Running a med spa in California means navigating some of the strictest labor laws in the U.S. These laws impact everything from ownership rules to employee classification and break requirements. Med spas are treated as medical practices under California law, so compliance is critical to avoid severe penalties like fines, lawsuits, or even business closure. Here’s a quick breakdown of the seven key labor laws you need to know:

  • Corporate Practice of Medicine (CPOM): Only licensed physicians can own or control med spas. Non-physicians must use alternative models like a physician-owned Professional Corporation (PC) and Management Services Organization (MSO).
  • Minimum Wage & Overtime: As of 2026, the state minimum wage is $16.90/hour, with stricter overtime rules for hours worked over 8/day or 40/week.
  • Employee vs. Independent Contractor Classification: Workers are presumed employees unless they meet the strict "ABC" test under AB5. Misclassification can result in fines up to $25,000 per violation.
  • Meal & Rest Breaks: Employees must get a 30-minute meal break after 5 hours and a 10-minute paid rest break for every 4 hours worked.
  • Paid Sick Leave: Employers must provide at least 40 hours of paid sick leave annually, with specific rules for accrual and usage.
  • Workers' Compensation Insurance: Legally required for all employees, covering workplace injuries and illnesses.
  • Staff Licensing & Scope of Practice: Only licensed professionals can perform medical treatments, with clear limits on what estheticians and cosmetologists can do.

These laws are complex but essential to follow. Regular audits, proper documentation, and compliance tools can help you stay on track while protecting your business and employees.

7 Essential California Labor Laws for Med Spa Owners Compliance Guide

7 Essential California Labor Laws for Med Spa Owners Compliance Guide

1. Corporate Practice of Medicine Doctrine and Employment Restrictions

California's Corporate Practice of Medicine (CPOM) doctrine sets strict rules for med spa ownership. According to California Business & Professions Code Section 2400, non-physicians are not allowed to own medical practices, employ physicians, or make clinical decisions. Simply put, if you're not a licensed MD or DO, you cannot legally own a med spa outright.

For a Professional Corporation (PC) in California, at least 51% must be owned by licensed physicians, while the remaining 49% can be owned by other licensed healthcare professionals.

"California law is clear: medical practices must be owned and controlled by physicians. Business professionals may provide support, but they cannot direct patient care or interfere with medical judgment." – Amanda Guarniere, MSN, APRN, NP-C, Vice President of Sales and Marketing, GuardianMD

This separation has led non-physicians to use alternative business models. One common approach is the PC/MSO model, where a physician-owned PC oversees clinical operations, while a separately owned Management Services Organization (MSO) handles administrative tasks like billing, payroll, and marketing. A Management Services Agreement clearly defines the roles and responsibilities of both entities.

To comply with CPOM laws, all patient revenue must go directly into the PC's bank account. From there, the PC pays the MSO for its services. Importantly, the MSO cannot influence clinical decisions, set schedules, or hire and fire medical staff. California regulators closely monitor these arrangements to ensure compliance. For example, in 2021, Envision Healthcare faced legal challenges for exploiting business loopholes that undermined clinical control, highlighting the state's strict enforcement of CPOM laws.

Navigating these rules is essential for running a compliant and successful med spa. Proper structuring not only ensures legal adherence but also promotes smooth operations.

2. Minimum Wage and Overtime Requirements

When it comes to running a med spa in California, understanding wage and overtime laws is just as important as knowing the rules about ownership and operations. California is known for having some of the strictest wage laws in the country, and med spa owners need to comply with both state and local regulations. Starting January 1, 2026, the state minimum wage will be $16.90 per hour, regardless of the size of the business. This rate is adjusted annually for inflation, but increases are capped at 3.5% per year. However, keep in mind that many cities and counties in California set their own minimum wages, which can be higher than the state rate. Med spa owners must pay the highest applicable rate - whether it’s federal, state, or local.

