Payroll and Benefits Guide United States – California
Last updated: Mar 22, 2023
Employer Payroll Contributions
|1.50% – 6.20% (Maximum taxable wages is 7,000.00 USD)||Unemployment Insurance (State)|
|3.40%||Unemployment- New Employer (State)|
|6.20% (Maximum taxable wages is 160,200 USD)||FICA Social Security (Federal)|
|1.45%||FICA Medicare (Federal)|
|0.60%-6.00% (Maximum taxable wages is 7,000 USD)||FUTA (Federal Unemployment Tax Act). The FUTA tax rate is 6.0% with a taxable wage base of 7,000 USD. However, if states operate their unemployment insurance programs in compliance with federal law then the FUTA tax is reduced (credit) by 5.4% to 0.6%.|
|13.15% – 23.25%||Total Employment Cost|
Employee Payroll Contributions
|1.20% (Maximum taxable wages is 128,298.00 USD)||State Disability Insurance|
|6.20% (Maximum taxable wages is 160,200 USD)||FICA Social Security (Federal)|
|1.45% (Maximum taxable wages is 160,200 USD)||FICA Medicare (Federal)|
|0.90%||Additional tax on earnings over 200,000 USD (High-income earners also pay an additional 0.9 percent in Medicare taxes)|
|5.00% (With an annual increase of 1.00% and maximum percentage of 8.00%)||CalSavers (If not already in retirement plan)|
|13.85% – 17.75%||Total Employee Cost|
Employee Income Tax
|6.60% except 10.23 for bonuses and stock options||Supplemental Wage/Bonus Rate|
|State Tax – Single|
|1.00%||Up to 8,544.00 USD|
|2.00%||8,544.01 USD – 20,255.00 USD|
|4.00%||20,255.01 USD – 31,969.00 USD|
|6.00%||31,969.01 USD – 44,377.00 USD|
|8.00%||44,377.01 USD – 56,085.00 USD|
|9.30%||56,085.01 USD – 286,492.00 USD|
|10.30%||286,492.01 USD – 343,788.00 USD|
|11.30%||342,788.01 USD – 572,980.00 USD|
|12.30%||572,980.01 USD – and over|
|Married taxpayers filing jointly|
|1.00%||Up to 20,198.00 USD|
|2.00%||20,198.00 USD – 47,884.00 USD|
|4.00%||47,884.01 USD – 75,576.00 USD|
|6.00%||75,576.01 USD – 104,910.00 USD|
|8.00%||104,910.01 USD – 132,590.00 USD|
|9.30%||132,590.01 USD – 677,278.00 USD|
|10.30%||677,278.01 USD – 812,278.00 USD|
|11.30%||812,278.01 USD – 1,354,550.00 USD|
|12.30%||1,354,550.01 USD and over|
|Standard Deduction and Personal Exemption|
|Single or Married filing separately||5,202.00 USD|
|Couple /Married Filing Jointly||10,404.00 USD|
|Federal Employee Income Tax|
|Federal Tax – Singles|
|10.00%||Up to 11,000 USD|
|12.00%||11,001 USD to 44,725 USD|
|22.00%||44,726 USD to 95,375 USD|
|24.00%||95,376 USD to 182,100 USD|
|32.00%||182,101 USD to 231.250 USD|
|35.00%||231,251 USD to 578,125 USD|
|37.00%||578,126 USD or more|
|Federal Tax – Married, filing jointly|
|10.00%||Up to 22,000 USD|
|12.00%||22,001 USD to 89,450 USD|
|22.00%||89,451 USD to 190,750 USD|
|24.00%||190,751 USD to 364,200 USD|
|32.00%||364,201 USD to 462,500 USD|
|35.00%||462,501 USD to 693,750 USD|
|37.00%||693,751 USD or more|
|Federal Tax – Heads of Households|
|10.00%||Up to 15,700 USD|
|12.00%||15,701 USD to 59,850 USD|
|22.00%||59,851 USD to 95,350 USD|
|24.00%||95,351 USD to 182,100 USD|
|32.00%||182,101 USD to 231,250 USD|
|35.00%||231,251 USD to 578,100 USD|
|37.00%||578,101 USD or more|
|Standard Deduction and Personal Exemption|
|27,700.00 USD||Married Filing Jointly|
|20,800.00 USD||Head of Household|
The minimum wage in California is determined by the municipalities, the below rates are effective July 1, 2023:
City of Los Angeles
City of Los Angeles (Unincorporated areas only)
In general, employees are paid semi-monthly, with requirements for the payments to be made on the 26th of the month for work undertaken between 1st and 15th of the month and the 10th of the following month for work undertaken between 16th and end of the month.
There are no provisions in the law regarding 13th salaries.
