Organizations in California prepare for economic and legislative changes by keeping their employee benefit plans updated. Yet, changing regulations can strain internal HR teams, fragment relationships with vendors and healthcare providers, and disrupt communication with employees about their benefits. A workflow that includes not only compliance but also transparency and personalization is a significant driver of trust and talent retention.
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This guide reviews employee benefits compliance for California employers, with an emphasis on strategies to protect assets, support employees, and avoid penalties, and explains how custom group plans from local providers can help.
The Costs of Non-Compliance
Compliance with California’s workplace benefits legislation is more than a legal requirement. For California employers and HR leaders, compliance protects the business from legal liabilities, supports employee engagement and retention, and avoids fines. Modern strategies suggest a proactive approach that rethinks healthcare benefits planning as a competitive advantage instead of an obligation.
In light of recent studies showing that over half of employees consider their healthcare benefits a significant factor in whether they stay with their current employer, maintaining compliance is one of the best ways for organizations to build trust and maintain high retention among modern employees.
Compliance Requirements for California Employers
Outside federal employment laws, California has established state-specific compliance requirements for employers. These requirements from agencies such as the Department of Industrial Relations and the Division of Occupational Safety and Health aim to establish that the most populous state is also one of the safest places to work.
To achieve this, these organizations and others require certain benefits, documents, and on-site accommodations from all employers. This list summarizes these benefits to help business leaders stay compliant, avoid penalties, and support their employees:
1. Employee Rights to Protected Leave
Employers in California are required to provide certain benefits to employees. For organizations with at least five employees, California law requires up to 12 weeks of job-protected leave for certain medical and family reasons under the California Family Rights Act (CFRA), while the federal Family and Medical Leave Act (FMLA) applies to employers with 50 or more employees. In addition to unpaid job-protected leave, employers must also provide leave for other circumstances, including:
- Family leave (paid): California’s Paid Family Leave (PFL) program provides up to eight weeks of partial wage replacement for eligible employees bonding with a new child or caring for a seriously ill family member. PFL does not provide job protection, which is provided separately under CFRA or FMLA when applicable. Pregnancy Disability Leave (PDL) is a required benefit under the California Civil Rights Department.
- Sick leave (paid): Employers must provide paid sick leave for an illness diagnosis, preventative care for an existing illness, or treating a family member’s illness. This also includes paid leave following a sexual assault or domestic violence incident. The relevant legislation is the California Family Rights Act (CFRA) and the Family and Medical Leave Act (FMLA).
- Emergency Response leave (unpaid): Employees with duties as a responder, including peace officers and volunteer firefighters, must receive unpaid leave to deal with eligible emergencies.
- Other leave requirements, such as organ donation leave, school activities leave, and jury duty leave, are mandated by different rights departments.
Note: In addition to healthcare benefits, employees also have certain rights under California law, a minimum wage, a paid 10-minute break per 4 hours of work, a meal break of at least 30 minutes, a right to file compensation claims, workers’ compensation insurance, and a work environment that meets state safety laws.
2. On-site and Remote Healthcare Accommodations
Under California law, specifically Labor Code Section 1030, employers must provide lactation accommodations for employees who need to express breast milk, including reasonable break time and a private, non-bathroom space. This includes permitting lactation breaks (paid or unpaid) and providing adequate private space. Organizations with at least 5 employees must also accommodate employees with mental or physical disabilities, according to the California Fair Employment and Housing Act.
Remote workers are entitled to reimbursement for necessary business expenses under California law, which may include a portion of internet, phone, or equipment costs depending on job requirements. They often comply with this law through a remote employment stipend, which helps prevent compliance and liability issues that arose from pandemic-era remote work transitions.
Pro Tip: California Labor Code Section 2802 mandates that remote employees are entitled to expense reimbursement.
3. Other Relevant California Legislation
California has passed or updated numerous pieces of legislation related to employee benefits. These state-specific laws are in addition to federal laws, including the Affordable Care Act (ACA), the Employee Retirement Income Security Act (ERISA), and HIPAA. In California, employers are also responsible for staying up to date with changes to the California Family Rights Act (CFRA), the leave policies established by the California Department of Industrial Relations, transparency rules from the Department of Labor (DOL), and more.
Next Steps for California Employers
Employers in California strive to meet current compliance requirements and anticipate future trends in employee benefits. New California laws often focus on expanding benefits related to mental healthcare, family support, adoption support, and DEI. In addition to tracking new legislation, creating a group health plan with a local employee benefits consultant can help employers customize their benefits to changing industry standards and employee expectations.
Connect with an Experienced California Employee Benefits Provider
Keeping up with new and updated compliance legislation in California can be challenging for any employee benefits provider. At New City Insurance, our team helps employers and HR leaders customize their benefits plans to establish that they stay compliant with California’s legal requirements while increasing their employees’ trust and engagement.
Contact our team today to learn more about custom group health plans in California and how your business can benefit from making compliance a priority.