same day each week. Businesses need to maintain time sheets, since they must track the start and end time of each shift, plus the start and end time of meal breaks.

You need to track daily and weekly overtime hours if your employees work more than eight hours in a workday or 40 hours in a workweek, or if they work the seventh consecutive day after working six consecutive days in a workweek. Nonexempt employees in California are eligible for 1.5 times to double their regular rate of pay for overtime compensation. Make sure you include overtime details on the employee’s pay stub, and pay overtime wages in the same payroll period as regular wages.

Employees who are laid off or fired must be paid immediately. If the employee voluntarily leaves, they must be paid within 72 hours or immediately if the employee gave at least 72 hours notice. This includes the monetary value of any unused vacation or paid time off that has accrued. (Note: This doesn’t include sick leave, unless the sick leave is part of a paid time-off policy.)

California has four types of payroll taxes, but only two of them are withheld from employee paychecks: the state personal income tax and the state disability insurance tax.

In addition to federal benefits such as Social Security and the Family and Medical Leave Act (FMLA), employees in California are entitled to the following benefits:

• Paid sick leave: Whether your workers are full-time, part-time, or temporary, all employees earn one hour of paid sick leave for every 30 hours worked, once they’ve put in at least 30 days with the company. Paid sick leave must carry over from year to year, but employers can place a cap on accrual of 48 hours (or six days). This sick leave can be used for personal sick time or to take care of a sick family member.

• Workers’ compensation: All businesses, regardless of size or type of business, must provide workers’ compensation insurance.

• Health care: According to the Patient Protection and Affordable Care Act (ACA), businesses with 50 or more full-time (or equivalent) employees must offer health insurance benefits. California employers can withhold these costs from employee paychecks.

• Voting: California employers must offer up to two hours of paid time off so employees can fulfill their civic duty.