In California, the workweek is a maximum of 40 hours per week or 8 hours per day.
California adheres to the Fair Labor Standards Act (FLSA), and work in excess of 40 hours per week is considered overtime and paid at the rate of 150% of the regular pay. If employees are scheduled to work on weekends or rest days, no additional payment is required.
However, should an employer request an employee to work in exceptional circumstances on these days, then overtime is paid at the rate of 150% of the regular pay.
Paid Time Off
California does not have any state laws that govern paid time off. However, it is common for employers to decide whether to offer paid or unpaid vacation leave. This must comply with employment law and must be stipulated in the collective bargaining agreements.
There are 12 public holidays in California. Public holidays are not mandatory as paid days off, however, it is very common to allow workers to take federal holidays as paid days off.
It is common for an employer to follow the Family and Medical Leave Act (FMLA) which provides certain employees with up to 12 weeks of unpaid, job-protected leave per year for certain family and medical reasons (maternity leave, serious illnesses, or if the employee needs to care for a spouse or child).
Employees are eligible for FMLA if they have worked for their employer for at least one year, completed a minimum of 1,250 hours over the past year, and worked at a location where the company employs 50 or more employees within 75 miles.
FMLA eligible employees are entitled to:
- 12 working weeks of leave in any one year for a child’s birth and to care for the newborn child within one year of birth.
- Leave for the adoption or foster care of a child and care for the newly placed child within one year of placement.
- Care for the employee’s spouse, child, or parent who has a severe health condition.
- Leave in the event of a serious health condition that makes the employee unable to perform the essential functions of their job.
- Any qualifying exigency arising out of the fact that the employee’s spouse, son, daughter, or parent is a covered military member on “covered active duty.”
- 26 working weeks of leave during a single one-year period to care for a covered service member with a serious injury or illness if the eligible employee is the service member’s spouse, son, daughter, parent, or next of kin (military caregiver leave).
In addition to the FMLA, California state law grants employees 3 sick days per year, accrued at 1 hour for every 30 hours worked. Employees can carry these three days over to the following year, but this can only happen once, and the maximum sick leave is 6 days.
The California Family Rights Act (CFRA) provides enhanced rights to the FMLA. These laws provide women with unpaid and paid, job-protected time off from work for pregnancy and time after pregnancy, birth, adoption, and foster care.
- For employers with 5 or more employees, the Pregnancy Disability Leave entitles employees who have disabilities related to pregnancy or the child’s birth up to four months of unpaid maternity leave.
- For employers with 20 or more employees, the Family Leave law entitles employees with up to 12 weeks of family leave (applicable to women and men to bond with their children)
- For employees eligible for California’s State Disability Insurance (SDI), employees with short-term disability are entitled to partial pay during their leave due to a temporary disability caused by pregnancy or childbirth (up to 6 weeks leave).
The Paid Family Leave Act entitles eligible employees to receive partial pay while taking time off work to bond with a newborn baby, newly adopted child, or foster child within the first 12 months of the child’s birth. During maternity leave, employees can use any accrued time, including vacation or sick leave.
In California, there are three laws regarding Paternity Leave:
Family and Medical Leave Act (FMLA), California Family Rights Act (CFRA), and The New Parent Leave Act (applies to employers with 20 – 49 employees) all three entitle new fathers to 12 weeks of unpaid leave.
Maternity leave falls under the FMLA, California Family Rights Act, Paid Family Leave Act (see Sick Leave).
PAID MATERNITY LEAVE (DAYS)
Paternity leave falls under the FMLA, California Family Rights Act, and the New Parent Leave Act (see Sick Leave).
Parental leave falls under the FMLA and California Family Rights Act (see Sick Leave).
- Jury Duty: Full-time employees are entitled to job-protected, unpaid leave for jury duty, as a witness in a case, responding to a subpoena, or acting as a plaintiff or defendant in the courts. Employees must provide a copy of the jury summons to the employer as evidence of requirement.
- Voting Leave: Employees who are registered to vote receive 2 hours off from work to vote in any municipal, county, state, or federal primary or general election. Employees must provide reasonable notice to their employers to take time off to vote. Unpaid or paid leave is dependent on contract terms.
- In addition to the federal law USERRA, California law provides protection against discrimination for members of U.S. armed forces, reserves, National Guard, commissioned corps of the public health service, and any other category of persons designated by the president in a time of war or emergency. In California, employers with 25 or more employees must provide up to 10 days of unpaid leave to eligible spouses of military service members when their spouses are on leave from deployment.
Except in mass dismissals or as provided for in an employment contract or a collective bargaining agreement, U.S. law does not impose a formal notice period to terminate an individual employment relationship, and employment is stipulated “at will.”
