I’m thinking of starting a business in CA. A person has told me through another friend that CA is a terrible place to start a business due to their labor laws.
I’ve goggled but failed to find a good reason to be told this.
Does anyone know which labor laws I should be looking into?
The minimum wage here is higher than the Federal minimum wage.
I have heard stories that the Disability Insurance here is a massive paperwork nightmare even if there are no claims and is super expensive.
You have to pay a minimum of something like $800 per year for a business license just to be incorporated. Most states are like $30.
Business licensing and incorporation are two entirely different and unrelated things. It costs between $30 and $100 to incorporate in California, depending on what type of corporate structure you want and the purpose of your corporation. Most states charge about $100, including Delaware, the haven of incorporation.
The cost of a business license varies by county or municipality, just like everywhere else.
Most California-specific labor laws won’t apply to you unless you have more than 50 employees. Those that will include:
- Higher workers’ compensation rates than most states, and requires coverage for any business with one employee or more;
- Higher minimum wages generally.
Objectively, California is an expensive place to do business. Whether or not that effects your planned business essentially depends on how important the place you do business is. If you’re opening a sandwich shop, all your competitors will be at the same disadvantage. If you’re making widgets, some of them probably won’t.
Thanks, hope other chime in later, this is helpful.
No details, but:
[ul]
[li](I think) California has their own version of FLSA overtime rules[/li][li]Separate Family Medical Leave protection - on top of the Federal version[/li][li]Accrued vacation rollover rules[/li][/ul]
The regulatory and litigation climate in CA is poor. There are a large number of CA boards that through administrative rule setting have the force of law. Everything from the air resources board that controls when you can light a fire in your fireplace, to how you can operate a leaf blower, all the way to to the ADA that is often used in CA as a means to blackmail business owners. Fees are high, lawsuits are common, and regulation is punitive. CA sucks for business, but has great weather!
This is true of every state.
True - though I suspect CA is a leader (or loser) in this regard. Recently there has been effort to eliminate those with overlap, but they are of course entrenched. Here’s some general info on that effort.
And a list of them, according to Wiki: List of California state agencies - Wikipedia
I’m just really glad we have both the California Department of Fair Employment and Housing and the California Fair Employment and Housing Commission. Not to mention the California Naturopathic Medicine Committee.
Of course each one of these regulatory bodies has their own management structure as well.
You don’t. The FEHC was abolished by Jerry Brown in January and its powers and duties subsumed by the DFE. 
Was just going to mention this. I work in California for a multinational corporation, and we are always being notified of exceptions regarding vacation rollover for us (i.e., for other employees, it’s “use it or lose it”, but we get to rollover any unused vacation). I’m not sure if there is a minimum number of employees for this rule to take effect.
One thing I know of is that California requires overtime pay for any hours worked over 8 per day. Federal law only requires OT for more than 40 per week but in CA you have to pay based on daily totals.
Speaking as an HR professional, there is a sense that CA has much more stringent and complex labor laws than most other states.
Yeah. I totally screwed that up. I was self employed and incorporated eight years ago and I have forgotten a lot.
The deal was that CA corporate taxes had an $800 minimum even if you didn’t earn enough to have to pay that. My lawyer told me that technically, you have to pay this even if you don’t earn anything and the corporation is idle for the year. I had to dis-incorporate after two years just to avoid any potential issues. As I recall, most states let you have some sort of hiatus if you aren’t using the corporation in a given year.