Hiring

Advertising

What are the requirements relating to advertising open positions?

Advertisements must not suggest a preference against applicants or independent contractors on the basis of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition (e.g., cancer-related conditions and genetic characteristics), genetic information, marital status, sex, gender identity, gender expression, age (40 years and older), sexual orientation, or military and veteran status of any person.

Background checks

(a)Criminal records and arrests

As a general matter, employers are prohibited from making any non-job-related inquiries of applicants or employees that directly or indirectly express a limitation, specification, or discrimination about any protected characteristic. In addition to the federal Fair Credit Reporting Act governing the use of background checks in employment, California employers must also comply with certain requirements in the California Investigative Consumer Reporting Agencies Act and the California Consumer Credit Reporting Agencies Act. Class actions alleging violations of these statutes have recently been on the rise in California.  

An employer may not ask an applicant about any arrest or detention that did not result in a conviction (Cal. Lab. Code § 432.7).  Employers also may not ask about bankruptcies older than 10 years, judgments older than seven years, suits older than seven years, or records older than seven years that contain information about arrests, indictments, criminal information, misdemeanor complaints, or criminal convictions.  (Cal. Civ. Code § 1786.18(a)).  Employers also cannot ask applicants to disclose information regarding a conviction for certain marijuana-related crimes or possession of certain drug-related paraphernalia when the conviction is more than two years old (Cal. Lab. Code § 432.8). With limited exceptions, employers may not ask for juvenile convictions or inquire or use information about juvenile arrests, detentions, or court dispositions in making an employment determination.

Statewide and local "Ban the Box" laws are prevalent in California. The California Fair Chance Act prohibits a covered employer from asking about or considering criminal history before making a conditional offer of employment. This does not apply to: (1) a position that requires a conviction history background check by law; (2) a position with a criminal justice agency; (3) a position as a Farm Labor Contractor; or (4) a position where an employer is required by law to restrict employment based on criminal history (Cal. Govt. Code § 12952(d)). In addition, Los Angeles and San Francisco have their own "Ban the Box" statutes.  

(b)Medical history

As a general matter, employers may not inquire about any mental or physical disability or medical condition but may ask an applicant if they can perform the essential functions of the job.

The Fair Employment and Housing Act prohibits employers from requiring applicants to take a medical or psychological examination prior to the initial job offer (Cal. Govt. Code § 12940(f)). After extending an initial job offer, the employer may ask the applicant to undergo a pre-employment medical exam or laboratory test, so long as it relates specifically to the essential functions of the job.  

Background check reports may not include medical information without the employee’s or applicant’s authorization (Cal. Civ. Code § 1786.12(f)). 

(c)Drug screening

There is no specific statute on drug screening, but California courts have generally permitted employers to require employees to pass a drug test as a condition of employment, so long as an employer tests all applicants and does not single out certain applicants due to protected characteristics. Note that employers in certain safety-sensitive industries such as transportation and aviation will be subject to federal drug testing laws and might be allowed to conduct random drug testing.

The California Supreme Court has held that an employer may refuse to hire an applicant who tests positive for marijuana even where it is prescribed for medicinal purposes (Ross v. RagingWire Telecomms., Inc., 42 Cal. 4th 920 (2008)).

(d)Credit checks

Both California and federal law limit the use of credit reports for employment purposes. California's Consumer Credit Reporting Agencies Act prohibits an employer or prospective employer from using a consumer credit report for employment purposes unless the report is sought for certain enumerated positions such as a managerial position or a position that involves access to cash or confidential and proprietary information. (Cal. Lab. Code § 1024.5). However, the prohibition does not apply to reports that both verify income or employment and do not include credit-related information, such as credit history, credit score, or credit record. (Cal. Lab. Code § 1024.5).

If an exception applies and an employer seeks to obtain and use a credit report, California law requires that employers provide written notice to the consumer that addresses the specific exception used for obtaining the report.  