This means that either the employer or the employee may end the employment relationship without giving either notice or reason, provided it is not illegal, notable discrimination on the grounds of a category protected by law, etc., and as per the Federal Worker Adjustment and Retraining Notification Act (WARN).
The employment contracts of executives and other highly skilled individuals often incorporate a “just cause termination” clause which mandates that the employer may only terminate the employee for “cause” and lists the permissible grounds. In such cases, the parties negotiate the foundations for a “just cause” termination.
In California, most employees are employed “at-will,” and either party can terminate the employment relationship without notice. In California, payout of unused vacation time is not required by law. However, employers will generally pay an employee for unused vacation days, provided the employee gives some advanced notice of resignation. While there is no official notice period, general practice is 2 weeks.
In mass dismissal cases the Worker Adjustment and Retraining Notification Act (WARN Act) must be followed, and employers must give 60 days’ notice to impacted employees.
Except as otherwise provided in an employment contract or collective bargaining agreement, employers are not required to pay severance. Many employers choose to offer severance pay based on the employee’s length of employment.
There are no provisions in the law regarding probation or trial periods. However, it is common practice for employers to set a performance evaluation after an initially stated period of employment of 90 days.
Foreign nationals without permanent resident status or a work visa are not permitted to work in the United States. An employer seeking to hire a foreign national may file a petition with the United States Department of Homeland Security or the United States Citizenship and Immigration Services (USCIS) for an employment visa on behalf of the prospective employee.
If the petition is approved, the prospective employee must obtain a visa stamp from a United States embassy or consulate (Canadian citizens are exempt from this requirement). To get a temporary U.S. work visa, an employer must file a petition with U.S. Citizenship and Immigration Services (USCIS). An approved petition must be part of the visa request.
The types of visas include:
- H-1B: For applicants with a college degree hired to do specialized work. The visa is valid for three years and can be extended for an additional three years. The visa is connected to the employer that filed the petition. If there is a change of employer, the new employer must repeat the process. There are 65,000 H-1B visas available each year.
- H-1B1: For applicants with a college degree from Chile and Singapore. The US government grants up to 1,400 visas to Chilean citizens and 5,400 from Singapore each year.
- H-2A: For temporary or seasonal agriculture work. It is limited to citizens of qualified countries. Usually valid for up to 1 year and can be extended to a maximum of 3 years.
- H-2B: For temporary non-agricultural work. These visas are limited to citizens of qualified countries. Usually valid for up to 1 year and can be extended to a maximum of 3 years.
- L: For intercompany transfers (people transferred from a foreign company to a US branch of the company). The applicant must have been employed at the company for a year before the transfer and work in a managerial level position or higher with specialized knowledge.
- O: For people with extraordinary abilities in science, arts, education, business, or athletics.
The standard procedure is to obtain a short-term work visa and then apply for an immigrant visa after the employee has started working in the United States.
For those seeking employment-based immigrant visas:
- E-1: Highest priority employment for those with extraordinary ability in science, arts, education, business, and athletics
- E-2: For those with advanced degrees or exceptional ability
- E-3: For skilled workers and professionals, as well as unskilled workers
- E-4: Members of certain immigrant groups
- E-5: Immigrant investors in US companies (substantial investment)
Alternatively, an employer may sponsor a potential employee’s application for permanent resident status, referred to as a “green card” if the employee can establish that the potential employee is a multinational executive or manager transferee, has unique skills, or has been offered a job in the United States.
The employer must have been unable to recruit a U.S. worker who meets the position’s minimum requirements.
All employers are obligated to verify that all individuals they employ are authorized to work in the United States.
California has a minimum combined sales tax rate of 7.25% (state tax is 6.00% and local tax is between 1.25% – 4.75%).
Stay up to date on payroll & employment law changes
Payroll contributions and personal income tax rates have been updated.
Family leave: The California Family Rights Act (CFRA) extends family and medical leave to employees of employers with only five or more employees. It also extends the family members for whom an employee can take leave to care for to include grandparents, grandchildren, and siblings, and extends the “qualifying exigency” to include military duty by an employee’s spouse, domestic partner, child, or parent. The CFRA also extends "baby bonding" leave taken by both parents working at the same company. Under FMLA, the parents share a total of 12 weeks. Under CFRA, they receive 12 weeks each.
Questions & Answers
Payroll and Benefits Guide
in United States – California
What’s covered in this guide:
- Employer/employee contributions
- Minimum wage
- Working hours
- Visa requirements
Public Holidays Calendar
|Sunday||Jan-1||New Year's Day|
|Monday||Jan-16||Martin Luther King Jr. Day|
|Monday||Jun-19||Juneteenth Independence Day|
|Tuesday||Jul-4||Independence Day July|