Overtime rules add another layer of complexity. Non-exempt employees are entitled to time-and-a-half pay for hours worked over eight in a day, 40 in a week, or the first eight hours on the seventh consecutive workday. For hours exceeding 12 in a single day or beyond eight hours on the seventh consecutive day, employees must be paid double time. It’s also important to note that overtime calculations must include nondiscretionary bonuses and commissions - not just the employee’s base pay. For example, if your estheticians earn performance-based bonuses, those need to be factored into their overtime pay.

For tipped employees, California law is clear: tips cannot be counted toward meeting the minimum wage. That means tipped workers must still receive the full $16.90 per hour. Employers are also obligated to pay overtime for any hours worked if they "knew or should have known" about it, even if the overtime wasn’t pre-approved. Employees cannot waive their right to overtime pay, and any agreement to work for less than the legal rate is invalid under the law.

Accurate timekeeping is critical to avoid legal trouble. Failing to document meal and rest breaks can lead to lawsuits and penalties. Using automated systems to track breaks, require digital confirmations, and send real-time alerts can help prevent violations.

Non-compliance can result in serious consequences, including back pay with interest, waiting time penalties under Labor Code Section 203, civil fines, and even class-action lawsuits. The Division of Labor Standards Enforcement actively investigates wage violations, and employees are protected from retaliation if they file claims. To stay ahead, regularly consult the UC Berkeley Labor Center Inventory of US City and County Minimum Wage Ordinances to ensure you’re meeting or exceeding local wage requirements.

3. Employee vs. Independent Contractor Classification

Misclassifying employees as independent contractors can lead to serious financial and legal consequences. Under AB5, which became law on January 1, 2020, all workers are presumed to be employees unless proven otherwise using the strict ABC test. Simply labeling someone as an independent contractor doesn’t change their status. The California Supreme Court clarified this in the Dynamex decision:

"The hiring entity cannot unilaterally determine a worker's status simply by assigning the worker the label 'independent contractor' or by requiring the worker, as a condition of hiring, to enter into a contract that designates the worker an independent contractor".

For med spa roles that are central to clinical services, the ABC test is particularly stringent. To classify someone as an independent contractor, all three criteria must be met:

  • Prong A: The worker must operate independently, both in practice and as outlined in their contract.
  • Prong B: The worker must perform tasks outside the usual scope of your business. For example, hiring a nurse injector or esthetician to provide Botox or facials - which are core med spa services - would typically fail this prong.
  • Prong C: The worker must be independently established in their trade. This means having their own business license, setting their own rates, handling payments directly from clients, and maintaining their own client base.

There are exceptions to the ABC test. Licensed physicians and surgeons are evaluated under the more flexible Borello multifactor test. Similarly, licensed estheticians, electrologists, and cosmetologists may also qualify for the Borello test if they meet specific conditions, such as setting their own hours, managing their client base, holding a separate business license, and issuing a Form 1099 for rented space at your location. However, roles like nurses and administrative staff must be classified as employees.

The penalties for misclassification are steep. Knowingly misclassifying workers can result in civil fines ranging from $5,000 to $25,000 per violation. Beyond fines, you may be responsible for back wages, overtime, missed meal and rest breaks, unpaid workers' compensation premiums, and payroll taxes. If the Employment Development Department (EDD) determines the misclassification was negligent or intentional, they can impose an additional 15% penalty. On a national level, worker misclassification results in an estimated $1.5 billion in lost tax revenue annually.

Proper classification is just as important as ensuring compliance with wage laws and break requirements. Review any 1099 arrangements under the ABC test, paying close attention to Prong B. If a worker’s role is integral to your med spa’s operations, they should be classified as an employee. Make sure their actual working conditions align with the classification. If changes are needed, reclassify workers promptly and begin filing quarterly payroll taxes to avoid further issues. Regularly assessing worker roles can help ensure your business stays compliant.

4. Meal and Rest Break Requirements

California has strict rules for meal and rest breaks, and failing to follow them can lead to costly penalties. For med spas with back-to-back appointments, it's crucial to carefully schedule these breaks to stay compliant. Here's what you need to know.

