Complying with California Labor Laws

California’s labor laws are among the most worker-friendly in the U.S.—and they’re constantly evolving. Stay ahead with key insights on compliance and strategies to protect your business while keeping employees happy.

With a minimum wage of $16.50 per hour (higher for other industries like fast food and healthcare), California labor laws provide workers with a strong protection framework. For the construction industry, in particular, contractors on public works projects must ensure compliance with strict health and safety regulations under Cal/OSHA and pay the workers industry-standard wages.

What to know to avoid penalties

Non-compliance of prevailing laws can result in penal action, including fines of $100 per worker per day for first violation and $200 for additional violations, back wages, debarment from public contracts, stop-work orders, and lawsuits under the Private Attorneys General Act (PAGA).

To avoid punitive action, businesses must ensure worker protection and compliance with the State’s safety, sustainability, and labor laws, described below:

1.     Safety Laws (Cal/OSHA): Requires fall protection, scaffolding safety, and heat illness prevention. Furthermore, the law prescribes IIPP & Hazard Communication mandating safety plans, protective equipment, and hazardous material training.

2.     Sustainability Laws: The CALGreen & Title 24 law enforces energy efficiency, water conservation, and waste reduction. It prescribes stormwater and waste management for pollution control and material recycling.3.Labor Laws (Wages and Worker Protections): The prevailing wage and classification mandate ensures proper wages and prevents worker misclassification (AB 5). This law also provides for guaranteed breaks, meals and safeguards for reporting workers. The PAGA Compliance further increases employer liability by allowing workers to sue for any labor violations

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Deep dive on common pain points

Complying with evolving laws can present several challenges for construction businesses. These include:

a. CA Prevailing Wage Law: Ensuring workers on public works projects are paid state-mandated wages, which usually vary by county, trade, and project type. This makes recordkeeping complex, requiring certified payroll reports and compliance tracking. Non-compliance can attract hefty fines, debarment, and payment of back wages.

b. AB 5 & AB 2257 (Worker Classification Laws): A stricter ABC test, as outlined in the AB 5, requires classifying independent contractors versus employees, impacting subcontractors and gig workers. Although AB 2257 allows some exemptions, compliance still remains complex. Further, misclassification can expose businesses to risks such as lawsuits, tax penalties, and back wages.

c.  Overtime & Meal Break Compliance: California mandates an uninterrupted 30-minute unpaid meal break for workers working more than five hours a day. They get an additional 30-minute unpaid meal break when working more than 12 hours a day and a paid 10-minute rest period for every four hours of work. Employers violating these mandatory break times must pay one hour of pay at the worker’s regular rate of compensation for each workday. For overtime, the law prescribes the rate of 1.5x the worker’s regular rate of pay after eight hours and 2x after 12 hours.

d. Union Agreements & Project Labor Agreements (PLAs): Managing multi-union projects involves following multiple wage rates, benefits, and work rules. Businesses may face union jurisdiction disputes that can delay projects. However, they must mandatorily comply with legal requirements of PLAs and CBAs (Collective Bargaining Agreements).

Steps to minimize compliance risk

To navigate the evolving labor laws and reduce risk, businesses can take the following steps:

• Create reports for audits and tax filing: Create accurate and detailed audits, tax filings, and record-keeping reports that align with state and federal regulations. Automate data collection with real-time tracking and payroll integration for more accurate audits, tax filings, and compliance records as well as to eliminate manual errors in report generation.
• Manage temporary workers/seasonal labor: Ensure compliance with overtime, meal breaks, and tax regulations, streamline onboarding of temporary and seasonal workers with digital documentation, record-keeping, and automated wage calculation.
• Manage resources: Accurately track time to monitor employee attendance and productivity, adjust employee schedules and improve project timelines. Leverage these insights to improve resource allocation, optimize workforce planning, reduce overtime costs, and enhance overall efficiency. 

Ensure compliance with Fingercheck

With automated timekeeping and wage tracking, Fingercheck helps construction managers comply with prevailing laws and improve overall workforce efficiency.

It keeps businesses updated with evolving regulations like wage laws and worker classification rules with built-in compliance tools and real-time alerts. Fingercheck’s seamless payroll integration and detailed reporting enables construction managers to maintain accurate records – aligned with state and federal regulations, streamline audits, and avoid compliance risks. Schedule a demo today!