HR Compliance, Practice Efficiency Essentials, State & Local Law

HR Guide to California Labor Laws for Healthcare Practices

Updated 5/16/2025

California has arguably the most “pro-worker” labor laws in the United States. That could be great for your team but may present challenges for you and your practice. Even if you are in a different state but have employees who work in California, you must follow and comply with state labor laws. These laws sometimes supersede federal law and are under the purview of up to six agencies.

California labor laws generally protect your employees by prohibiting you or anyone in your practice from discriminating or retaliating against them for various reasons. Laws change constantly, but the core tenets of labor law remain. They incorporate equal employment opportunity (“EEO”) policies, such as anti-harassment and anti-discrimination policies, disability policies, pregnancy accommodations and policies, equal pay policies, and so much more. These laws are constantly changing and require you to pay careful attention to find which ones apply to your practice, or to use an automated solution that tracks changes and provides alerting and updates to keep you in compliance. In this article we’ll delve into California’s most impactful labor laws and provide some key insights into ways you can stay on top of them.

Why California Labor Laws Are Critical for Healthcare Practices

California labor laws are among the most intricate in the nation, with frequent updates that demand healthcare employers’ constant attention. The overlapping jurisdiction of federal, state, and local laws creates additional complexity, especially for practices managing multi-location operations. For example, regulations governing overtime, meal breaks, and family leave differ from other states, making compliance particularly challenging.

Compliance with labor laws not only shields healthcare practices from fines and lawsuits but also fosters trust and loyalty among employees. When employees feel their rights are respected, such as receiving proper rest breaks and overtime pay, they are more engaged and productive. This directly impacts patient care, as satisfied employees are more likely to deliver high-quality service in a fast-paced healthcare environment.

Healthcare employers often struggle with meal break compliance due to unpredictable patient schedules and urgent care needs. Failure to track breaks accurately can lead to costly penalties, with noncompliant practices paying up to one hour of wages per violation. In addition, misclassifying employees as independent contractors or exempt from overtime poses a significant risk, with severe financial repercussions if audits uncover violations.

Common Labor Law Compliance Pitfalls for Healthcare Practices

1. Failing to provide timely meal breaks. Many healthcare practices struggle to ensure employees take meal breaks on time due to unpredictable patient care demands. This can result in penalties, as California law requires a 30-minute meal break within the first five hours of work, with strict tracking and documentation requirements.
2. Misclassifying nonexempt employees as exempt. Misclassification often occurs when practices assume administrative or technical staff are exempt from overtime pay without meeting salary or job duties criteria. This mistake can lead to back pay claims, fines, and potential litigation if discovered during audits or employee complaints.
3. Overlooking local wage ordinances. Practices operating in multiple California locations may inadvertently apply statewide wage rates, ignoring higher local minimum wages. Failure to comply with these ordinances not only risks financial penalties but also damages employee trust and morale.
4. Inadequate tracking of overtime hours. Inconsistent or manual timekeeping systems often lead to underreported overtime hours for nonexempt employees. This can result in wage theft claims, requiring practices to compensate employees retroactively and pay additional penalties.
5. Neglecting proper documentation for leaves of absence. Healthcare practices sometimes fail to maintain accurate records for family, medical, or pregnancy-related leaves. Without proper documentation, employers may inadvertently deny eligible leave or face compliance issues during audits or disputes.

Practical Tips to Avoid These Pitfalls

Implement automated timekeeping systems. Use digital tools to track employee hours and breaks accurately, reducing the risk of meal break and overtime violations.
Review and update employee classifications regularly. Conduct periodic audits to ensure employees are classified correctly based on their job duties and salary, aligning with California labor laws.
Train management on local and state-specific regulations. Equip supervisors and HR staff with regular training on wage ordinances, meal break laws, and leave policies to ensure consistent compliance across all locations.
Develop clear leave and meal break policies. Include detailed guidelines in your employee handbook, specifying procedures for breaks, overtime, and leave requests, ensuring all employees understand their rights.
Consult with legal or HR professionals for audits. Engage experts to review your compliance practices, identify risks, and address any discrepancies before they lead to legal issues.

