California Home Care Rules & Regulations: A Guide to Staying Compliant

Between stringent licensing, labor, and evolving data privacy regulations, keeping up with California’s home care rules can feel like an uphill battle. Reaching the top in this heavily regulated state requires organization, flexible systems, and an ongoing commitment to meeting compliance standards. But compliance is about more than checking regulatory boxes—it’s about delivering exceptional care and establishing a reputation as an agency your clients can trust.

In this guide, you’ll find everything you need to know about California’s evolving home care regulations and practical strategies to help your agency stay compliant and deliver the quality care your clients deserve. 

Licensing and Compliance Requirements for Home Care Providers: Where It All Starts

Home Care Organization (HCO) License:  California home care agencies must secure an HCO license through the California Department of Social Services (CDSS) before operations begin. After submitting your application, you’ll receive a notice that includes your HCO number, instructions for fingerprinting, and steps to complete the online orientation.

Home Care Aide Registration: All home care aides must register with the Home Care Aide Registry, have their background checked, and pay a fee. This ensures that those providing assistance have the skills and credentials required to deliver quality care.

Agency Tip:  Maintaining detailed records—such as caregiver certifications, training logs, and updated policies—helps keep your agency compliant and prepared for inspections

California’s Latest Home Care Regulations: What You Need to Know

California’s evolving labor laws are reshaping how home care agencies operate. Here’s a breakdown of the latest changes and what they mean for your agency.

Minimum Wage Legislation for Healthcare Workers

The state has rolled out a phased minimum wage increase for healthcare workers, which will reach $25 per hour by 2028. This is a major change, especially for smaller agencies. Here are a few ways you tackle the transition:

• Update Payroll Systems: Adjust your payroll systems to reflect new wage rates and calculations for all employees—including part-time and temporary staff.
• Revise Financial Plans:  Reallocate resources or seek supplemental funding (through grants or partnerships) to account for higher labor costs.
• Leverage Scheduling Tools: Utilize tools like AlayaCare to optimize operations, balance your team’s workloads, and reduce travel time.

Non-Compete and Restrictive Covenant Agreements

While non-compete agreements have been banned in California for years, The Federal Trade Commission has only recently proposed a nationwide ban. This new law will give home care aides greater freedom to explore better job opportunities and create a more competitive (and fair) labor market.

What should agencies do to prepare?

• Review and update employment contracts to remove non-compete clauses.
• Ensure restrictive covenants (such as non-solicitation agreements) follow federal and state laws.

Paid Sick Leave Policy Enhancements

Paid sick leave laws also saw important changes earlier this year. Employers must now provide at least 40 hours—or five days—of paid sick leave annually to all eligible employees, including part-time and temporary staff. Here’s how it works:

• Employees earn one hour of sick leave for every 30 hours worked.
• Sick leave can be used for personal illness, caring for family members, or preventive healthcare appointments.
• Employers have the option to provide the full amount upfront.

What Do These Changes Mean for Home Care Agencies? 

Agencies will need to adjust to higher minimum wages, update contracts to comply with non-compete rules, and roll out expanded sick leave policies. It might feel like a lot to juggle, but tools like AlayaCare can make it easier to manage these changes, saving time and helping you stay compliant.

Navigating Common Labor Compliance Challenges

Beyond adapting to new regulations, California home care agencies must also navigate strict labor laws, including overtime pay, wage theft prevention, and the Private Attorneys General Act (PAGA). Here’s a look at key requirements and strategies to help you stay compliant and minimize risks.

Overtime Pay Regulations and Best Practices for Compliance

In California, overtime laws require employees to be paid 1.5 times their regular pay for working beyond 8 hours a day or 40 hours a week. If an employee works over 12 hours in a single day, the rate increases to double pay.

Avoiding overtime in home care isn’t always easy. Unexpected healthcare needs can pop up at any time, making it hard to stick to standard hours. Here are a few best practices to help you accurately track your team’s hours and ensure compliance when overtime does occur.

• Track Time Accurately: Invest in a time-tracking system that monitors hours in real-time. Look for one that sends alerts when employees are nearing overtime, so you can proactively adjust the schedule when possible.
• Handle Multiple Pay Rates Carefully: Overtime gets tricky when caregivers work different roles at varying pay rates. Make sure you’re calculating overtime based on the correct regular rate of pay for each role. Double-checking these calculations can save your agency from payroll headaches later.
• Plan Schedules Proactively: Avoiding overtime is easier when you plan ahead. Adjust workloads to keep shifts within daily and weekly limits. Tools that optimize staffing and reduce unnecessary travel time can make this process smoother.
• Train Your Team: Managers and schedulers should know the ins and outs of California’s overtime rules. A little extra training now can prevent costly mistakes down the road.
• Keep Communication Open: Be upfront about overtime policies with your team. When employees understand the rules and know they’re being treated fairly, it builds trust and improves morale.

Preventing Wage Theft

Wage theft—whether intentional or accidental—is a common challenge for both hourly employees and their employers. It can lead to disputes, legal issues, and damaged trust. That’s why California introduced the Wage Theft Prevention Act to protect workers by ensuring they’re paid fairly and accurately.

Think of payroll practices as the foundation of your agency. If they’re not solid, everything else can start to fall apart. Here’s how to build a strong foundation:

• Pay on Time, Every Time: Make sure employees are paid accurately and on time for all the hours they work, including overtime. Delays or errors can quickly erode trust and leave your agency vulnerable to legal risks.
• Keep Records That Matter: Track everything—hours worked, wage rates, and pay stubs. Clear and detailed records aren’t just a requirement; they’re your best defense if a wage dispute ever arises.
• Audit Regularly: Don’t wait for problems to surface. Conduct regular payroll audits to catch and correct mistakes early. Whether it’s a missed overtime calculation or an incorrect rate, small errors can grow into big problems if left unchecked.