Meal breaks must occur before the end of an employee's fifth hour of work. For shifts longer than five hours, employees are entitled to a 30-minute unpaid meal break. If their shift exceeds 10 hours, they must receive a second 30-minute meal break. However, employees can waive the meal break for shifts of six hours or less - or waive the second meal break for shifts between 10 and 12 hours, as long as they took the first one.

Rest breaks work differently. Employees are entitled to a 10-minute paid rest break for every four hours worked - or for any portion of time over two hours in a four-hour block. These breaks should be scheduled as close to the middle of the work period as possible. Unlike meal breaks, rest breaks are paid, and employees must be completely free of work duties during this time. They cannot be required to stay on-call, carry devices, or remain at their workstations. The California Supreme Court reinforced this by stating:

"During rest periods employers must relieve employees of all duties and relinquish control over how employees spend their time".

Failing to provide proper breaks comes with financial consequences. For each workday that a compliant meal or rest break isn’t provided, the employer owes the employee an extra hour of pay at their regular rate. If both a meal and rest break are missed on the same day, the penalty doubles to two hours of premium pay. With a three-year statute of limitations, these violations can add up quickly.

To avoid issues, document break times and enforce clear written policies. Using scheduling software that accounts for these mandatory breaks can help ensure compliance and prevent practices that discourage employees from taking their breaks.

5. Paid Sick Leave Requirements

Starting January 1, 2024, California's paid sick leave law increases the minimum requirement from 24 hours (3 days) to 40 hours (5 days) per year. For med spa owners, understanding the details of eligibility, usage, and documentation is crucial to staying compliant. Here's a breakdown of the key points.

Eligibility and Accrual
Most employees - whether full-time, part-time, or temporary - qualify for paid sick leave if they work for the same employer for at least 30 days within a calendar year in California. Leave begins accruing immediately, but employees can only start using it after 90 days. Employers have two options for managing accrual:

  • Accrual method: Employees earn 1 hour of sick leave for every 30 hours worked.
  • Frontloading: Provide 40 hours upfront each year, which simplifies tracking since unused hours don’t carry over when this method is used.

Usage and Payment
Employers can limit the annual use of sick leave to 40 hours (5 days), with total accrual capped at 80 hours (10 days). Employers may also set a minimum usage increment, but it cannot exceed two hours per instance. Non-exempt employees must be paid for sick leave at their regular weekly rate or an average of the past 90 days. Sick leave can be used for personal or family medical care, preventive care, or health condition diagnosis.

Upcoming changes expand usage:

  • January 1, 2025: Sick leave can be used for jury duty or court appearances.
  • January 1, 2026: It will also cover time off for victims of qualifying acts of violence to attend judicial proceedings.

Record-Keeping and Anti-Retaliation Protections
Keeping accurate records is essential to verify compliance and avoid disputes. Employers must:

  • Display available sick leave balances on wage statements.
  • Post the updated "Paid Sick Leave" notice prominently in the workplace.

California law prohibits retaliation against employees for using their sick leave. As stated in the California Labor Code:

"An employer shall not deny an employee the right to use accrued sick days, discharge, threaten to discharge, demote, suspend, or in any manner discriminate against an employee for using accrued sick days." - California Labor Code

Attendance policies that penalize employees for taking protected sick leave are unlawful. Employers also cannot require employees to find replacements or provide medical notes to use their leave. If an employee is rehired within one year, unused sick leave must be reinstated. However, unlike vacation pay, unused sick leave does not need to be paid out upon termination.

To simplify compliance, med spa owners can consider tools like Prospyr (https://prospyrmed.com), which automate record-keeping and ensure wage statements and notices meet state requirements. By effectively managing paid sick leave, you can protect your business from potential legal challenges while supporting your employees.

6. Workers' Compensation Insurance

If you're running a med spa in California, you are legally required to carry workers' compensation insurance - no exceptions. This rule applies whether your employees are full-time, part-time, or temporary. It’s not just about following the law; this insurance protects your staff and shields your business from potential legal and financial trouble.