(e)Immigration status

The federal Immigration Reform and Control Act sets out certain requirements to establish authorization to work in the United States. California has additional requirements prohibiting employers from engaging in unfair immigration-related practices, such as using E-Verify to check a person’s authorization status at a time or in a manner not consistent with federal immigration law, or in retaliation for a person’s exercise of their employment rights under the Labor Code. Labor Code § 1019.1 states that employers may not:

  • Request more or different documents than required under federal law to verify work authorization status;
  • Refuse to honor documents that look genuine;
  • Refuse to honor documents or work authorization based on the specific status/term accompanying the authorization to work; or
  • Attempt to re-investigate or re-verify an incumbent employee’s authorization to work using an unfair immigration-related practice.

A penalty of up to $10,000 per violation may be recovered by the applicant, employee, or by Labor Commissioner.

Employers also may not reverify the employment eligibility of a current employee at a time or in a manner not required under federal law. (Cal. Lab. Code § 1019.2). The Labor Commissioner may recover a penalty of up to $10,000 per violation of this section as well. Violations of Section 1019.2, however, may not form the basis of liability or penalty under Section 1019.1.

(f)Social media

While there is no specific statute prohibiting retrieval or review of applicant or employee social media information, relying on such information to make employment decisions can raise a host of issues under the state’s anti-discrimination and privacy laws. For example, an employer may be liable for discrimination if it conducts a social media search that reveals an applicant’s protected characteristics and then relies on such information in deciding whether to hire.

In addition, Section 7 of the National Labor Relations Act prohibits employers from discriminating or taking adverse action against employees who engage in protected concerted activity, which may include online discussions of wages, hours, or other working conditions.

California employers must also refrain from asking applicants to access a personal social media account in the presence of the employer and may not require their employees to provide log-in information for their social media account (Cal. Lab. Code § 980(b)). Employers may, however, request an employee’s social media information if it is reasonably believed to be relevant to an investigation of allegations of misconduct or violations of laws and regulations, and only if that information is used for limited, permissible purposes. (Cal. Lab. Code § 980(c)).

(g)Other

Employers may not demand or require applicants or employees to take a polygraph test nor request an applicant or employee take a polygraph test without first advising them of their rights under the Labor Code § 432.2. Public agencies are exempt from this requirement.

Likewise, California employers cannot use the results of applicant or employee HIV tests for employment purposes (Cal. Health & Safety Code § 120980(f)).

California also prohibits employers from seeking or relying on an applicant’s salary history to determine whether to make an offer of employment or what salary to offer the applicant. (Cal. Lab. Code § 432.2).

Wage and hour

Pay

What are the main sources of wage and hour laws in your state?

The California Labor Code and the Industrial Welfare Commission (IWC) Wage Orders are the statutory laws dealing with wage and hour issues.

Wage claims can be especially problematic because an employee who prevails on a wage claim is usually entitled to an award of its reasonable attorneys’ fees in addition to any damages received. Employee wage claims are typically brought before a state government labor agency or through the federal or state civil judicial system.

What is the minimum hourly wage?

For employers with at least 26 employees, the state minimum wage is $13 per hour starting January 1, 2020 and will increase as follows:

  • $14 per hour starting January 1, 2021; and
  • $15 per hour starting January 1, 2022 (Cal. Lab. Code § 1182.12).

Note that there are local ordinances with higher minimum wages, including updated minimum wages that went into effect July 1, 2020 (e.g., $15.00 in Los Angeles). 

 

What are the rules applicable to final pay and deductions from wages?

In California, an employee who is terminated by the employer for any reason must receive payment on the date of termination for all wages earned through the final day of employment (including all accrued but unused vacation entitlement) (Cal. Lab. Code § 201). If the employee resigns, the employer has 72 hours after notice is given to provide payment of final wages (Cal. Lab. Code § 202). An employer’s willful failure to timely pay an employee’s final wages can result in the imposition of a significant waiting time penalty equal to one day of the employee’s wages for every day the payment is withheld, up to a maximum of 30 calendar days (Cal. Lab. Code § 203).

Hours and overtime

What are the requirements for meal and rest breaks?

Employees who work five hours or more per day must be provided with a duty-free uninterrupted 30-minute meal period. Meal periods must also be timely, meaning they are taken before the end of the employee’s fifth hour of work. If the employee is required to remain at the work site or facility during the meal period, the meal period is on duty and must be paid. If a meal period is not provided, is interrupted, or otherwise non-compliant, the employer must pay a premium equal to one hour of wages to that employee.