Top California Labor Law Issues

There are a plethora of labor law issues that you will face in your optometry, dental, veterinary, or other healthcare practice. The good and bad news is that other companies and practices have faced many of the same issues. Some of those issues are still being challenged in the courts, and many have already been determined based on previous legal precedent.

So, you’re not alone, but it’s even more important that you are proactive about your understanding of the current and evolving labor laws in California. While many of these labor law issues have been explored at length in court, you should still be aware of how they could affect you. Here are some of the most common labor law issues you may face in your practice.

Leave Issues

• Leave under California’s Fair Employment and Housing Act

• Healthy Workplace Healthy Family Act of 2014 (AB 1522)

• Supplemental Sick Leave Policies

OSHA/Cal-OSHA/EEOC/DFEH Worksite Investigations

• OSHA Control Prevention

• Cal-OSHA Guidance – Requirements for Coronavirus Protection

Retaliation Claims

Labor Code section 1102.5 protects employees against retaliation for disclosing information or because an employer believes an employee has disclosed information to a government or law enforcement agency, to a person with authority over the employee, or to another employee who has the authority to investigate, discover, or correct a violation where an employee reasonably believes the information discloses a violation of a state or federal statute, or a violation of or noncompliance with a local, state, or federal rule or regulation.

The key point to understand here is that the employee only had to reasonably believe that the disclosure discloses a violated federal, state, or local law or regulation.

Wage and Hour Issues

Inaccurate timekeeping
Meal and rest break violations
Reporting time pay claims
Claims of missed wages and/or unpaid overtime
Employment misclassification

Disability Discrimination · Fair Employment and Housing Act (FEHA):

The FEHA prohibits employers from discriminating against employees based on physical conditions, mental disabilities, as well as other medical conditions.

Overtime Pay

Accurate timekeeping systems are essential for your practice, which is why HR for Health offers a modern and intuitive time-tracking system you can use. We offer accurate monitoring of hours worked so that you and your employees are on the same page. It’s important to ensure that your nonexempt employees receive proper California overtime pay, which is why we offer this comprehensive service to meet your needs.

There could be other unique situations that you may face with your employees, such as when they are compensated at two different pay rates. In a scenario where they may incur overtime during that work week, you may either compensate at the higher rate of pay, or you can perform a weighted average calculation to calculate the overtime worked (and owed) for that employee’s work week.

Independent Contractors

California Labor Laws use the ABC Test to determine the classification of independent contractors. Most of your team members at your practice will be employees, but it’s also possible to misclassify employees as “independent contractors.”

The ABC Test for Independent Contractors

California uses the ABC Test to determine if a worker qualifies as an independent contractor. To classify a worker as an independent contractor, the following three criteria must be met:

A: The worker is free from control and direction in performing their work, both under the terms of their contract and in practice.
- Example: A freelance IT specialist hired to update your practice’s computer system is likely free to decide when, where, and how they complete the work.
B: The work performed is outside the usual course of the hiring entity’s business.
- Example: A dental hygienist or veterinary technician directly contributes to patient care, which is the core business of a dental or veterinary practice. These roles fail this criterion and must be classified as employees.
C: The worker is customarily engaged in an independently established trade, occupation, or business.
- Example: A cleaning service hired to sanitize the practice after hours is an independent business with other clients, qualifying under this condition.

If all three criteria are not satisfied, the worker must be classified as an employee.

When you misclassify employees, your team members are not receiving their full compensation or potential benefits they may be entitled to under California Labor Law. You may be forced to pay up to $25,000 per violation in civil penalties to remedy the misclassification.

Exempt and Nonexempt

Under California law, California employees are considered exempt or nonexempt. Employers must meet the salary requirement and other criteria based on their status.

State labor laws require that you pay exempt employees once a month on or before the 26th of each month when the wages were earned. You must also include the amount projected to be earned from the 26th through the remainder of the month.

State labor laws require that you pay all wages to nonexempt employees at least twice a month or semimonthly. You must also provide a schedule of paydays in advance and adhere to those regular paydays.

