Most employees work under an “at-will” employment relationship and do not require written employment contracts. However, written agreements are often advisable to address compensation, confidentiality, intellectual property ownership, restrictive covenants (where legally permitted), dispute resolution, and other employment terms. Certain arrangements, such as commission compensation plans, must be memorialized in writing under California law.  

States generally presume employment is “at will,” meaning either the employer or employee may terminate the employment relationship at any time, with or without cause or advance notice, unless a contract provides otherwise. Employers may not terminate employees for unlawful reasons, including discrimination, retaliation, whistleblowing, protected leave, or other protected activities. 

Terminating an employee can create legal exposure if not handled properly. Key risks include discrimination claims, retaliation claims, wrongful termination allegations, and failure to follow internal disciplinary procedures. Proper documentation and consistent policy enforcement are essential risk-management tools. Employers should also ensure compliance with a state’s final paycheck requirements, which often require immediate payment of earned wages upon termination. 

Overtime pay is state specific. For example, in California, non-exempt employees are generally entitled to overtime pay at: 

• 1.5 times their regular rate of pay for hours worked over 8 in a workday or 40 in a workweek;  

• 1.5 times their regular rate for the first 8 hours worked on the seventh consecutive day in a workweek; and  

• Double time for hours worked over 12 in a workday and for hours worked over 8 on the seventh consecutive day in a workweek.  

Employee misclassification is a common source of liability. 

Employees are subject to employer control over how work is performed, while independent contractors operate with greater autonomy. In California, the “ABC test” is used to determine classification, and misclassification can result in penalties, back wages, and tax liability.  

Employers must comply with federal, state, and sometimes local laws, including anti-discrimination laws, wage and hour regulations, workplace safety requirements, employment eligibility verification (Form I-9), and mandatory workplace postings. California employers must also comply with pay scale disclosure requirements, anti-harassment training obligations, and California’s Fair Chance Act when applicable. 

Many jurisdictions restrict these inquiries. Salary history questions are prohibited in several states, and criminal background checks are regulated under “fair chance” laws requiring individualized assessment based on job relevance. For example, California employers generally may not ask applicants about their salary history. 

In many states, yes. For example, California requires unpaid meal breaks for shifts over five hours and paid rest breaks based on hours worked. Employers who fail to provide required breaks may owe premium pay penalties. 

An employee handbook should outline key workplace policies including at-will employment, anti-discrimination and harassment policies, wage and hour rules, leave policies, technology use, confidentiality expectations, and disciplinary procedures. A well-drafted handbook helps ensure consistency and reduce legal risk. 

Employers may be subject to federal and state leave laws such as the Family and Medical Leave Act (FMLA), state paid sick leave laws, pregnancy disability leave, and military leave protections. Eligibility depends on employer size and employee qualifications. California employers are potentially subject to a large number of leave laws including:  

• The Family and Medical Leave Act (FMLA);  

• The California Family Rights Act (CFRA);  

• Paid Sick Leave requirements;  

• Pregnancy Disability Leave (PDL);  

• Reproductive Loss Leave;  

• Jury duty and witness leave;  

• Military leave protections; and  

• Various school and family-related leave rights. 

Employers operating in Los Angeles may be subject to local requirements in addition to California and federal law. Depending on the location and employer size, these may include local minimum wage ordinances, paid sick leave requirements, fair chance hiring rules, hotel worker protections, predictive scheduling requirements for certain industries, and other local employment regulations. Employers should review both county and city requirements to ensure compliance.