Hiring employees in California: the 2026 compliance checklist for employers and recruiters

As of October 2026, an employer hiring in California has to register with the Employment Development Department (EDD) within 15 days of paying more than $100 in wages in a quarter, carry workers' compensation insurance from the first employee, publish a pay scale in job postings once it has 15 or more employees, hold criminal history questions until after a conditional offer, get every party's consent before recording an interview, give the new hire a DE 4 and the required notices at hire, and report the hire to the EDD within 20 days of the start date. California also bars salary history questions at any employer size, limits credit checks to listed jobs, forbids E-Verify before an offer, and treats discriminatory AI screening as a civil rights violation.

This page is the California hub: one table with every item and its official source, then a short section on each. Where we already have a full guide to an item, the section summarizes it and links there.

The California hiring checklist at a glance

What must be in place before the first California hire?

Two accounts. First, the EDD employer payroll tax account: the EDD says a business must register within 15 days once it pays "more than $100 in wages in a calendar quarter" ($750 in cash wages for household employers). That one account carries the four state payroll taxes: unemployment insurance and the Employment Training Tax, which the employer pays, and State Disability Insurance and personal income tax, which are withheld from wages.

Second, workers' compensation. Labor Code § 3700 requires every employer except the state to be insured or approved to self-insure, and the Division of Workers' Compensation says coverage is required "even if they have only one employee." The federal layer (an EIN, Form W-4 and Form I-9 by the third business day) applies on top.

Does a staffing or recruiting agency need a California license?

Usually not for ordinary employer-paid search or contract staffing. California licenses talent agencies through the Labor Commissioner and regulates agencies that charge job seekers a fee under the Civil Code, with a bond, while most employer-paid placement falls outside both. Our guide to the California staffing agency license rules walks through the three tracks. One staffing-specific duty does apply: a temporary services employer's wage notice at hire must also name the client the employee will work for, under Labor Code § 2810.5(a)(3).

What must a California job posting include, and can you ask about pay history?

An employer with 15 or more employees must include the pay scale, "a good faith estimate of the salary or hourly wage range" it reasonably expects to pay, in every job posting, and must give it to any third party that posts for it, under Labor Code § 432.3; the Labor Commissioner can order $100 to $10,000 per violation. The same section bars every employer, of any size and "through an agent," from asking about salary history or relying on it. Our pages on the California pay transparency law and the California salary history ban cover ranges, records and a script.

When can you ask about criminal history or run a credit check?

California's Fair Chance Act, Gov. Code § 12952, bars employers with five or more employees from asking about conviction history until after a conditional offer. To withdraw an offer over a conviction, the employer must make an individualized assessment, send a preliminary notice with the report, allow at least five business days for a response and send a final notice. See California's ban-the-box law.

Credit checks are narrower still. Labor Code § 1024.5 bans using a consumer credit report for employment purposes unless the job is in a listed category, such as a managerial position, a role with regular access to $10,000 or more in cash, or one where law requires a report. Our credit check laws guide lists the exceptions next to other states'.

Can you record or transcribe a job interview in California?

Only with everyone's consent. Penal Code § 632 covers confidential communications and § 632.7 covers any call involving a cell or cordless phone, which takes in most phone screens. Section 637.2 allows $5,000 per violation. Say you are recording or transcribing and get a clear yes before you start; our California call recording guide has a consent line, and recording calls across state lines covers candidates elsewhere.

Does California regulate AI in hiring?

Yes. Since October 1, 2025, the Civil Rights Council's FEHA regulations expressly cover automated-decision systems. They do not ban AI screening; they make discriminatory use of a tool unlawful in the same way as a discriminatory human decision, treat anti-bias testing as relevant evidence, count a recruiter or vendor acting for the employer as an agent, and require four years of retention for automated-decision data. See California's AI hiring regulations and the state-by-state AI hiring summary.

Can you drug test applicants in California?

The statute that speaks directly to applicant drug tests is Gov. Code § 12954, operative January 1, 2024. An employer may not penalize a person for off-duty cannabis use or for a test that finds only "nonpsychoactive cannabis metabolites," and may not ask an applicant about prior cannabis use. Tests that do not screen for those metabolites remain allowed, and the section does not apply to the building and construction trades, to jobs needing a federal background investigation or security clearance, or where state or federal law requires testing. Our drug testing laws guide compares other states.

Does California require E-Verify?

No, and it limits voluntary use. Labor Code § 2812 bars state and local governments from mandating E-Verify for private employers except where federal law requires it, and § 2814 makes it unlawful to run it on an applicant who has not received an offer, with a civil penalty of up to $10,000 per violation. Details are in E-Verify requirements in California.

Which state withholding form does a new hire complete?

The DE 4, Employee's Withholding Allowance Certificate. The EDD's form explains that since January 1, 2020 the federal W-4 is "used for federal income tax withholding only," so a new hire completes both. If an employee does not hand in a DE 4, the form says the employer "must use Single with Zero withholding allowance." An employee claiming exempt must file a new DE 4 by February 15 each year to keep the exemption.

Which notices must a new California employee get at hire?

• Wage notice. Labor Code § 2810.5 requires a written notice "at the time of hiring" with the pay rate and basis, regular payday, employer details, the workers' compensation carrier, paid sick leave rights and any emergency declaration issued in the prior 30 days. Employees exempt from overtime are excluded.
• Workplace Know Your Rights notice. Labor Code § 1553, effective January 1, 2026, requires the stand-alone notice "to each new employee upon hire" and to all employees by February 1 each year. The Labor Commissioner publishes a template; keep delivery records for three years. Penalty: up to $500 per employee per violation.
• Emergency contact. Under § 1555, an employee hired after March 30, 2026 must be offered the chance, at hiring, to name an emergency contact to be told of an arrest or detention at work.
• Workers' compensation notice. Labor Code § 3551 requires it at hire or by the end of the first pay period; the DWC posts a time of hire notice.
• Sexual harassment information sheet. Gov. Code § 12950(b) requires the Civil Rights Department's sheet, or equivalent information, to be distributed to employees.

Leave non-compete clauses out of California offer letters; they are void and, since 2024, unlawful to enter into. See California non-compete laws.

How do you report a new hire in California?

File a Report of New Employee(s), DE 34, with the EDD's New Employee Registry "within 20 calendar days of their start-of-work date," meaning the first day the person performed services for wages. Rehires count. The report needs the employer's EDD account number, FEIN, name, address and contact, and the employee's name, Social Security number, home address and start date. The EDD takes it through e-Services for Business, by mail or fax, or as a copy of the W-4 or DE 4 with the required information. It may charge $24 per unreported employee, or $490 where employer and employee agreed not to report.

The California hiring steps in order

1. Before the first hire: open the EDD account (within 15 days of crossing $100 in quarterly wages) and bind workers' compensation coverage. Agencies confirm whether a license track applies.
2. Posting: include the pay scale if the employer has 15 or more employees.
3. Screening: no salary history, no criminal history, no cannabis history, and no credit report unless the job fits a listed exception.
4. Interview: get every party's consent before recording or transcribing, and keep records from any automated scoring tool for four years.
5. Conditional offer: run any background check through the Fair Chance process, and any drug test without relying on nonpsychoactive metabolites.
6. First day: Form I-9, W-4, DE 4, the wage notice, the Know Your Rights notice, the emergency contact form, the workers' compensation notice and the harassment information sheet. Run E-Verify only after the offer, if enrolled.
7. Within 20 days of the start date: file the DE 34.

Hiring in more than one state? The same checklist is available for Texas, Florida, New York, Pennsylvania, Illinois and Ohio.