Payroll California, Unique Aspects of California Payroll Law and Practice
California payroll law and practice have unique aspects that differ from other states. You should be aware of these differences if you are located in California or you are dealing with a California employer.
This blog post will cover a few of the common payroll topics in California including the:
- California minimum wage
- Military leave
- Mandatory overtime pay
- Occasional overtime pay for live employees
- Miscellaneous items such as employer contributions to FICA, PERS and RRTA, family responsibility leave, use of credit cards as wages, tips and gratuity payments, travel expenses, moving expenses, expense reimbursements.
This blog post will not cover every aspect of payroll in California, but it will cover the most common topics and issues. I hope that it is able to help you to understand the California payroll process and how to deal with payroll issues in California. If you have any additional questions or comments, please feel free to leave a comment.
The following are some of the unique aspects of California employment law and practice:
- In 2012, there were over 5 million jobs created in California. For every job created, there was an average of one new employee hired each day resulting in an increase of 457 temporary workers per month. The top job classifications were sales, office and administrative support. These numbers demonstrate the strength of the California economy.
- California has an educated workforce that is able to take advantage of the opportunities available to them.
- Approximately 2.6 million workers are employed in California's service sector and about 1.4 million work in the goods producing sector. The majority of Californians are employed by organizations over 100 employees but there are over 839,000 micro businesses, self-employed persons and independent contractors in California . Over a quarter of all Californians employ themselves as independent contractors.
- 10,000 workers are employed in the movie and television production industry
- There are over 200,000 horse trainers in California - nearly half of the total U.S. population of horse trainers.
- More than 4 million people in California have invested in qualified programs through pension plans, individual retirement accounts and approved deferred compensation plans.
- California has an unemployment rate of 6.5% as of September 2011 which is below the national average of 9%. However, within this data there is not a complete picture because it does not include part time workers who would like to work full time or "discouraged workers" who have given up looking for a job. The state's unemployment rate was at 6.9% as of October 2011.
- It's not easy to find work in California: 1 in 4 Californians are unemployed. - The average weekly wage in San Francisco is nearly three times that of Fresno . However, the cost of living is also significantly higher in San Francisco than Fresno. - The highest paying industry for men is utilities and the highest paying industry for women is professional, scientific and technical services. - The average weekly wage for a resident of Sacramento was about 2% higher than the state average. - There are over 100,000 foreign students enrolled in colleges or universities that are employed seasonally or part-time during school breaks . - Unemployment in California is twice the national average - 20% of the gross state product (GSP) is derived from the services sector and California has about 70% of the entertainment jobs in the United States.
- California Labor Code - The following are examples of violations that may subject an employer to criminal prosecution: 1. Failing to pay wages earned 2. Failing to provide payment for all hours worked 3. Failing to provide meal or rest periods 4. Paying employees less than minimum wage 5. Paying employees less than overtime 6. Failing to keep records 7. Failing to pay final wages 8 . Falsifying or altering records 9 . Fraudulently misclassifying workers 10 . Using a false or misleading application or agreement to obtain information with the intent of retaliating against or discriminating against an individual 11 . Making or causing to be made any false statement or entry on any employment record 12 . Failing to provide wage statements 13. Failing to post required notices 14. Engaging in prohibited acts in retaliation for exercising rights (such as reporting wage violations) 15. Discriminating against an employee who has made a protected complaint 16 . Inappropriately using the "exempt" designation 17 . Failing to make and maintain payroll records 18 . Failing to comply with the California Sick Leave Law
- Overtime: California does not have a separate overtime law; rather overtime is covered under the minimum wage law. In other words, California employees must earn at least 1.5 times the minimum wage for all hours worked (not just time-and-a-half overtime). Whether individuals are exempt from overtime pay is a question of fact that must be decided by the courts. The following is a brief labor law overview regarding what employers need to know in order to comply with the overtime requirements:
1 . State law requires employers to pay time and one-half an employee's regular rate of pay for all hours worked over forty during a work week, over 48 hours during a seven-day work week, and eight hours in a day or 40 hours during a seven-day work week. 2 . Exemptions may apply for managerial, administrative, professional and computer employees. The exemption requirements are complex and must be carefully reviewed. 3 . Exemptions do not apply to executive, administrative, or professional employees who are paid on a salary basis regardless of how much they work, regardless of the job title 4 . Overtime pay cannot be offset against any amounts owed to an employee. 5 . A non-exempt employee who works more than eight hours in a day is entitled to a tenthour rest period. 6 . A non-exempt employee who works more than five days in a work week is entitled to two days of rest per month (24 consecutive hours). 7 - California live-in domestic service workers have different overtime requirements 8 . Failure to pay overtime or provide rest periods could result in employees recovering three times their unpaid wages, interest, and attorney fees. 9 . Workers can recover additional penalties against the employer under the Private Attorney General Act 10 . Tips or gratuities are not counted as part of the employee's "regular rate of pay" and are therefore not subject to the overtime requirements. 11 . Employees who work more than five hours in a day must be allowed to take two paid breaks totaling at least 30 minutes for lunch and dinner. 12 . Single meal periods must be at least 30 minutes. 13.
Conclusion: The average weekly wage in California is $639.96 according to the U.S. Bureau of Labor Statistics' data for 2011. By comparison, the national average was $678.20 (with a high of $1,600 weekly wages in the District of Columbia and a low of $360 weekly wages in West Virginia). However, this data does not tell the entire story because California has more than twice as many people who are unemployed as those who have full-time jobs and it also includes part-time workers. The state's unemployment rate was at 6.9% as of October 2011 which is below the national average of 9%.
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