Overview

Capital
Sacramento
Currency
United States Dollar (USD)
Date Format
mm/dd/yyyy

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Taxes

Employer
6.20% - Social Security Tax
1.45% - Medicare
1.5% to 6.2% - Unemployment
.1% on the first $7,000 - Employment Training Tax
Employee
6.20% - Social Security Tax
1.45% - Medicare
1.5%-6.2% - Unemployment
1% per year - State Disability Insurance

Minimum Wage

General

California minimum wage is set at $12.00 per hour and $13.00 per hour for companies with 26 or more employees.

Working Hours

General

A normal workday is 8 hours and a workweek is 40 hours.

Overtime

One and one-half times the employee’s regular pay should be given for work exceeding 8 daily hours and up to 12 hours. This is also paid for the first 7 hours worked on the 7th consecutive day.

VAT

General

7.25%

Mandatory Benefits

Pension Fund

Employer: has to contribute 12.56% of the employee's wages.
Employee: has to contribute 12.56% of his/her wages.

CalSavers is a retirement program that will be implemented in the near future depending on the size of the business.

  • 5 or more employees – June 30th, 2022
  • 50 or more employees – June 30th, 2021
  • 100 or more employees – June 30th, 2020

Contributions are deducted from the employees’ wages at a rate of 5%. Each year the contribution increases at 1% capping at 8%.

Social Security

The Federal insurance Contributions Act (FICA) tax rate for 2020 is a 6.2% contribution towards social security. Employers and employees both contribute this amount. The maximum Social security tax for employees and employers in 2020 is $8,537.40.

Health Insurance

The Federal insurance Contributions Act (FICA) tax rate for 2020 is a 1.45% contribution towards Medicare. Employers and employees both contribute this amount. The wage base for 2020 is set at $137,700, and wages in excess of $200,00 will be subject to an extra .9% Medicare withholding tax.

Disability/Life Insurance

State Disability Insurance (SDI) is a deduction taken from the employee’s wages and goes towards providing benefits for non-work-related illness, injury, pregnancy, and paid family leave. The contribution rate is 1% per year, with the maximum employee contribution set at $1,229.09.

Unemployment Insurance

Unemployment insurance (UI) is tax contribution made by the employer that provides payments to unemployed persons. The current contribution is between 1.5% to 6.2% with the taxable wage base set at $7,000 per employee. The tax rate or a new employer is 3.4%.

Employment Insurance

Employment Training Tax (ETT) is a fund intended to promote a healthy labor market by training employees in targeted industries. The ETT is an employer contribution of .1% on the first $7,000 in wages paid to each employee in the calendar year. The maximum contribution is $7 per employee, per year.

Payroll

Payroll Frequency

Employees should be paid at least twice per month.

Payroll Cycle

Work done between the 1st and the 15th must be paid by the 26th of the month, and work done between the 16th and the last day of the month must be paid by the 10th of the following month.

Termination

Termination Process

California is an At-Will State, meaning termination procedures are only required if they are in the employee’s collective bargaining agreement.

Advance Notice

No notice period is required.

Severance Pay

Employers are not required to provide severance pay to their employees.