Employers must authorize and permit non-exempt employees to take a duty-free uninterrupted 10-minute paid, off-duty rest break for every four-hour work period or major fraction thereof. Rest breaks should be taken in the middle of the work period insofar as practicable. Employees working less than 3.5 hours are not entitled to a rest period.

What are the maximum hour rules?

Non-exempt employees must generally be paid 1.5 times the regular rate of pay for all hours worked over eight in a day up to and including 12 hours in any workday, as well as the first eight hours worked on the seventh consecutive day of work in a workweek (Cal. Lab. Code § 510). Non-exempt employees must be paid double the regular rate of pay for work performed over 12 hours in any workday and over eight hours on the seventh consecutive day of work in a workweek (Cal. Lab. Code § 510).  

How should overtime be calculated?

The California Department of Labor Standards Enforcement (DLSE) relies on the Fair Labor Standards Act regulations to determine the regular rate of pay for the purposes of calculating overtime. The regular rate must include all remuneration for employment paid to or on behalf of an employee (Huntington Memorial Hosp. v. Sup. Ct., 131 Cal. App. 4th 893, 902-05 (Cal. Ct. App. 2005)). This typically includes hourly, salary and piecework earnings, commissions, on-call pay, non-discretionary bonuses (i.e., production and attendance bonuses), shift differentials, the value of certain meals and lodging.

Payments generally not considered to be remuneration and therefore are not included in the regular rate calculation include:

  • payments for occasional periods when no work is performed (i.e., holiday and sick pay);
  • gifts and rewards for service that are not tied to hours worked;
  • production or efficiency (i.e., gifts for holiday/special occasions);
  • discretionary bonuses (only if the employer has sole discretion over both the fact and amount of payment and the bonuses are not part of a contract or promise);
  • payments under a bona fide profit-sharing plan or thrift or savings plan that are not tied to hours worked, production, or efficiency (29 C.F.R. §§ 778.200 - 778.225; Cal. Lab. Code § 200(a); DLSE Enforcement Manual, §§ 35.4.4, 35.7, 49.1 to 49.1.2.4 (2002)).

What exemptions are there from overtime?

Employees may be exempt from overtime in California if they satisfy the salary level test (double minimum wage, currently $49,920) and their duties fall under the executive, administrative, or professional exemptions.  Unlike the federal exemption analysis, California employees are subject to a strict duties test, meaning that employees must perform exempt job duties for over 50% of an employee’s working time in order to be exempt from overtime. This is a quantitative, not qualitative test and the exemption must be met every week.

  • California also recognizes limited exemptions applicable to:computer software professionals (as of January 1, 2020, salary test of $46.55 per hour or at least $96,968.33 annually for full-time work, and primarily conducts systems analysis or designs, develops, documents, analyzes, creates, tests or modifies computer systems or programs);
  • licensed physicians and surgeons (as of January 1, 2020, salary test of $84.79 per hour and primarily engaged in duties that require licensure);
  • commissioned employees (with earnings which exceed 1.5 times the minimum wage and greater than 50% of earnings represent commissions); and
  • outside salespersons (primarily engaged in sales activity and who spend over 50% of their working time away from the employer’s place of business).  
Record keeping

What payroll and payment records must be maintained?

 Employees must keep accurate information related to each employee (e.g., name, address, occupation, social security number and date of birth), as well as:

  • time records showing when the employee begins and ends each work period, meal periods, split shift intervals and total daily hours worked (rest periods and meal periods during which operations cease do not have to be recorded);
  • payroll records showing total wages paid for each payroll period, including value of any board, lodging or other compensation actually furnished to the employee; 
  • wage statements should contain all of the information required under Labor Code Section 226(a), including the balance of available paid sick leave available or paid time off/vacation time in lieu thereof;
  • total hours worked in the payroll period and the applicable rates of pay; and 
  • for piece rate or incentive plan employees, employers must list the piece rates or provide an explanation of the incentive plan formula. Employers must also maintain accurate production records (IWC Wage Order No. 15. § 7)).

All required records must be written, in English, properly indicate the month, day and year, and be kept on file for at least three years at the place of employment or at a central location in California (Cal. Lab. Code. § 226).  

Records of wage and wage rates, job classifications, and other terms and conditions of employment must be maintained for all employees for at least three years (Cal. Lab. Code § 1197.5(d)).