Can't remember my source but just google "most litigious states in america" and California without a doubt, any measurement, is #1 in litigation, lawsuits, settlements. Not just PAGA (wage and hour compliance predominantly), anything...think TBI claims for auto accidents against your commercial business, so called "nuclear" settlements for personal injury, etc.. California has the most "claimant" friendly courts in the country and certain counties within the state (e.g. see certain East Bay California counties such as contra costa or alameda) for handing out massive jury rulings against corporations (hence insurance companies rates skyrocketing across the board, companies just making the economic decision to not do business in california etc..). The Newsom administration finally gave some relief on some of this litigation via the PAGA relief act in Julyredactedalthough PAGA claims have not slowed down that much) But again, California is also the largest state in the union and one of the largest economies in the world and generally those economics flow down into SMBs (not equally, just generally speaking).

I certainly concur with the comments regarding access to an HR expert - whether that is someone you hire to be part of your company or a contact that has (ideally extensive) HR experience in CA in the industry/ies in which you are searching, that person will likely be an invaluable resource for navigating CA labor and other laws. Local chamber of commerce can also be a helpful source of authoritative advice (in areas such as, for example, preparing employee handbooks, etc.) for a relatively modest membership or access fee.