5 Signs Your Business Is at Risk Without You Realizing It

1. Employee Turnover is Becoming the Norm

California is one of the most competitive labor markets in the United States, with an unemployment rate of 5.3% as of mid-2025, higher than the national average.

This means top talent has options. If you are losing people faster than you can replace them, it is not just frustrating; it is costly. The Center for American Progress estimates that replacing a worker typically costs about 20 % of that worker’s annual salary (in non‑executive roles).

If your employees keep leaving for better pay, flexibility, or culture, it is a signal your business is bleeding resources.

2. You’re not Keeping up with California’s Employment Laws

California has some of the most stringent labour laws in the country, covering everything from overtime to meal breaks to pay transparency. California employers face more wage and hour lawsuits than any other state. The California Department of Industrial Relations issues millions of dollars in penalties every year for noncompliance. 

There are over 300 potential Labor Code/wage & hour violations in California that employers might inadvertently commit.

If you do not have a compliance system in place, you could be one audit or employee complaint away from hefty fines.

3. Leadership is Running on Empty

California’s fast-paced business environment often leaves managers juggling too much. A recent Deloitte study found that 77% of workers have experienced burnout, and managers are no exception.

When leaders are spread thin, they cannot effectively support their teams, which leads to disengagement and costly mistakes.

If your managers are constantly putting out fires instead of developing people, your business growth is at risk.

4. HR is Still in Spreadsheets

In California, documentation matters. Whether it is onboarding, performance reviews, or handling workplace disputes, informal HR practices can land you in legal hot water.

Without proper records, even minor disputes can escalate into lawsuits, and California is known for employee-friendly rulings.

If your HR “system” is just a Google Sheet or someone’s memory, you are leaving your business vulnerable.

5. Culture Problems are Easy to Ignore Until They are not

California employees, especially Millennials and Gen Z, place a high value on company culture. Gallup found that engaged teams drive 23% higher profitability, yet disengagement costs U.S. businesses over $500 billion annually. In California’s competitive job market, a weak culture makes it nearly impossible to retain talent.

If you dismiss disengagement, quiet quitting, or low morale as mere growing pains, you may be risking both employee loyalty and customer trust.

Final Thought

For California businesses, the most significant risks are not always obvious. High turnover, compliance slip-ups, and disengaged employees may seem like minor issues at first, but in this state’s regulatory and competitive landscape, they can quickly snowball into serious challenges.

At DSA HR Solutions, we help California business owners stay compliant, reduce turnover, and strengthen culture so you can focus on growth without worrying about hidden risks. Grow confidently without worrying about hidden liabilities.

Curious where your business might be exposed? Let’s talk about how we can protect your people and your bottom line.

Coming Soon: A Deeper Dive Into Turnover Costs

In our next article, we’ll dive deeper into the hidden costs of employee turnover (and how to stop it before it impacts your bottom line). Check back soon or subscribe to our newsletter so you don’t miss it.