What issues should California businesses consider for planning and compliance in 2025? Additionally, how can a PEO assist these businesses with planning and compliance?
Detailed Issues for California Businesses in 2025
- Wage and Hour Compliance: The state minimum wage has increased to $16.50 per hour for all employers, with higher rates for specific industries like fast food and healthcare. Employers must ensure they are paying the correct wages and updating payroll systems accordingly. Additionally, exempt employees must be paid a minimum annual salary of $68,640.
- Posting Requirements: New posting requirements mandate that employers prominently display notices about whistleblower rights and workers’ compensation legal advice. These notices must be in 14-point or larger type and placed in visible locations.
- Non-Compete Agreements: California continues to enforce its ban on non-compete agreements, making it essential for businesses to review and update employment contracts to ensure compliance.
- Protected Time Off: Employers must adhere to special rules for protected time off, including paid sick leave and other leave entitlements. This includes ensuring that employees are aware of their rights and that the necessary documentation is in place.
- Social Compliance Audits: Employers who voluntarily subject their business to social compliance audits must post a link on their website if the audit involves child labor. This ensures transparency and compliance with labor standards.
- Independent Contractor Classification: Recent court rulings and new rules require businesses to properly classify independent contractors to avoid legal issues. Misclassification can lead to significant penalties and legal challenges.
How a PEO Can Help
A Professional Employer Organization (PEO) can assist businesses with planning and compliance in several ways:
- HR Management: PEOs handle onboarding, employee benefits, payroll processing, and tax filing, allowing businesses to focus on core operations.
- Legal Compliance: PEOs ensure adherence to the latest employment laws and regulations, reducing the risk of legal issues.
- Employee Training: PEOs provide training on new laws and best practices to keep the workforce informed and compliant.
- Risk Management: PEOs offer support in risk management and safety compliance to create a safer work environment.
- Cost Savings: PEOs leverage economies of scale to obtain competitive pricing on benefits and insurance, reducing overall costs.
- Proactive Updates: PEOs act as proactive partners, alerting businesses to changes in labor laws and implementing necessary updates before they become problematic.
- Streamlined HR Support: PEOs provide robust HR support, ensuring compliance at every stage of the employee lifecycle, from hiring to benefits administration.
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