Out-of-State Employers With Remote Employees in California and the Hiring Checklist

Yes, for the employee who works in California. The general rule, which California courts apply and California agencies enforce, is that employment law follows the place the work is physically performed. Your headquarters, your payroll provider and the state named in the offer letter do not move it. A choice-of-law clause pointing to Texas does not waive California wage and hour protections for someone working every day from a home office in Sacramento.

The California Supreme Court drew the line from both directions. In Sullivan v. Oracle (2011) it applied California overtime law to nonresident employees for the full days they worked inside the state. In Ward v. United Airlines (2020) it tied the wage statement requirement to whether the employee principally works in California. A remote employee who lives and works in California is the easy case under both: every workday is a California workday.

The practical consequence is that you run two rulebooks. The rest of your team keeps your home state's rules, and the California hire gets California's, including where they are stricter than yours. That is manageable for one person, and it is exactly why the decision is worth making at posting time rather than after an offer is signed. The broader version of this question, for every state rather than one, is worked through in hiring remote employees in another state.

With the EDD, yes, almost immediately. The EDD requires registration within 15 days of paying more than $100 in wages in a calendar quarter, which one paycheck clears. That account is how you pay unemployment insurance and ETT and remit the SDI and income tax you withhold.

With the Franchise Tax Board, it depends on arithmetic most guides skip. California treats a business as "doing business" in the state if its California sales, property or payroll exceed a threshold amount or 25% of the total. For 2025 the payroll threshold is $75,707, indexed each year. A single remote employee earning more than that makes a corporation or LLC doing business in California, which means a California return and the $800 annual minimum tax.

The 25% half of the test is the one that catches small companies. If the California hire is the only payroll in the state, they cross 25% whenever their salary is more than one third of everything else you pay. We ran the numbers:

So for any company whose other payroll is under $227,121, the percentage test reaches the California hire before the dollar threshold does. A three-person startup in Austin adding a $55,000 remote support lead in Fresno is doing business in California on payroll alone. Whether you also need to register with the Secretary of State as a foreign entity is a separate question for your counsel; the tax filing duty does not wait for it.

$70,304 a year. Labor Code 515(a) requires an exempt executive, administrative or professional employee to earn a monthly salary of no less than two times the state minimum wage for full-time employment. The minimum wage is $16.90 an hour from 1 January 2026, and full-time is 2,080 hours, so the floor is $16.90 times 2 times 2,080.

That is 1.98 times the federal floor of $684 a week, or $35,568 a year. The trap for an out-of-state employer is copying a job level from home: a $60,000 remote operations coordinator who is correctly exempt in Georgia is non-exempt in California whatever the title and duties, which means tracking hours, daily overtime after 8 hours, double time after 12, meal and rest periods, and a compliant itemized wage statement.

The floor moves every January with the minimum wage, so a salary set right this year can fall under it next year without anyone touching it. Put a calendar reminder on the renewal, and if the role sits close to the line, set the pay scale above it before you post. What the rest of that pay package costs you in taxes and insurance is broken down in what it costs to hire a remote employee in California.

Yes, for the portion that is a necessary work expense. Labor Code 2802 requires an employer to "indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties." The Court of Appeal held in Cochran v. Schwan's Home Service (2014) that this includes a reasonable percentage of a personal cell phone bill when the employee is required to use it for work, even if the employee's plan is unlimited and the employee paid nothing extra.

For a fully-remote employee that reasoning reaches home internet as well, because the job cannot be done without it. There is no statutory dollar amount. Most employers settle it with a flat monthly reimbursement that is plainly large enough to cover the work share, paid through an accountable plan so it stays out of wages.

The mechanics matter because a flat taxable stipend and a reimbursement are not the same thing to payroll. The cost of each, and the states other than California that also mandate reimbursement, are on our work from home stipend page.

Here is the first-year arithmetic for a $95,000 exempt remote hire at a 12-person company with $900,000 of payroll elsewhere, the defaults in the checker above. These are the charges set by statute or by the state, before benefits or equipment.

Two of those lines exist only because the employee is in California. The FUTA credit reduction adds $84 over the standard $42, and the rate grows each year the state's federal unemployment loan stays unpaid. The workers comp index is the fourth highest in the country and adds $731.50 over the national median of $1.09. The franchise tax is new money if you were not already filing there. The workers comp detail by state is on workers comp for remote employees, and the state withholding rules are on state tax withholding for remote employees.

The index figure overstates an office role, because clerical and telecommuter class rates price well below the all-industry index. Use it as the ceiling for budgeting and ask your carrier for the class rate before you decide.

If you have 15 or more employees, counted across every state, Labor Code 432.3 requires the pay scale in any job posting for a role a California applicant could fill. A posting open to remote candidates anywhere in the US is such a role. The statute also requires you to give the pay scale to any third party that publishes the posting for you, and requires that third party to include it, so the duty follows the listing onto whichever board you use. Penalties run from $100 to $10,000 per violation. The full state-by-state picture is on pay transparency laws by state, and the method for choosing a defensible range is in how to set a good faith salary range.

There is a second reason to decide at posting time. Every duty on this page is triggered by one fact, where the new employee works, and that fact is known before the first interview. You have two honest options. Name the states you already employ in and hire inside them, or open the role to California on purpose, with the salary set above the $70,304 floor, the pay scale in the listing, and the payroll and franchise tax lines already in the budget.

Every LatestRemote listing shows its salary range, which covers the posting half of that decision. A listing is $199 a month for one live role, with applicants coming straight to your inbox and no commission on the hire. See the plans on remote job posting pricing.