Federal law supersedes state law. No matter where you’re doing business, federal employee handbook policies must be included. These cover some of the most critical worker rights, including anti-discrimination laws, different types of leave, and how the company will handle sexual harassment.
“California doesn’t require employers to have an employee handbook, but if you choose to have a handbook for your California employees, there are some policies that have to be included to comply with state law,” said Christensen.
The required federal employee handbook policies are the same across all 50 states, so you’ll need to include them in every version of your employee handbook. When there’s a change to the law, each state handbook needs to be updated appropriately.
Each of the following policies must be included in your employee handbook:
California offers additional protections to its employees, including paid sick leave, crime victim and domestic violence leave, voting leave and more. These protections make it easier for California employees to take time off work without risking their employment status.
Note that there are also state policies governing health and safety, meal and rest breaks, and outside employment. These policies go further than federal law, and may require you to make adjustments to your overall company policies.
Finally, take note that the paid sick leave policies are unique for Berkeley, Emeryville, Los Angeles, Oakland, San Diego, San Francisco, and Santa Monica: if you hire employees in those locations, be prepared to create different policies based on those requirements.
“Employers should pay special attention if they have employees in San Francisco,” said Christensen. “Employers with 20 or more employees worldwide must include a San Francisco Family Friendly Workplace policy and Paid Parental Leave policy in their employee handbook. Employers with 100 or more employees worldwide must also include a San Francisco Public Health Emergency leave policy in their handbook.”
Here are California’s required policies:
But wait—there’s more! In addition to the required state and federal policies, there are 46 optional policies you can add to your employee handbook. While not all of these will apply to every company, they can provide structure for employees and protect your business.
For instance, most companies will have a payment, holiday, and dress code policy—but you can also include policies that apply to your specific type of work. Transportation companies may wish to add policies about drugs, alcohol, and using electronic devices while driving. Tech companies may want to add policies about how employees can use company property, confidentiality and non-disclosure agreements, and telecommuting policies.
After your required state and federal policies, you’re invited to add the following:
Noncompliance with California employment policies can lead to significant penalties, including administrative fines, lawsuits, backpay, damages for lost wages, emotional distress, and attorneys’ fees. Violations may trigger investigations by state agencies, such as the California Labor Commissioner or the Department of Fair Employment and Housing (DFEH), and result in claims under the Private Attorneys General Act (PAGA) or class actions.
Specific risks include civil penalties for failing to provide required leaves (e.g., bereavement, sick leave, CFRA), reimbursements (e.g., business expenses, home office costs), and accommodations (e.g., lactation, meal/rest breaks). Retaliation or discrimination claims often carry additional punitive damages. Employers must implement compliant HR policies and seek legal guidance to avoid costly repercussions and protect their workforce.
Regularly updating your California employee handbook is essential to ensure it remains compliant with evolving laws—and accurately reflects your company’s current policies and procedures. At a minimum, it’s advisable to review and update your handbook annually. However, certain circumstances may necessitate more frequent revisions:
By proactively refreshing your employee handbook, you uphold legal compliance and also demonstrate a commitment to transparency and effective communication within your organization. This practice fosters trust and sets clear expectations, contributing to a positive workplace environment.
Under California state law, employees who are terminated must receive their final paycheck immediately. Employees who resign must be paid within 72 hours of resignation unless they provide at least 72 hours’ notice. In that case, payment is due on the separation date.
All earned and unpaid wages, including premium pay for missed meal and rest periods, must be paid. Any accrued and unused vacation time must be compensated upon separation as per Cal. Lab. Code § 227.3.
Final paychecks for discharged employees must be provided at the place of discharge, while resigning employees should receive their pay at their last place of work. If requested, wages may be mailed. Employers who fail to pay the final wages on time may face penalties, including the unpaid amount plus an additional 30 days’ wages at the employee’s regular pay rate.
All California employees must receive several important notices upon termination. These include the California unemployment pamphlet DE 2320, as required by the California Employment Development Department, and a notice about changes in the employment relationship in accordance with Section 1089 of the California Unemployment Insurance Code.
If the organization employs 20 or more individuals, employees must also be provided with notice about California’s Health Insurance Premium Payment (HIPP) program. Additionally, employees should be informed about their Cal-COBRA continuation rights, as well as all continuation, disability, and conversion coverage options available to them after termination.
Under the California WARN Act, certain employers also must give 60 days’ notice for plant closures, mass layoffs involving 50 or more employees, or relocations of operations more than 100 miles away. A “covered employer” is defined as any person or entity owning and operating a covered establishment, which is any facility with 75 or more employees in the past year, including contractors. Notice must be delivered to affected employees, the Employment Development Department, local workforce investment boards, and city and county government officials.
Exceptions to the 60-day notice requirement include situations involving a faltering company, physical calamities, acts of war, or temporary projects. The notice must include detailed information such as the site address, contact details, the nature of the action, and job classifications affected.
When firing employees and drafting severance agreements, employers must clearly specify the claims being waived under both federal and state laws. In California, this includes claims related to wrongful termination (Tameny claims), breach of contract, breach of the implied covenant of good faith and fair dealing, privacy violations, defamation, intentional infliction of emotional distress, and discrimination or harassment under the California Fair Employment and Housing Act.
California law also mandates that if a release is intended to cover both known and unknown claims, it must include a waiver of California Civil Code Section 1542. Furthermore, there must be independent evidence showing that the employee intended to release unknown claims.
It is important that any claims release only covers claims that arose before the agreement’s effective date, not those that may arise afterward. Employers must also inform employees of their right to consult an attorney about the severance agreement, and provide at least five days to do so.
Finally, federal regulations, including recent NLRB decisions, impose restrictions on non-disparagement and confidentiality clauses in severance agreements.
If an employee has an Income Withholding for Support Order (IWO), you must immediately notify the child support agency, court, or attorney who issued the IWO about the employee’s termination. If you would prefer online reporting, you can register with the Federal Office of Child Support Enforcement.
Alternatively, you can report the termination by completing the Notification of Employment Termination or Income Status section of the IWO and sending it via fax or mail to the issuing child support agency.
Include the following information:
Should an organization stop doing business in California, they may formally withdraw their registration to do business in the state by filling out certain forms. This often occurs when the organization separates from their last in-state employee. The forms are submitted to the California Secretary of State, and they vary depending on the legal structure involved.
For-Profit Corporations and Non-Profit Corporations must file this Certificate of Surrender and pay all required state taxes before withdrawing. Limited Liability Companies (LLCs) must file this Certificate of Cancellation. They are also required to pay all state taxes before withdrawing.
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