Guide to Laws Related to Retail Businesses in California

Retail stores in California are subject to various laws and regulations governing their operations, employment practices, consumer rights, and safety standards. Here are some key laws and regulations that retail stores in California should be aware of.

1. Prosecuting Shoplifting

Is a shop owner allowed to detain a customer if the owner suspects they stole something?

Generally, yes. This is known as the shopkeeper’s privilege. In California, as in most states, a shop owner (or their employee such as a security guard) has the right to stop a customer from leaving in order to investigate as to whether they stole something.

From the California Penal Code: “A merchant may detain a person for a reasonable time for the purpose of conducting an investigation in a reasonable manner whenever the merchant has probable cause to believe the person to be detained is attempting to unlawfully take or has unlawfully taken merchandise from the merchant’s premises.”1California Penal Code Sec 490.5

What are the penalties for shoplifting in California?

In California, shoplifting is a misdemeanor crime, punishable by up to 6 months in county jail. Shoplifting is defined as “entering a commercial establishment with intent to commit larceny while that establishment is open during regular business hours” where the value of the property does not exceed $950.2California Penal Code Sec 459.5 Larceny is a type of theft crime.3California Penal Code Sec 484 – 502.9

Any other act where a person enters into a store with intent to commit larceny is burglary, which is punishable by up to 6 years in prison.4California Penal Code Sec 461

2. Consumer Laws

What are the consumer laws stores must follow?

Retail stores must comply with consumer protection laws, including laws governing product safety, labeling, and advertising practices.

What return and refund policies must stores have?

California law requires retail stores to clearly post their return and refund policies. Retailers are generally required to offer refunds, exchanges, or store credit for most consumer purchases, although certain restrictions may apply.

See our Guide to Consumer Laws for more.

All such store policies are essentially contractual agreements, so be sure to see our Guide to Contract Law.

3. Sales Tax

Sales Tax Permits: Retailers are required to obtain a seller’s permit from the California Department of Tax and Fee Administration (CDTFA) to collect and remit sales tax on taxable sales.

Sales Tax Collection: Retailers in California must collect sales tax on taxable sales of tangible personal property and certain services. The sales tax rate varies by location and can include state, county, and local sales taxes.

See our Guide to the California Seller’s Permit.

4. Labor and Employment Laws

As with all employers, retailers are subject to various employment laws, including minimum wage, overtime, meal and rest breaks, and anti-discrimination. See our Guide to Laws for Employees in California and our Guide to Laws for Hiring in California.

5. Environmental Regulations

Waste Disposal: Retailers must comply with environmental regulations governing the proper disposal of hazardous waste, recyclables, and other waste materials generated by their operations.

Plastic Bag Ban: California has implemented a statewide ban on single-use plastic bags at retail stores, encouraging the use of reusable bags or recyclable paper bags.

See our Guide to Laws about the Environment.

6. Other Business Laws

Of course, retail businesses must follow the general business laws in California. See our Guide to the Law for Business Owners in California.

See our Guide to Laws about E-Commerce.

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