Moving your company from California to Austin, Texas? Part 1: The business case and the people cost

This is Part 1 of a two-part series for employers weighing a move from California to Texas. It covers the business case and the people side of the move: what it costs, who follows, and what HR has to get right. Part 2 compares California and Texas employment law line by line.

My position, up front: a headquarters move is a people decision dressed up as a real estate decision. The lease, the tax rate and the incentive package get the board’s attention. The employees who decline to move, the knowledge that leaves with them, and the California obligations that follow the company across the state line decide whether the move pays off.

How many companies have moved from California to Austin?

About 21 companies moved their headquarters from California to the Austin metro from 2021 through early 2025, and 13 of those moves happened in 2021. That count comes from the State of Texas headquarter relocation list, filtered to companies leaving California for Austin, Round Rock, Leander, Pflugerville and Kyle. The 2021 group included Tesla, Green Dot and Digital Realty. Since then, the stream of companies moving to Austin from California has slowed to one to four a year, with Realtor.com’s move from Santa Clara in 2025 the most visible recent example.

Year	California HQs to the Austin metro	All HQs to the Austin metro
2021	13	33
2022	4	6
2023	1	4
2024	2	6

The statewide pull is larger and steadier. The Texas Comptroller reports that California supplied 157 of the 314 headquarters that relocated to Texas from 2015 through 2024. Most recent movers chose Dallas-Fort Worth or Houston, not Austin. Read together, the numbers say Austin’s boom was a 2020 and 2021 event, and many of those decisions were made in the most uncertain year American employers have had in decades.

Why do companies move their headquarters from California to Texas?

Companies relocating headquarters to Texas give consistent reasons: no state income tax, lower operating and real estate costs, a lighter regulatory load and access to a growing talent pool. Texas has no personal income tax, while California’s top rate is 13.3%, which matters most to executives and owners. Texas also has no paid sick leave mandate, no daily overtime and no Private Attorneys General Act, the California law that lets employees sue for penalties on the state’s behalf.

Here is the part the press releases skip. For most employers, the larger savings is not the tax rate. It is lower exposure to wage-and-hour litigation, because California’s meal and rest break rules, final paycheck penalties and PAGA claims are where employers lose real money. I cover that exposure in California meal and rest breaks and PAGA. That savings applies only to employees who actually work in Texas. A company that moves its headquarters but keeps most of its workforce in California has changed its mailing address, not its risk profile.

What happens to employees when a company relocates to Texas?

Each employee gets a choice: relocate, stay in California remotely if the role allows it, or separate, and the mix of those choices is the true cost of the move. Many people will not move. They have partners with California careers, children in school, parents to care for, or housing they cannot replace. The employees most able to move are often the ones with the most options elsewhere, and the employees with the deepest institutional knowledge are often the least mobile.

That is why the first HR decision is not the relocation package. It is the role map: which roles must be in Austin, which can stay remote, and which will be rehired in Texas. A company that answers that question before the announcement controls the story. A company that answers it after watches its best people interview elsewhere while leadership drafts a FAQ.

Brief the managers before the announcement, not alongside it. In Careerminds research, 66% of C-suite people managers said they were very ready to lead through change, but only 42% of the senior and middle managers who actually deliver the news agreed. Those managers will field the hardest questions in the first 48 hours, and I cover how to prepare them in training managers to lead through change.

Does the California WARN Act apply when a company relocates?

Yes: the California WARN Act requires 60 days’ written notice before relocating operations 100 miles or more, for covered establishments with 75 or more employees, regardless of how many employees are affected. The California Employment Development Department confirms that a relocation of at least 100 miles affecting any number of employees triggers the notice. Federal WARN is narrower, covering employers with 100 or more full-time employees.

Austin is roughly 1,500 miles from the Bay Area, so the distance test is never in doubt. Since January 1, 2026, Senate Bill 617, the latest CalWARN update, also requires California WARN notices to include more information about how laid-off workers can reach retraining and support services, so older templates no longer comply. For the full rules, read my guide to California WARN Act layoffs.

How much does an employee relocation package cost?

Relocation assistance is the largest single check many employees ever receive. A typical relocation package costs $19,309 to $24,216 for a renter and $72,627 to $97,116 for a homeowner, and every dollar is taxable wages. The One Big Beautiful Bill Act of July 2025 permanently ended the tax exclusion for employer-paid moving expenses for everyone except active military and certain intelligence personnel. Without a tax gross-up, a $25,000 package delivers far less than $25,000 to the employee.

California adds a second constraint. Assembly Bill 692 limits repayment of bonus, training and relocation money, and AB 1697, signed September 30, 2026, moved its start date to agreements entered on or after January 1, 2027. Most relocation decisions made now produce agreements signed in 2027, so plan as if the ban applies. The old playbook, pay the relocation upfront and claw it back if the employee leaves within a year, will be largely unenforceable for California employees. The better design is a retention bonus paid at the end of the retention period. It costs the same, survives the new law, and rewards the people who actually stay.

Do California employees who stay remote still follow California law?

Yes: an employee who lives and works in California is covered by California employment law no matter where the company is headquartered. Minimum wage, daily overtime, meal and rest breaks, paid sick leave, final pay timing and California’s noncompete ban all follow the employee, not the headquarters. California Labor Code section 925 also bars employers from requiring California-based employees to litigate or arbitrate under another state’s law as a condition of employment.

So a company that moves to Austin and keeps a California team runs two compliance programs, not one. That means multi-state payroll, registration with the Texas Workforce Commission for unemployment tax, separate wage statements, and an employee handbook with a California supplement. I recommend employers budget for that ongoing HR compliance work before announcing the move, because it is the cost most often left out of the business case. Whether that work belongs with fractional HR, a PEO or a first HR hire depends on how many people stay in California.

What should HR do first when a company moves to Texas?

Build the people plan before the announcement, in this order:

• Map every role as move, remote or rehire, and estimate attrition. Plan for the possibility that a large share of California staff will decline, and price the cost of replacing each senior role before the board votes.
• Confirm California WARN coverage and serve compliant notice at least 60 days before the relocation date.
• Rewrite relocation offers for AB 692: retention bonuses paid at the end, tax gross-ups stated in writing, and no clawbacks for California agreements signed on or after January 1, 2027.
• Calculate final pay for every separating California employee. Final wages are due on the last day for an involuntary separation, and late pay carries waiting time penalties of up to 30 days of wages. Read California final paycheck rules.
• Register Texas payroll and unemployment accounts, and decide on workers’ compensation coverage. Texas is the only state where private employers may opt out, and 24% of Texas employers did in 2024.
• Split the handbook into Texas and California policies and train managers on both. A Texas manager supervising a California employee follows California rules for that person, including harassment prevention training, which California requires of employers with as few as 5 employees.

Part 2 walks through exactly which rules change at the border and which follow your people. If you are planning a move and want the people plan built before the announcement, book a consultation.

McKinley holds a J.D. but is not a licensed attorney. Articles here are general information, not legal advice. For your specific situation, talk with an employment attorney.

Data current as of September 2026. Sources are linked where each figure appears.