You must pay any overtime by the following payday for the next regular payroll period after you’ve earned those wages. With so many things to keep track of, it can get overwhelming. Thankfully, HR for Health offers a comprehensive HR solution and a payroll option, so you don’t have to worry about whether or not your practice is compliant. Schedule a consultation today to see how HR for Health can help your practice navigate the changing labor laws and ensure compliance. We’ll offer recommendations, advice, and time-tested tips that will help you navigate the confusion surrounding labor laws.

Real-World Examples of Classification in Healthcare

Hygienists and Technicians:
- These roles involve patient care and are integral to the practice’s operations. They are nonexempt employees entitled to overtime pay if they work more than 8 hours a day or 40 hours a week.
Freelance Consultants:
- A consultant hired to improve front-desk operations or marketing strategies may qualify as an independent contractor since their work is outside the core patient care focus of the practice.
Locum Tenens Providers:
- Temporary doctors or dentists hired through an agency may qualify as independent contractors if the agency manages their work and contracts.
Administrative Staff:
- Receptionists and office managers are part of the core operations of the practice and should be classified as employees, not independent contractors.

Meal and Rest Breaks

Meal and rest break compliance continues to be the source of a great deal of litigation for California employers. That’s because California has requirements for rest breaks and meal breaks that are employee friendly and many practices do not realize they aren’t compliant.

If you do not provide breaks at the appropriate time and with the correct duration, you could be subject to a penalty, which you’d be required to pay your employee. The penalty is equal to one hour at their regular rate of pay.

Your employees could recover those penalties for up to four years. They can pursue additional damages if the penalties are not paid. So, you must understand the law regarding California’s meal and rest breaks requirements.

Examples of Compliant Schedules for Healthcare Practices

Standard 8-Hour Shift:
- Meal Break: Provide a 30-minute unpaid meal break before the end of the 5th hour of work (e.g., if a shift starts at 9:00 AM, the meal break must begin before 2:00 PM).
- Rest Breaks: Two 10-minute paid rest breaks, one around mid-morning (e.g., 11:00 AM) and the other mid-afternoon (e.g., 3:30 PM).
10-Hour Shift (4/10 Schedule):
- Meal Break: Provide one 30-minute unpaid meal break within the first 5 hours of the shift and a second meal break if the shift exceeds 10 hours.
- Rest Breaks: Three 10-minute paid rest breaks spaced evenly throughout the shift.
Split Shifts:
- Meal breaks must occur within the first 5 hours of each portion of the shift if total work hours exceed 5 hours.
- Ensure rest breaks are appropriately distributed across both segments of the split shift.
Staggered Breaks for Large Teams:
- For practices with overlapping shifts, stagger rest and meal breaks to ensure patient coverage while maintaining compliance. For example, alternate meal breaks between 12:00 PM and 2:00 PM for a front-desk team working the same shift.

Nuances to Consider

Split Shifts: Employees working split shifts must receive their meal break within 5 hours of starting either segment of the shift. Employers must account for both work periods when scheduling breaks.
Waiver of Second Meal Break: Employees may waive their second meal break if their total shift is less than 12 hours and the first meal break was not skipped.
On-Duty Meal Breaks: In cases where an employee’s duties prevent them from being relieved (e.g., a sole radiology technician), an on-duty meal break agreement must be signed, and the break must be paid.
Rest Break Timing: Rest breaks should ideally occur near the middle of each four-hour work period.

Calculating Work Hours

Calculating work hours can be challenging. California’s minimum wage rate is currently $16.50 for all employers. California labor law requires you to pay all non-exempt employees at least this much for every hour they work “on the clock.” At certain healthcare facilities there are also higher minimum wage laws in California – these include hospitals, residential care settings, physicians groups, county mental health care correctional facilities, certain outpatient facilities, and certain primary care facilities. Please read more on the California Department of Industrial relations website to determine if you meet one of these unique criteria.

Of course, some local areas in California have provisions for minimum wages that are higher than those required by state labor laws, so you need to continue to follow these laws and be aware of any discrepancies as well.

