Payroll and Benefits Guide United States – California
Last updated: Mar 03, 2026
Contribution
| Employer Payroll Contributions | |
| 1.5% – 6.2% | State Unemployment Insurance (SUI), applied on the first 7,000 USD of each employee’s wages.The rate depends on the employer’s experience rating, which is influenced by their history of layoffs and unemployment claims. |
| 3.4% | State Unemployment Insurance – New Employer, applied on the first 7,000 USD of each employee’s wages. |
| 6.20% | Federal Insurance Contributions Act (FICA) - Social Security, applied on salary up to 176,100 USD per year. |
| 1.45% | Federal Insurance Contributions Act (FICA) – Medicare.
An additional 0.9% should be withheld from employees earning above 200,000 USD per year. |
| 0.60% – 6.00% | Federal Unemployment Tax Act (FUTA), applied on salary up to 7,000 USD per year.Employers who pay their state unemployment tax in full and on time are eligible for a 5.4% tax credit, reducing the FUTA rate to 0.6%. |
| 13.15% – 23.25% | Total Employment Cost |
| Employee Payroll Contributions | |
| 1.20% | State Disability Insurance (CA SDI) |
| 6.20% | Federal Insurance Contributions Act (FICA) - Social Security, applied on salary up to 176,100 USD per year. |
| 1.45% | Federal Insurance Contributions Act (FICA) – Medicare.An additional 0.9% should be withheld from employees earning above 200,000 USD per year. |
| 5.00% | CalSavers (where the worker is not already in a retirement plan), applied on income up to 7,000 USD annually.
The rate increases by 1% annually up to a maximum of 8% unless the employee chooses otherwise. |
| 13.85% – 17.75% | Total Employee Cost |
| State Employee Income Tax | |
| 6.60% except 10.23 for bonuses and stock options | Supplemental Wage/Bonus Rate |
| State Tax – Single | |
| 1.00% | Up to 10,756 USD |
| 2.00% | 10,756 – 25,499 USD |
| 4.00% | 25,499 – 40,245 USD |
| 6.00% | 40,245 – 55,866 USD |
| 8.00% | 55,866 – 70,606 USD |
| 9.30% | 70,606 – 360,659 USD |
| 10.30% | 360,659 – 432,787 USD |
| 11.30% | 432,787 – 721,314 USD |
| 12.30% | Above 721,314 USD |
| State Tax – Married – Joint Filing | |
| 1.00% | Up to 21,512 USD |
| 2.00% | 21,512 – 50,998 USD |
| 4.00% | 50,998 – 80,490 USD |
| 6.00% | 80,490 – 111,732 USD |
| 8.00% | 111,732 – 141,212 USD |
| 9.30% | 141,212– 721,318 USD |
| 10.30% | 721,318 – 865,574 USD |
| 11.30% | 865,574 – 1,442,628 USD |
| 12.30% | Above 1,442,628 USD |
| State Tax – Head of Household | |
| 1.00% | Up to 21,527 USD |
| 2.00% | 21,527 – 51,000 USD |
| 4.00% | 51,000 – 65,744 USD |
| 6.00% | 65,744 – 81,364 USD |
| 8.00% | 81,364 – 96,107 USD |
| 9.30% | 96,107– 490,493 USD |
| 10.30% | 490,493 – 588,593 USD |
| 11.30% | 588,593 – 980,987 USD |
| 12.30% | Above 980,987 USD |
| Standard Deduction and Personal Exemption | |
| Single | 5,540 USD |
| Married – Joint Filing, Surviving Spouse and Head of Household | 11,080 USD |
| Federal Employee Income Tax | Annual |
| Federal Tax – Singles | |
| 10.00% | Up to 11,925 USD |
| 12.00% | 11,925 – 48,475 USD |
| 22.00% | 448,475 – 103,350 USD |
| 24.00% | 103,350 – 197,300 USD |
| 32.00% | 197,300 – 250,525 USD |
| 35.00% | 250,525 – 626,350 USD |
| 37.00% | Above 626,350 USD |
| Federal Tax – Married – Joint Filing | |
| 0.00% | Up to 23,850 USD |
| 12.00% | 23,850 – 96,950 USD |
| 22.00% | 96,950 – 206,700 USD |
| 24.00% | 206,700 – 394,600 USD |
| 32.00% | 394,600 – 501,050 USD |
| 35.00% | 501,050 – 751,600 USD |
| 37.00% | Above 751,600 USD |
| Federal Tax – Heads of Household | |
| 10.00% | Up to 17,000 USD |
| 12.00% | 17,000 – 64,850 USD |
| 22.00% | 64,850 – 103,350 USD |
| 24.00% | 103,350 – 197,300 USD |
| 32.00% | 197,300 – 250,500 USD |
| 35.00% | 250,500 – 626,350 USD |
| 37.00% | Above 626,350 USD |
| Standard Deduction and Personal Exemption | |
| 15,000 USD | Single |
| 30,000 USD | Married Filing Jointly |
| 22,500 USD | Head of Household |
Minimum Wage
General
The minimum wage in California is 16.5o USD per hour.
The Federal minimum wage rate is 7.25 USD per hour.
Payroll
Payroll Cycle
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.
