What California Therapists in Private Practice Need to Know About the Relevant Laws and Regulations

As a licensed therapist or psychologist in California, running your own private practice offers autonomy and flexibility. But it also comes with additional legal and ethical responsibilities in order to avoid disciplinary action and to protect your clients. It means you need to understand and comply with laws and regulations for therapists AND for businesses.

Below is a guide to the key legal and regulatory requirements every California mental health professional in private practice must know. This page includes information for Licensed Marriage and Family Therapists (LMFT), Licensed Clinical Social Workers (LCSW), Licensed Professional Clinical Counselors (LPCC), and Licensed Clinical Psychologists.

1. Licensing and Scope of Practice

• Maintain your license in good standing with the California Board of Behavioral Sciences (BBS) (for LMFT, LCSW, and LPCC); or the California Board of Psychology (BoP) (Licensed Clinical Psychologist).
• Renew your license, including Continuing Education (CE) every renewal cycle: 36 hours every 2 years
• Each license has a defined scope of practice. Practicing outside your licensed scope, even unintentionally, can result in disciplinary action.
• Testing and assessment: Psychological testing and certain standardized assessments may fall exclusively under the scope of practice of psychologists, not LMFTs, LCSWs or LPCCs, unless trained and supervised appropriately.

2. Business Structure

Choosing the right business structure can impact your taxes, liability, and licensing compliance. In California, mental health professionals have the following options:

• Sole Proprietorship: The simplest structure, with no separate legal entity. Easy to set up, but offers no personal liability protection.
• Professional Corporation (PC): professional corporations for therapists offer several benefits: they provide liability protection for business debts (though not for malpractice), may offer tax advantages, and allow for formal ownership structures among multiple providers. At least 51% of the shares must be owned by licensed therapists.
• Note: under the Moscone-Knox Professional Corporation Act, general corporations or LLCs are not allowed for the practice of psychotherapy in California.

3. Other Business Considerations

• Obtain a business license from your local city or county
• Maintain malpractice and general liability insurance: not legally required, but highly recommended
• Register for an NPI (National Provider Identifier): if working with insurance

4. Confidentiality and HIPAA Compliance

• California’s confidentiality laws and ethics codes are robust. See more on when therapists can and cannot break confidentiality.
• Therapists and psychologists must also comply with the federal Health Insurance Portability and Accountability Act (HIPAA) when handling protected health information (PHI).

Key HIPAA Requirements:

• Provide clients with a Notice of Privacy Practices
• Obtain written authorization for disclosures not related to treatment, payment, or healthcare operations
• Use HIPAA-compliant platforms for storing records, billing, and communication
• For third-party vendors for recordkeeping and communication, ensure they sign HIPAA-compliant Business Associate Agreements (BAAs).

5. Mandatory Reporting Laws

All licensed mental health professionals in California are mandated reporters. You are legally required to report suspected:

• Child abuse or neglect
• Elder or dependent adult abuse
• Threats of harm to self or others (duty to protect under Tarasoff v. Regents of the University of California)

Failure to report can result in civil liability and/or criminal penalties.

See more on when therapists must break confidentiality.

6. Informed Consent and Client Agreements

You must obtain and document informed consent prior to providing services. This includes disclosing:

• The nature and goals of treatment
• Confidentiality and limits of confidentiality
• Fees, billing practices, and cancellation policies
• Risks and benefits of therapy
• Telehealth procedures and risks (if applicable)
• Required notice regarding complaints (see Informed Consent and Client Agreements)
• Full name as filed with the BBS
• License or registration number, including type of license or registration, and expiration date

Use a comprehensive informed consent and client agreement, and revise it if your services change substantially. See Informed Consent and Client Agreements.

7. Record Keeping Requirements

California law requires mental health providers to retain clinical records for a minimum of:

• 7 years from the date of termination of services
• For minors: 7 years or until the client turns 25, whichever is longer

Records must be stored securely and remain confidential in accordance with both California law and HIPAA.

8. Advertising and Marketing Regulations

A therapist’s advertising and marketing must be:

• Truthful and not misleading
• Include your full legal name, license type, and license number
• Free of promises or guarantees of specific outcomes or “cures”

Be particularly cautious with testimonials, social media, and online platforms. False or unsubstantiated claims can lead to board discipline.

See more general marketing laws and regulations.

9. Telehealth Requirements

Both BBS and Board of Psychology licensees are permitted to provide telehealth, but must follow applicable state and federal laws.

• Verify that the client is physically located in California or in a state where you are also licensed
• Obtain informed consent specifically for telehealth
• Use a secure, HIPAA-compliant platform
• Document telehealth services the same way you would in-person sessions

See our Guide to Telehealth Rules for Therapists in California

10. Employment Law and Supervising Associates

If hiring employees, therapists must comply with California labor laws.

• Wage and hour laws including overtime, meal/rest breaks, and mandatory sick leave
• Maintain a compliant employee handbook and required notices
• See more at our Guide to Hiring Employees.

If you supervise an AMFT, APCC, or ASW, you must:

• Complete a board-approved supervisor training course
• Adhere to strict guidelines for supervision sessions and recordkeeping
• Have a signed supervision agreement before services begin

Further Resources

Guide to Legal and Ethical Requirements for Therapists in California

When Can Therapists Break Client Confidentiality?

Informed Consent and Client Agreements for Therapists

Guide to the Law for Business Owners

Guide to Getting Legal Help

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