Mitigating PAGA Risks: How to Stay Ahead

A PAGA complaint can feel like an unexpected visit from a health inspector—catching you off guard and exposing vulnerabilities you didn’t realize were there. But just like health codes, the PAGA is in place to keep standards high and ensure fairness for everyone involved.

What exactly is PAGA? The Private Attorneys General Act (PAGA) is a California law that allows employees to sue their employers on behalf of the state for labor code violations and collect civil penalties, sharing a portion with the state. Whether brought on individually or by a group, they hold employers accountable for fair labor practices.

Proactive labor practices not only protect your agency from legal challenges but also build trust with your employees, enhance transparency, and help you attract and retain top talent. Here’s how you can stay ahead:

1. Review Labor Practices and Conduct Internal Audits: Your wage and hour policies are the backbone of your operations. Do they follow California’s labor laws and ensure your team is paid fairly? Regular reviews help identify small issues before they turn into costly problems, while internal audits dig deeper to uncover systemic compliance gaps and areas that need improvement.
2. Address Issues Quickly: If an audit uncovers a problem—like a payroll error or a missed break—act immediately to correct it. Small issues, such as a miscalculated paycheck, can escalate into larger disputes if left unresolved. A quick fix today can save you significant legal headaches tomorrow.
3. Train Your Team on Labor Laws: Labor law compliance isn’t a one-person job—it’s a team effort. Train your managers and team on the basics of wage, break, and overtime rules. When everyone understands the standards, it’s easier to avoid mistakes and maintain transparency.
4. Keep Up with Changing Labor Laws: California’s labor laws are constantly changing. Make it a habit to stay updated and adjust your policies as needed. And don’t underestimate the power of strong documentation—detailed schedules, pay records, and hours worked can be your best defense if a PAGA claim ever arises.

While the risk of potential lawsuits can be daunting—compliance ultimately comes down to having the right systems in place. Tools like AlayaCare automate overtime tracking, ensure accurate wage payments, and simplify payroll management, helping your agency stay compliant and avoid costly legal challenges.

Ensuring Workplace Safety and Data Security

Workplace Violence Prevention

• Risk Mitigation Protocols: Identify potential safety risks and establish measures—such as regular safety assessments and clear protocols —to proactively address them.
• Incident Reporting Procedures: Make it easy for staff to report and document workplace accidents. Removing barriers to reporting helps ensure issues are addressed promptly and thoroughly.
• Regular Staff Training: Teach caregivers to recognize warning signs, de-escalate conflicts, and handle emergencies confidently.

The California Consumer Privacy Act (CCPA): Protecting Client Data and Building Trust

To ensure confidential information stays secure, The California Consumer Privacy Act (CCPA) enforces strict guidelines for handling personal data, with penalties reaching up to $7,500 per violation. But compliance isn’t the whole story. Properly handling client data is about more than avoiding fines—it’s about preserving your reputation in an era where data breaches are alarmingly common.

With healthcare data breaches rising by 83% over the past decade—and nearly 400,000 health records compromised daily in 2023 alone—being responsible with your clients’ data safe is non-negotiable.

Here are a few steps your agency can take to prioritize data security:

• Encrypt Data: Think of encryption as your digital vault. Whether in transit or storage, encryption keeps confidential information secure and makes it nearly impossible for unauthorized users to gain access.
• Limit Access: Restrict sensitive data to only those who absolutely need it. Fewer access points mean fewer chances for breaches.
• Conduct Security Audits: Security audits are like a health check for your systems. They help you identify vulnerabilities, so you can fix them before they become bigger problems.
• Use a CCPA Compliance Checklist: Track how data flows through your systems, confirm storage is secure, and train staff on privacy best practices.
• Be Transparent with Clients:  Explain how you collect, use, and protect their data. When clients understand how their data is being used, it builds trust and reassures them that—like their health—their information is safe in your care.

The CMS Medicaid 80/20 Rule: Prioritizing Care Over Costs

Medicaid funds are meant to improve patient care, and the CMS Medicaid 80/20 rule ensures that at least 80% of Medicaid funds go directly to patient care. That means no more than 20% can be spent on administrative expenses. The purpose? To maximize resources for patients while keeping overhead in check.

Tips to Stay Compliant

• Track Spending: Regularly monitor expenses to maintain the 80/20 balance.
• Keep Accurate Records: Document direct care costs and administrative spending separately for smoother audits.
• Adjust Budgets: Prioritize funds for activities that directly benefit patients, like home aid support and improved care delivery.

Embracing Technology to Keep Up with Changing Regulations

California’s home care regulations are complex and constantly evolving, making it challenging for agencies to stay compliant. While keeping up can feel like a neverending game of catch-up, the right tools can make all the difference. 

With AlayaCare, agencies can tackle regulatory challenges with confidence by:

• Automating payroll, handling sick leave, and ensuring you get overtime calculations right every time.
• Providing real-time updates on changing regulations while keeping an eye on compliance metrics.
• Protecting personal health information with advanced cybersecurity practices that meet privacy requirements.

With AlayaCare as your partner, adapting to emerging regulations will feel less like an uphill battle and more like a smooth ascent—allowing you to focus on care, not compliance.

Additional resources

California employment law checklist

California overtime compliance checklist