Small Employers and California Employment Law: Which Protections Apply to You
Many employees assume that because their employer is small, employment law does not apply to them. Many small employers encourage that assumption. In California, most workplace protections kick in at five employees — and some apply from the very first hire.
The size of the employer matters in California employment law — but it matters less than most people think, and it matters differently depending on the specific protection at issue. An employee at a ten-person company has nearly the same statutory protections as an employee at a ten-thousand-person company. An employee at a three-person company has fewer, but not none.
What follows is a guide to the employer-size thresholds that govern the major California employment protections. The takeaway is straightforward: if your employer has five or more employees, nearly every major protection applies.
One or more employees
Certain protections apply to every employer in California, regardless of size.
Harassment. FEHA’s prohibition on workplace harassment applies to employers with one or more employees. Government Code section 12940, subdivision (j)(4)(A). There is no size threshold for harassment claims. An employee of a two-person company who is harassed by the owner on the basis of a protected characteristic has the same claim as an employee of a Fortune 500 company.
Wage and hour protections. The Labor Code’s minimum wage, overtime, meal and rest break, and wage payment requirements apply to every employer, regardless of size. There is no exemption for small employers. An employer with one employee must pay minimum wage, must pay overtime for hours beyond eight in a day, must provide meal and rest breaks, and must pay wages on time.
Workers’ compensation. Every employer in California must carry workers’ compensation insurance, with very limited exceptions. An injured employee is entitled to workers’ compensation benefits regardless of the employer’s size.
Whistleblower protections. Labor Code section 1102.5 applies to all employers. An employee of any size employer who reports illegal activity is protected against retaliation.
Retaliation for exercising Labor Code rights. The Labor Code’s anti-retaliation provisions — protecting employees who file wage claims, report safety violations, discuss wages, take jury duty, and exercise other statutory rights — apply to all employers.
Five or more employees
Five employees is the threshold at which California’s broadest employment protections take effect.
FEHA discrimination and retaliation. The Fair Employment and Housing Act’s prohibitions on employment discrimination and retaliation apply to employers with five or more employees. Government Code section 12926, subdivision (d). This includes discrimination on the basis of race, sex, age, disability, sexual orientation, gender identity, religion, national origin, pregnancy, marital status, military status, and every other FEHA-protected characteristic.
FEHA reasonable accommodation. The duty to provide reasonable accommodations for disability and the duty to engage in the interactive process apply at the five-employee threshold.
CFRA leave. The California Family Rights Act — providing up to twelve weeks of job-protected leave for the employee’s own serious health condition, to care for a family member, or to bond with a new child — applies to employers with five or more employees. This is dramatically broader than the federal FMLA, which requires fifty employees.
Pregnancy disability leave. PDL applies to employers with five or more employees, with no minimum tenure requirement for the employee.
Bereavement leave. The bereavement leave statute applies to employers with five or more employees.
Reproductive loss leave. The reproductive loss leave statute applies to employers with five or more employees.
Harassment prevention training. Employers with five or more employees must provide sexual harassment prevention training to all employees every two years.
At the five-employee threshold, the California workplace is comprehensively regulated. An employee of a small business with a handful of coworkers has access to nearly the full scope of anti-discrimination, anti-retaliation, leave, and accommodation protections.
Twenty or more employees
Federal COBRA. The federal health insurance continuation statute applies to employers with twenty or more employees. Employees of smaller employers may be eligible for Cal-COBRA, which extends continuation coverage to employees of employers with two to nineteen employees.
Fifty or more employees
Federal FMLA. The Family and Medical Leave Act applies to employers with fifty or more employees within seventy-five miles. Because CFRA’s threshold is only five employees, this distinction matters primarily for employees who want to invoke federal protections in addition to state protections, or for the narrow circumstances in which FMLA provides something CFRA does not.
Seventy-five or more employees
California WARN Act. California’s Worker Adjustment and Retraining Notification Act — requiring sixty days’ advance notice of mass layoffs and plant closings — applies to employers with seventy-five or more employees.
One hundred or more employees
Federal WARN Act. The federal WARN Act applies to employers with one hundred or more full-time employees.
Pay data reporting. Employers with one hundred or more employees must submit annual pay data reports to the CRD, broken down by job category, sex, race, and ethnicity.
How to count employees
The employee count includes all employees — full-time, part-time, and temporary — who are on the employer’s payroll. For most statutes, the count is based on the employer’s total number of employees, not the number at a single location. Related entities that are sufficiently integrated — common ownership, shared management, interrelated operations — may be treated as a single employer for threshold purposes.
An employer that maintains that it has “only four employees” when it actually has five — or when it has structured its workforce to avoid crossing the threshold — may be subject to scrutiny. The law looks at the substance of the employment relationship, not the employer’s characterization of it.
What this means
The practical consequence of California’s threshold structure is that very few employees in the state are beyond the reach of employment law. An employee at a company with five or more workers — which includes the vast majority of California employers — has access to comprehensive anti-discrimination, anti-harassment, anti-retaliation, leave, accommodation, and wage protections.
An employee at a smaller company — two, three, four employees — still has access to harassment protections, all wage and hour protections, whistleblower protections, and workers’ compensation. The protections are narrower, but they are not absent.
The belief that “the law doesn’t apply because my employer is small” is, in most cases, incorrect. And an employee who operates under that assumption may forgo a claim they are entitled to bring.
If you work for a small employer and are unsure whether California’s employment protections apply to your situation, the answer depends on the specific protection and the employer’s size — but in most cases, the protections kick in at five employees, and several apply from the very first hire. The size of the company does not determine the size of your rights.
This article is general information about California law and is not legal advice. Every situation turns on its particular facts.