CA Remote Employee Hub
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Start Here: Quick-Start Triage

Answer three quick questions to find exactly what you need for California remote employee compliance. This 60-second triage will route you to the right resources.

Find Your Compliance Stack

Fork 1
Where is your company based?
Fork 2
Where does the employee work?
Fork 3
What type of role?

What You Likely Need

Select options above to see your personalized compliance requirements.

Key Concepts for California Remote Employees

Card 1: Am I Hiring an Employee or Contractor?

California's ABC test presumes workers are employees. The burden is on you to prove otherwise.

The ABC Test (Labor Code Section 2750.3)

California codified the ABC test through AB 5. A worker is presumed to be an employee unless the hiring entity proves ALL THREE of the following:

ALL THREE Prongs Must Be Satisfied
A The worker is free from control and direction in performing the work, both under the contract and in fact.
B The worker performs work outside the usual course of the hiring entity's business.
C The worker is customarily engaged in an independently established trade, occupation, or business of the same nature.

SaaS-Specific Traps

  • "Contract developers" who work exclusively for you = likely employees
  • "Implementation consultants" who follow your processes = likely employees
  • "Fractional" executives working 20+ hours/week = classification risk
  • Anyone using your tools, following your methods, or working primarily for you fails Prong B or C
California Labor Code Section 2750.3
"For purposes of this code... a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that all of the following conditions are satisfied..."
Misclassification Penalties (Labor Code Section 226.8)
  • $5,000 - $25,000 per violation for willful misclassification
  • Back wages, benefits, and penalties owed
  • Class action and PAGA (Private Attorneys General Act) exposure
  • Personal liability for founders/executives

Card 2: Which State's Employment Laws Apply?

Work location determines compliance obligations, not company headquarters. California employees cannot waive CA protections.

Labor Code Section 925: Choice of Law/Forum Restrictions

California employers CANNOT require California-based employees to:

  • Adjudicate claims outside of California
  • Waive California substantive law protections
  • Agree to governing law from another state for employment matters
California Labor Code Section 925
"An employer shall not require an employee who primarily resides and works in California, as a condition of employment, to agree to a provision that would... require the employee to adjudicate outside of California a claim arising in California... [or] deprive the employee of the substantive protection of California law..."

Who Does Section 925 Apply To?

Employees who "primarily reside and work in California" are protected. This includes:

  • Full-time CA residents working remotely from home
  • Hybrid workers who spend the majority of time in CA
  • Anyone whose primary work location is California

Consequences of Non-Compliant Provisions

  • Employee can void non-compliant forum selection and choice-of-law provisions
  • Fee-shifting: Employer pays employee's attorney fees if litigation is required to void the clause
  • Key Case: Application Group, Inc. v. Hunter Group, Inc. (1998) - CA courts will apply CA law to protect CA employees even when contract specifies another state's law

Location Scenarios Matrix

Employee Location Law That Applies
CA resident working in CA Full CA compliance stack
Out-of-state resident (e.g., TX) Home state law (TX) + CA company obligations
Hybrid/travels into CA regularly CA rules for CA work time; track carefully

Card 3: First California Hire Checklist

Ten essential items to have in place before your first California remote employee starts.

Pre-Hire Readiness Checklist

  • CA-compliant offer letter with at-will disclaimer, no non-compete language
  • Wage Theft Prevention Notice (Labor Code Section 2810.5) - required at hire
  • Classification determination - Exempt vs. Non-exempt analysis documented
  • Expense reimbursement policy for remote work (internet, phone, equipment)
  • Paid sick leave policy - minimum 5 days/40 hours per year
  • Section 2870 notice in any IP/invention assignment agreement
  • Commission plan in writing if any variable compensation (Section 2751)
  • Workers' compensation insurance covering remote work in California
  • Pay scale disclosure - must provide to applicant upon request (Labor Code Section 432.3)
  • CA workplace posters (can be provided electronically to remote workers)

If Non-Exempt, Also Need:

  • Timekeeping system that captures daily hours (CA has daily overtime)
  • Meal and rest break policy with attestation system
  • Off-the-clock work policy and Slack/email expectations

View the complete compliance checklist with all 43+ items

Card 4: What Documents Do I Need?

Offer letter vs. employment agreement vs. handbook - when you need each and what must be included.

Document Decision Tree

1. Offer Letter (Minimum Required)

Every hire needs at least an offer letter containing:

  • Job title and start date
  • Compensation (salary/hourly rate)
  • Employment classification (exempt/non-exempt)
  • At-will employment statement
  • Benefits summary
  • Remote work status

2. Employment Agreement (Recommended For)

Add a full employment agreement when:

  • Employee has access to trade secrets or confidential information
  • Role involves IP creation (engineers, designers, product)
  • Commission or complex compensation structure
  • Executive or senior management position
  • Any role where you want arbitration

3. Separate Exhibits (When Needed)

Document When Required
IP/Invention Assignment Any role creating work product (must include Section 2870 notice)
Commission Plan Any commission-based compensation (Section 2751)
Arbitration Agreement If using mandatory arbitration (Armendariz-compliant)
Remote Work Policy All remote/hybrid employees
Expense Reimbursement Policy All remote employees (Section 2802)
BYOD/Device Policy If employee uses personal devices

4. Employee Handbook

Recommended once you have 5+ California employees. Should include:

  • All required policies (harassment, discrimination, leave)
  • Meal and rest break procedures
  • Timekeeping requirements
  • Remote work policies
  • Annual acknowledgment signature

Go to the Employment Agreements page for generators and templates