The Holiday Surprise No Employer Wants: What California Employers Should Avoid

The holiday season brings festive cheer, but it also presents unique challenges for employers navigating human resources decisions. While celebrating with your team is important, certain missteps during this period can expose your organization to significant legal and reputational risks.

California's comprehensive employment laws add additional layers of compliance that employers must navigate carefully. Here's what California employers should avoid doing during the holidays.

If your business is facing holiday-season HR risks — from wage issues to party liability or policy updates — the ILS team can help you stay compliant and avoid costly mistakes. For guidance on any of these topics, contact us at contact@consultils.com.

Don't Neglect Employment Record Maintenance

The end-of-year rush shouldn't be an excuse for sloppy record-keeping. Avoid letting personnel files, I-9 documentation, and payroll records fall into disarray. Incomplete or inaccurate records can become serious liabilities during audits or legal disputes. Under California law, employers must maintain detailed personnel records and provide employees access to their files upon request.

Don't Ignore Wage and Hour Classification Issues

Resist the temptation to postpone reviewing whether employees are correctly classified as exempt or non-exempt. Misclassification affects overtime eligibility and can result in costly back-pay claims.

Don't Overlook Holiday Party Risks

While holiday parties are opportunities for team bonding, don't underestimate the risks they pose—especially in California. Courts have held employers liable for significant damages when holiday celebrations go wrong. Avoid these common mistakes:

• Don't serve alcohol without careful planning：California employers face potential liability under the doctrine of respondent superior when intoxicated employees cause harm. Failing to monitor alcohol consumption or allowing intoxicated employees to drive can expose your organization to significant risk and liability.

• Don't ignore inappropriate behavior：The relaxed atmosphere and alcohol can lower inhibitions, increasing the risk of harassment. California's Fair Employment and Housing Act (FEHA) protections apply at company-sponsored events. Managers must not turn a blind eye to inappropriate conduct just because it's a party. They have the same duty to address and report misconduct as they would during normal work hours.

• Don't forget wage and hour obligations：If non-exempt employees are required to attend the party, you must pay them for their time. Don't make attendance mandatory unless you're prepared to compensate hourly employees appropriately.

• Don't assume off-site parties are consequence-free：Even company-sponsored events held outside regular work hours and off premises create employer liability under California law.

Don't Miscalculate Bonus Payments

Year-end bonuses are common, but don't make the mistake of treating all bonuses the same way for overtime calculations under California law. Non-discretionary bonuses—those based on predetermined formulas or metrics—must be included when calculating the regular rate of pay for overtime purposes for non-exempt employees.

Failing to properly account for bonuses in overtime calculations violates California's wage and hour laws and can result in significant penalties. When in doubt, consult with legal counsel rather than guessing.

Don't Violate Youth Employment Laws

If you hire student workers during the busy holiday season, don't cut corners on California's youth employment regulations. Avoid these violations:

• Don't skip work permit requirements：Almost all minors under 18 must have a valid Permit to Employ and Work issued by their school district before starting work. Employers must keep this permit on file. Hiring a minor without obtaining and maintaining a valid work permit violates California law.

• Don't exceed hour restrictions：California strictly limits when and how long minors can work. Other restrictions also apply, such as late-night and early morning shifts. Making sure the work schedule compliance before hiring students.

• Don't assign hazardous tasks：California law prohibits minors from performing certain types of hazardous work, regardless of business needs or how "mature" the minor seems.

• Don't forget about work time restrictions：Minors cannot work during school hours unless part of a school-approved work experience program. There are also restrictions on late-night and early-morning shifts to protect minors' rest and education.

Don't Use an Outdated Employee Handbook

Avoid entering 2026 with policies that don't reflect current legal requirements or company practices. California employment law evolves rapidly, and 2025 brought significant changes that must be reflected in your handbook:

• Don't ignore new leave entitlements. California expanded paid sick leave uses in 2025 and 2026, including time off for crime victims, jury duty, and court appearances. Your policies must reflect these expanded protections.