Family Medical Leave Act (FMLA), California Family Rights Act (CFRA), and Healthy Workplaces, Healthy Families Act (HWHFA)

The California Family Rights Act (CFRA) requires you to provide eligible employees with up to 12 weeks of job-protected leave in 12 months if you have 5+ employees. Your employee can take the leave to accommodate their own or a covered family member’s serious health condition, including the following.

Birth or placement for adoption or foster care of a child
A qualifying exigency related to the covered active duty
A call to cover active duty of an employee’s spouse, domestic partner, child, or parent in the US Armed Forces

The CFRA and the federal Family and Medical Leave Act (FMLA) are similar in many ways, but they also have areas of divergence.

California provides paid family leave (PFL) benefits under the Family Temporary Disability Insurance program. Under certain circumstances, eligible employees can receive partial wage replacement.

Time off to care for a seriously ill family member (i.e., child, parent, spouse, registered domestic partner, grandparent, grandchild, sibling, or parent-in-law).
Time off to bond with a child within one year of birth or placement for adoption or foster care.
Time off to participate in a qualifying exigency related to the covered active duty.
Time off for a call to cover the active duty of the employee’s spouse, domestic partner, or parent in the US Armed Forces.

Your employees are covered for up to eight weeks of PFL in 12 months.

Under the Healthy Workplaces, Healthy Families Act (HWHFA), you must allow eligible employees to take paid sick leave for the following reasons:

Diagnosis, care, or treatment of the employee’s or a covered family member’s existing health condition;
Preventive care for the employee or a covered family member; and
For an employee who is a victim of domestic violence, sexual assault, or stalking to obtain legal, medical, or social services.

Employees may accrue up to 24 hours (or three days) of paid sick leave annually. Total accrual, including carryover of unused accrued time, may not exceed 48 hours (or six days) per year.

In addition to the CFRA and HWHFA, you must comply with more than a dozen other leave and time off laws, such as:

Pregnancy disability leave (if you have 5+ employees)
Bone marrow and organ donor leave (if you have 15+ employees)Civil Air Patrol leave (if you have 15+ employees)
Day of rest requirements
Domestic violence and crime victim leave
Drug and alcohol rehabilitation leave (if you have 25+ employees)
Election official leave
Family military leave (if you have 25+ employees)
Jury duty leave
Kin care leave
Leave to attend judicial proceedings
Literacy leave (if you have 25+ employees)
Military leave
School activities leave (if you have 25+ employees)
School discipline leave
Voting leave

While all these leave requirements could affect you and your employees in California, you should also be aware of how and where there may be overlaps between various state, federal, and even local requirements. Generally, the best policy is to comply with whichever requirement offers the greatest benefit to the employee.

Additional information on payday, time off, and leave of absence practices in California can be found:

Federal requirements can be found:

Sexual Harassment

Sexual harassment is a form of sex discrimination that violates Title VII of the Civil Rights Act of 1964 and California’s Fair Employment and Housing Act. Sexual harassment, itself, refers to both sexual and unwelcome advances. It can also be in the form of other verbal, visual, or physical conduct of any sexual nature.

Those inappropriate actions venture into the area of sexual harassment when they create a hostile, intimidating, or offensive work environment based on your employee’s sex or gender identity. Under California law, offensive conduct in the workplace does not need to be motivated by sexual desire.

Motivation may be related to an employee’s perceived or actual sex or gender identity, perceived or actual sexual orientation, childbirth, pregnancy, or related medical conditions. The term “sexual harassment” incorporates many forms of offensive behavior.

It includes gender-based harassment of a person of the same sex as the harasser.
It includes actions that subject your team members to an unacceptable and hostile work environment.

You must understand what constitutes sexual harassment and take steps to prevent and stop it in the workplace. If you have 5+ employees, you must provide harassment prevention training to all employees every two (2) years.

California Workers’ Compensation

Under California Labor Code Section 3700, you must carry workers’ compensation insurance if you employ one or more employees.

Employee Handbooks

State of California employee handbooks are important not only as a reference resource for you and your employees. They are resources that highlight your and your employees’ rights and responsibilities. They allow you to answer questions regarding policies and procedures and mitigate conflict and other negative situations before they become more serious.