Workers' compensation operates as a no-fault system. It ensures employees injured on the job get immediate medical care and wage replacement, regardless of who’s at fault. At the same time, it protects employers from lawsuits tied to workplace injuries. The Division of Workers' Compensation explains it this way:

"The workers' compensation system is based on a trade-off between employers and employees. Employees are entitled to receive prompt, effective medical treatment for on-the-job injuries or illnesses no matter who is at fault and, in return, are prevented from suing employers over those injuries."

This coverage isn't just limited to medical care. It must also include disability benefits, job displacement assistance, return-to-work programs, and death benefits. If an employee reports a workplace injury, you’re required to provide them with a DWC 1 claim form within one working day. Given the risks in med spas - like chemical exposure, slips, repetitive motion injuries, and musculoskeletal strain - having solid coverage is essential to protect your team and keep your operations running smoothly.

Failing to secure workers' compensation insurance can lead to serious consequences. Operating without it is considered a criminal misdemeanor, punishable by fines starting at $10,000 or up to one year in county jail . Beyond that, civil penalties can reach as high as $100,000, and the state may issue a "stop order" that halts your business until you get the required coverage .

The cost of premiums varies based on factors like your industry classification, payroll size, and claims history. To find the right coverage for your med spa, it’s smart to compare options from different carriers.

7. Staff Licensing and Scope of Practice

Med spa staff must follow strict licensing and scope-of-practice regulations to ensure patient safety and avoid legal trouble. In California, procedures like Botox injections, laser resurfacing, and microneedling are considered medical practices because they involve medical judgment. As a result, only licensed professionals can perform these treatments, and each type of license has specific limitations.

The Medical Board of California clearly states that cosmetologists are not allowed to inject the skin, use lasers, or perform medical-grade dermabrasion or chemical peels.

Here’s a breakdown of who can perform specific procedures:

  • Physicians (MD/DO): Authorized to perform all procedures and oversee clinical operations.
  • Nurse Practitioners (NPs): Qualified to handle many procedures. Starting in 2026, under Assembly Bill 890, 104 NPs with at least six years of experience will be permitted to work independently.
  • Physician Assistants (PAs): Can administer injectables and operate lasers but must work under a formal supervision agreement with a physician.
  • Registered Nurses (RNs): Allowed to perform injections and laser treatments but require supervision from a physician or advanced practitioner.
  • Estheticians and Cosmetologists: Restricted to non-medical services like facials and waxing. They cannot perform injections or use medical-grade lasers.

Failure to comply with these rules can result in severe penalties, including heavy fines, license revocation, or even criminal charges for practicing without proper authorization. As the Medical Board of California warns:

"Practicing without a current license or registration is unlicensed practice and may result in disciplinary action and a criminal conviction."

To stay compliant, you should:

  • Use the California Department of Consumer Affairs' BreEZe system to verify staff credentials and confirm licenses with relevant state boards.
  • Ensure your Medical Director establishes written protocols for every procedure.
  • Maintain patient medical records for at least seven years. Using digital intake tools can help streamline this documentation process.
  • Keep physical or digital copies of all staff licenses and certifications readily available for inspections.

How to Stay Compliant with California Labor Laws

Keeping up with California's labor laws can be challenging, but automated systems and regular audits can simplify the process. Advanced software tools can help you stay on track.

Consider using practice management software that monitors employee schedules, credentials, and compliance with labor laws in real time. For example, platforms like Prospyr provide integrated tools for managing staff scheduling, credential tracking, and automated record-keeping. These features are crucial for ensuring compliance. Automated time-tracking systems can prompt meal breaks, flag potential overtime violations, and maintain detailed audit trails, cutting administrative time by as much as 25%. Additionally, software that sends real-time alerts for missed breaks or excessive hours can help you address issues before they escalate.