• Don't overlook pay transparency updates. California redefined "pay scale" to mean a good faith estimate of the wage range you reasonably expect to pay upon hire, and expanded the definition of "wages" under the Equal Pay Act to include all forms of compensation (SB 642).

• Don't forget about captive audience meeting bans. As of January 2025, California prohibits mandatory meetings about religious or political matters, including union discussions (SB 399, “Work Freedom Act”). Your handbook should address this new restriction.

• Don't neglect freelancer/independent contractor requirements. New laws require written contracts with specific terms for freelance workers (“Freelancer Worker Protection Act”). If you use independent contractors, your policies need updating.

  
  

An outdated handbook can create confusion, legal exposure, and put you at risk for penalties. Don't wait until a problem arises to discover your policies no longer comply with California law.

Avoid Firing Employees Hastily During the Holidays

While it may seem efficient to clean house before the new year, don't rush into terminations without careful consideration. Unless an employee has committed serious misconduct or business circumstances demand immediate action, consider these risks:

• Avoid termination for minor issues without proper documentation：Firing someone during the holidays for long-standing but poorly-documented performance issues can appear retaliatory or discriminatory, inviting legal challenges.

• Avoid ignoring the optics：Terminating employees right before the holidays—especially those with tenure—can damage morale, harm your employer brand, and increase the likelihood of litigation.

• Don't let the calendar pressure you：If the termination isn't urgent, use the remaining time to build proper documentation and address the issues systematically in the new year.

The holiday season requires California employers to balance celebration with heightened caution. Don't let festive spirit cloud your judgment about compliance obligations, and don't use the busy season as an excuse to defer important HR responsibilities. California's employment laws are among the most comprehensive and employee-protective in the nation, with severe penalties for violations.

By avoiding these common pitfalls, you can help your organization celebrates safely, maintains legal compliance, and starts the new year on solid footing. Remember that California courts and enforcement agencies take employee protections seriously, and ignorance of the law is not a defense.

When questions arise about any of these issues, don't hesitate to consult with California employment law counsel. The cost of getting advice upfront is far less than the cost of defending lawsuits, paying penalties, or dealing with Labor Commissioner investigations after violations occur.

If your business is facing holiday-season HR risks — from wage issues to party liability or policy updates — the ILS team can help you stay compliant and avoid costly mistakes. For guidance on any of these topics, contact us at contact@consultils.com.

Disclaimer: The materials provided on this website are for general informational purposes only and do not, and are not intended to, constitute legal advice. You should not act or refrain from acting based on any information provided here. Please consult with your own legal counsel regarding your specific situation and legal questions.

---

As Managing Partner at ILS, Richard Liu ranks among the leading U.S. attorneys in corporate, employment, and regulatory law. He is known for crafting legal strategies aligned with clients’ business objectives and advising Fortune 500 companies, startups, and executives on corporate transactions, financing, privacy, and employment matters across the technology, healthcare, and financial sectors.

Before founding ILS, Richard practiced at top defense firms, where he developed a reputation for anticipating risks and designing strategies that balance protection with growth. He has secured favorable outcomes in contract and intellectual property disputes, represented clients in state and federal courts, and is recognized for combining large-firm expertise with boutique-firm agility. Richard is also a frequent speaker at industry and legal conferences.

Email: contact@consultils.com | Phone: 626-344-8949

Yuki is a litigation senior counsel licensed to practice in both New York and California, with extensive experience in dynamic investigations and complex defense matters. Her practice focuses on personal injury, insurance defense, and construction defect litigation, where she is known for developing efficient, multidimensional strategies.

Before joining ILS, Yuki practiced in both New York and Los Angeles, gaining comprehensive experience representing both plaintiffs and defendants. Since 2020, she has concentrated on insurance defense and construction disputes, recognized for her thorough investigations and precise legal analysis. Since joining ILS in 2023, she has continued to provide clients with strategic, experience-driven litigation support.

Email: contact@consultils.com | Phone: 626-344-8949