No HR Department? Here's Where to Start

In California, your HR obligations begin the moment you hire your first employee — and they expand significantly at 5 employees, not 15 or 50 like federal law. The Fair Employment and Housing Act (FEHA), the California Family Rights Act (CFRA), SB 1343 harassment training requirements, and AB 5 worker classification rules all apply to small California employers. The businesses that get into trouble are not usually the ones acting in bad faith. They are the ones who did not know what they did not know.

Here is a practical roadmap to build a solid HR foundation before a problem forces your hand.

Not every employment law applies to every business. Size matters — a lot. And in California, the thresholds are lower than most business owners realize.

• Title VII, ADA, ADEA (discrimination protections): Apply to employers with 15 or more employees
• FMLA (Family and Medical Leave Act): Applies to employers with 50 or more employees
• FLSA (Fair Labor Standards Act — minimum wage, overtime): Applies to virtually all employers

• FEHA (Fair Employment and Housing Act — discrimination, harassment, accommodation): Applies to employers with 5 or more employees
• CFRA (California Family Rights Act — family and medical leave): Applies to employers with 5 or more employees — far broader than federal FMLA, which requires 50
• SB 1343 Sexual Harassment Training: Required for employers with 5 or more employees — 2 hours for supervisors, 1 hour for non-supervisory employees, every two years
• Cal/OSHA: Applies to all employers, regardless of size
• SB 553 Workplace Violence Prevention Plan: Required for most California employers as of July 1, 2024

Hiring someone without the right documentation is one of the most common — and costly — mistakes small business owners make.

• Form I-9 (Employment Eligibility Verification) — must be completed within 3 days of hire
• Form W-4 (Federal Tax Withholding)

• DE 4 (California Employee's Withholding Allowance Certificate)
• Notice to Employee (Labor Code Section 2810.5) — required at hire and whenever the terms of employment change; must include pay rate, pay day, employer name and address, and workers' compensation carrier information
• Paid Sick Leave notice
• Workers' Compensation carrier information
• CRD Sexual Harassment pamphlet (formerly DFEH)

Missing these documents does not just create administrative headaches — it can result in fines and make it harder to defend yourself if an employee dispute arises later.

If you have employees and no handbook, you are operating without a rulebook — and that ambiguity almost always works against you.

An employee handbook does not need to be 100 pages. It needs to clearly cover:

• At-will employment statement (critical in California)
• Anti-harassment and anti-discrimination policy (required under FEHA)
• Paid time off, sick leave, and holiday policy
• Code of conduct and disciplinary process
• Meal and rest break policy (especially important in California — violations trigger PAGA claims)
• Leave of absence policies — CFRA, Pregnancy Disability Leave (PDL), Paid Family Leave (PFL), bereavement leave under AB 1949

California employers must address several policies not required in other states:

• Mandatory Paid Sick Leave — at least 40 hours or 5 days per year under SB 616 (effective January 1, 2024)
• Pregnancy Disability Leave (PDL) — up to 4 months for employers with 5 or more employees
• Lactation Accommodation policy — required under Labor Code Section 1030
• Workplace Violence Prevention Plan — required for most California employers under SB 553 (effective July 1, 2024)
• Bereavement Leave — up to 5 days for employers with 5 or more employees under AB 1949

Misclassifying employees as independent contractors is one of the most expensive HR mistakes a California business owner can make.

California applies one of the strictest worker classification standards in the country. Under AB 5, a worker is presumed to be an employee unless the hiring business can prove all three of the following:

A. The worker is free from the control and direction of the hiring entity in connection with the performance of the work
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

Misclassification in California can result in back wages, unpaid benefits, tax penalties, and PAGA claims filed on behalf of all misclassified workers. If you are using contractors regularly, have an HR professional or employment attorney review those relationships against the AB 5 ABC test. Certain industries and occupations have specific exemptions — but the default presumption is employment.

Even with the best intentions, workplace issues happen. What separates businesses that handle them well from those that end up in litigation is having a clear, documented process before a complaint is filed.

Under FEHA, California employers have an affirmative obligation to investigate harassment complaints. "We looked into it informally" is not a compliant response.

At minimum, you need:

1. A designated person employees can report concerns to — and an alternative if that person is the subject of the complaint
2. A written policy explaining how complaints are handled and that retaliation is prohibited
3. A basic investigation protocol — who investigates, how findings are documented, and how outcomes are communicated

You do not need an HR department to do this. But you do need it in writing, and you need to follow it consistently.

California's SB 1343 requires employers with 5 or more employees to provide:

• 2 hours of sexual harassment prevention training for all supervisory employees every two years
• 1 hour of training for all non-supervisory employees every two years
• Training for new supervisors within 6 months of hire or promotion

This is not optional, and it is not satisfied by a generic online module that employees click through. The training must meet specific content requirements established by the CRD.

All Employers

• I-9 completed for every employee within 3 days of hire
• W-4 on file for every employee
• Workers' compensation insurance in place
• Written anti-harassment policy in place
• Employees classified correctly under AB 5

California Employers (Add These)

• DE 4 on file for every employee
• Notice to Employee (LC Section 2810.5) provided at hire and when terms change
• Paid Sick Leave policy meets SB 616 minimums (40 hours/5 days)
• Sexual harassment training completed per SB 1343
• Workplace Violence Prevention Plan in place per SB 553
• Handbook reviewed for California-specific requirements and updated annually

HR compliance in California is genuinely complex — and the stakes for getting it wrong are high. At Solis Consulting Management, I work with business owners who are exactly where you are: growing, busy, and aware that HR matters but unsure where to start.

Ready to get your HR house in order? Book a free 30-minute discovery call and let's talk about where you are and what you actually need.

You can also download the free California HR Compliance Checklist to see exactly where your gaps are right now.

Marlene Solis is the founder of Solis Consulting Management, an HR consulting firm serving small and mid-size businesses in California and nationwide. With 15+ years of Fortune 100 HR experience, she helps business owners build compliant, people-first workplaces.

This article is for general educational purposes only and does not constitute legal advice. California employers should consult the California Department of Industrial Relations (DIR), the California Civil Rights Department (CRD), and qualified employment counsel for guidance specific to their organization.