Once these systems are in place, conducting regular audits is key to staying compliant. Schedule annual compliance audits to ensure your practices align with current regulations. Starting in 2026, employers must distribute the mandatory "Workplace Know Your Rights" notice to all employees by February 1. This notice covers topics like I-9 requirements, labor organizing rights, and workers' compensation. Before March 30, 2026, review employee files to confirm that every staff member has provided an emergency contact for arrest or detention notifications. To meet these requirements, use the Labor Commissioner's official template as a guide.

Another essential tool is a well-crafted employee handbook that addresses California-specific policies. As Dental & Medical Counsel, P.C. explains:

"The employee handbook is crucial for addressing issues proactively".

Your handbook should include clear policies on meal and rest breaks, anti-harassment procedures, and at-will employment. Require new hires to sign an acknowledgment confirming they’ve received and reviewed the handbook. Update this process whenever policies change.

To ensure these strategies align with your overall business practices, consult with experts in California employment law. Regulations frequently evolve - for instance, employers with 15 or more employees must disclose pay scales in job postings and provide them to current employees upon request. Having legal counsel review associate agreements, employee handbooks, and classification decisions can help reduce the risk of litigation. For specific questions, you can reach out to the Labor Commissioner’s Office directly at DLSE2@dir.ca.gov.

Conclusion

Running a med spa in California comes with its fair share of challenges, particularly when it comes to navigating the state’s intricate labor laws. With thousands of specific requirements woven into California’s employment regulations, staying compliant isn’t just a box to check - it’s a way to safeguard both your practice and your team.

The seven labor laws highlighted here form the backbone of legal compliance for any med spa. Following these regulations closely ensures that your daily operations run smoothly and within legal boundaries.

But compliance isn’t just about avoiding fines or penalties. By offering benefits like paid sick leave, proper meal and rest breaks, and workers' compensation, you create an environment where employees feel respected and secure. This not only minimizes legal risks but also strengthens employee loyalty and boosts your practice’s reputation.

Don’t wait to take action. Review worker classifications, update your employee handbook, and prepare to meet the February 1, 2026 deadline for the mandatory "Workplace Know Your Rights" notice. If the process feels overwhelming, consider consulting legal counsel for guidance. Additionally, using a practice management platform like Prospyr (https://prospyrmed.com) can help streamline tasks like scheduling, patient management, and compliance tracking, ensuring you stay ahead of critical deadlines.

FAQs

How can non-physicians legally operate or be involved in a med spa in California?

Non-physicians in California can legally participate in the med spa industry by following ownership structures that align with state regulations. One widely used model is the Management Services Organization (MSO). In this setup, non-physicians handle the business and administrative side of the med spa, while licensed physicians, typically through a Professional Corporation (PC), oversee and provide the medical services. These two entities collaborate under a Management Services Agreement (MSA) to ensure compliance with California's Corporate Practice of Medicine (CPOM) laws.

Starting in 2026, the rules will expand to allow certain non-physician professionals, like nurse practitioners, to own or co-own med spas. This change offers more opportunities for non-physicians to engage in the industry. However, under CPOM laws, direct ownership of the medical practice itself remains restricted, requiring licensed physicians to retain majority control.

What is the ABC test under AB5, and how does it affect med spa employee classification?

The ABC test, established under California’s AB5 law, plays a crucial role in determining if a worker should be classified as an independent contractor or an employee. For med spa owners, this means you need to meet three specific criteria to classify someone as an independent contractor:

  • A: The worker must perform their tasks free from your control and direction.
  • B: The services they provide must not align with the core activities of your med spa’s business.
  • C: They must run an independently established trade, occupation, or business.

This stricter standard makes it harder to label workers as independent contractors. Misclassification can lead to serious legal and financial consequences, so getting it right is essential.

What happens if I don’t follow California’s meal and rest break laws?

Failing to follow California's meal and rest break laws can have serious repercussions for employers. Companies might be obligated to pay employees an extra hour of wages for every missed break. On top of that, violations can lead to penalties, wage claims, and even expensive class action lawsuits.

For med spa owners, it's crucial to fully understand and comply with these rules. Doing so not only helps avoid legal and financial troubles but also contributes to fostering a supportive and compliant workplace.

Related Blog Posts