No matter how big or small your practice is or how long you’ve been around, you need to take your employee handbook seriously. It’s the best way to keep your practice and team dynamics on track and the same page. Schedule a consultation today to see how HR for Health can help your practice with your employee handbook.

Drug and Alcohol Testing

As a California employer, you can require drug testing of job applicants in California, but you must offer sufficient notice of the drug testing requirement and documentation requirements. Also, while you have the right to require drug testing, a third party must properly perform those tests.

Please note: There are rules regarding how to navigate this drug-testing process. For example, you may need to provide certain notices to your employees (e.g., a consent form and notification to the candidate and/or employee letting them know of a positive result).

Employee Termination

To avoid lawsuits, employees must be properly terminated.

You must pay final wages in a timely manner when you terminate employees. When they resign, you must pay them on their last day of work as long as they provide you with at least 72 hours’ notice of their intent to resign. If they do not offer at least 72 hours’ notice, you’re required to pay final wages within 72 hours of their resignation date.

If you fail to pay out final wages in a timely manner, you could be subject to penalties equivalent to a day’s worth of your employee’s work for each day that the payout is late, up to 30 calendar days max.

California law prohibits requiring or offering “use it or lose it” vacation policies. You can cap vacation accruals, but the vacation benefit cannot be forfeited. You must pay out any accrued vacation and/or PTO earned by your employees upon separation or when their employment is ended. The only exception to this requirement is paid sick leave hours. Any balance of sick leave hours does not need to be paid out upon separation from employment. Please note that PTO policies, while they do encompass sick leave, still require a payout at termination.

California law also requires that you pay any outstanding wages owed to a deceased employee to the surviving spouse or even the conservator of the estate as necessary. You are not required to wait until the probate process is complete. In addition to outstanding wages, you are responsible for covering payment of any other compensation owed for personal services up to a cap of $15,000 net. You can still ask the surviving spouse or conservator of the estate to produce proof of identity, as well as a declaration or affidavit, under penalty of perjury regarding the valid disposition of the estate.

COBRA Health Insurance

The California Continuation Benefits Replacement Act (Cal-COBRA) requires your group health plan to offer continuation coverage to qualified beneficiaries, including your employees and their eligible dependents.

Cal-COBRA mirrors the federal Consolidated Omnibus Budget Reconciliation Act (COBRA) in terms and conditions for qualifying events and timelines. However, Cal-COBRA’s notice premiums and requirements differ from those of COBRA.

Cal-COBRA requires your group health plan to offer any former employee who has exhausted continuation coverage under federal COBRA the chance to continue that expired health coverage for up to 36 months.

That continuation benefit commences from the date when the continuation coverage began if your former employee is entitled to fewer than 36 months of COBRA coverage. If you’re still not sure why you need to know about these labor laws, and COBRA health insurance in particular, we can help.

Schedule a consultation to see how HR for Health can help your practice navigate the changing labor laws and ensure compliance. We’ll offer recommendations, advice, and time-tested tips that will help you navigate the confusion surrounding labor laws.

Helping Employers Understand California Law

It’s possible, even likely, that you have not taken your compliance with California’s labor laws as seriously as you should. The laws are constantly changing, and there are so many other considerations that you may not have a perfect grasp of what you need to do, or even where you should start.

HR for Health is ready to help you understand California labor law with recommendations and assistance for any documentation you might need. Our solution is a combination of reliable automated software that keeps your employee handbook permanently up to date while tying into timekeeping, time off tracking, and payroll, and expert support from our team of dedicated HR specialists. This all in one solution provides guardrails to keep you in compliance with ever changing labor laws which is important for protecting your practice, but also benefits you and your employees.

Contact HR for Health for a Free Consultation

HR for Health works with you to help you and your employees use convenient online documents and on-demand HR advising and support services. We provide our clients with an all-in-one HR solution that helps you stay on top of things like timekeeping, meal break and rest break tracking, electronic onboarding, and offboarding, a customized employee handbook, payroll, and more, so you can be confident that it contains the latest policies and regulatory updates. Schedule a consultation today to see how HR for Health can help your practice grow with confidence.