13th Salary
There are no provisions in the law regarding 13th salaries.
Working Hours
General
In California, the workweek is a maximum of 40 hours per week or 8 hours per day.
Overtime
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.
Leave
Annual Leave (vacation)
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.
Public Holidays
Public holidays are not mandatory paid days off, but employers commonly allow workers to take federal holidays as paid days off.
Some companies might also agree to allow workers to take off state holidays; workers can find specific state holiday dates from their local government.
Usually when an agreed public holiday falls on a weekend, a day off in lieu is given on the Friday before or the Monday after the holiday.
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day | Standard holiday |
| 19 January 2026 | Monday | Martin Luther King, Jr. Day | Standard holiday |
| 16 February 2026 | Monday | Presidents’ Day (Washington’s Birthday) | Standard holiday |
| 31 March 2026 | Tuesday | César Chávez Day | Standard holiday |
| 25 May 2026 | Monday | Memorial Day | Standard holiday |
| 19 June 2026 | Friday | Juneteenth National Independence Day | Standard holiday |
| 3 July 2026 | Friday | Independence Day Observed | |
| 7 September 2026 | Monday | Labor Day | Standard holiday |
| 11 November 2026 | Wednesday | Veterans Day | Standard holiday |
| 26 November 2026 | Thursday | Thanksgiving Day | Standard holiday |
| 27 November 2026 | Friday | Day After Thanksgiving | Standard holiday |
| 25 December 2026 | Friday | Christmas Day | Standard holiday |
Sick Days
As of January 1, 2024, Californian law requires employers to provide and allow employees to use at least 40 hours or five days of paid sick leave per year.
Additionally, 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.”
Or
- 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
Maternity leave falls under the FMLA, California Family Rights Act, Paid Family Leave Act (see Sick Leave).
Paternity Leave
Paternity leave falls under the FMLA, California Family Rights Act, and the New Parent Leave Act (see Sick Leave).
Parental Leave
Parental leave falls under the FMLA and California Family Rights Act (see Sick Leave).
Other 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.
PAID MATERNITY LEAVE (DAYS)
Termination
Termination Process
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.
| Salary payment interval / date | Final payment on termination | Bank account/payment-method requirement |
|---|---|---|
| Most employees must be paid at least twice each calendar month, on paydays designated in advance. Wages earned between the 1st and 15th of a month must be paid by the 26th of that month; wages earned between the 16th and end of the month must be paid by the 10th of the following month. | If an employee is terminated/discharged, the employer must pay all wages earned up to the separation at the time of termination. If the employee resigns and gives at least 72 hours’ notice, final wages are due at the time of quitting; if the employee quits without giving 72 hours’ notice, the employer must pay all wages due within 72 hours of quitting. | Wages must be paid in lawful money and employers may pay by cash, check, or, with the employee’s voluntary consent, by direct deposit into a bank or financial institution of the employee’s choosing. The law does not require that payment be only via bank account for all employees. |
Notice Period
In California, most employees are employed “at-will,” and either party can terminate the employment relationship without notice. Under California law, unless stipulated by a collective bargaining agreement, employer must pay employees all earned and accrued and unused vacation days.
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.
Severance Pay
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.
Probation Period
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.
Minimal Statutory Termination Costs
Some states require PTO balances to be paid out during termination, also any bonuses or commissions that were promised in the employment contract
Immigration
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/ 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.
- 0 – for people with extraordinary ability 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/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.
VAT
General
California has a State sales tax of 7.25%. Additionally, there are Local sales tax rates ranging from 0.10% to 1.00%.
Stay up to date on payroll & employment law changes
Version History
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
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Payroll and Benefits Guide
in United States – California
What’s covered in this guide:
- Employer/employee contributions
- Minimum wage
- Working hours
- Visa requirements
And more...
Public Holidays Calendar
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day | Standard holiday |
| 19 January 2026 | Monday | Martin Luther King, Jr. Day | Standard holiday |
| 16 February 2026 | Monday | Presidents’ Day (Washington’s Birthday) | Standard holiday |
| 31 March 2026 | Tuesday | César Chávez Day | Standard holiday |
| 25 May 2026 | Monday | Memorial Day | Standard holiday |
| 19 June 2026 | Friday | Juneteenth National Independence Day | Standard holiday |
| 3 July 2026 | Friday | Independence Day Observed | |
| 7 September 2026 | Monday | Labor Day | Standard holiday |
| 11 November 2026 | Wednesday | Veterans Day | Standard holiday |
| 26 November 2026 | Thursday | Thanksgiving Day | Standard holiday |
| 27 November 2026 | Friday | Day After Thanksgiving | Standard holiday |
| 25 December 2026 | Friday | Christmas Day | Standard holiday |
What are the rules for reducing employee hours and salary? What is the notification period?
Hi Frances,
Employers who would like to reduce the working hours of their employees can apply for the Unemployment Insurance (UI) Work Sharing Program. Once you have applied and received approval, the UI will step in and partially pay the employee’s salary. One of the stipulations is that the employee’s hours and pay are reduced anywhere between 10%-60%.
Work Sharing employees would need to wait one week from the date of the claim before the benefit begins to kick in.