Effective January 1, 2026, new employment laws will go into effect in California, including several signed by Governor Newsom. We recommend reviewing and updating your employee handbooks, personnel policies, and procedures before year-end to ensure compliance with these upcoming changes.
Minimum Wage
Effective January 1, 2026, California’s minimum wage will increase to $16.90 per hour. Minimum annual salaries for exempt employees (i.e., professional, administrative, executive) will increase to $70,304.
Local city and county ordinances may require a higher minimum wage than the state. These local higher rates only apply to hourly employees, not exempt employees.
Different minimum wage laws apply to certain workers in health care (ranging from $18.63-$23/hour) and fast-food chains ($20/hour).
Notices to Employees
Senate Bill 294: “The Workplace Know Your Rights Act”
The Workplace Know Your Rights Act (SB 294) requires employers to provide employees a standalone written notice by February 1, 2026, and annually thereafter, about certain workplace rights, including information on specific constitutional, employment, and labor rights as well as unfair immigration practices and interaction with law enforcement agencies. The California Labor Commissioner will issue a model notice template by January 1, 2026. The new law also requires employers to notify an employee’s designated emergency contact if the employee is arrested or detained at work, or during work hours if the employer had actual knowledge of the event. Employees have until March 30, 2026 to designate an emergency contact. Compliance records must be kept for three years.
Senate Bill 446: 30-Day Window to Provide Data Breach Notifications
SB 446 narrows the State’s data-breach notification rules by requiring that any business or entity conducting business in California and owning or licensing computerized data with personal information must notify affected California residents within 30 calendar days of discovering or being notified of a breach of security. If the breach impacts more than 500 California residents, the entity must also submit a sample copy of the consumer notification to the California Attorney General’s office within 15 calendar days of notifying consumers. The bill allows for delays only for legitimate law enforcement needs or to determine the scope of the breach and restore system integrity.
Recordkeeping Requirements
Senate Bill 513: Expansion of Personnel File Inspection Requirements
Under California Labor Code section 1198.5 employees are required to make available for inspection personnel records relating to an employee’s performance or grievance. SB 513 amends this requirement to include employees’ training and education records. “Education and training records” include the following:
Name of the employee
Name of the provided training
Duration and date of the training
Core competencies, including skills in equipment or software, of the training
Resulting certification or qualification
Section 1198.5 makes it a crime for an employer to violate these requirements.
Senate Bill 464: Mandatory Penalties for Pay Data Reporting Failures
Under current law, private employers with 100 or more employees, or that engage labor contractors with 100 or more employees, must file an annual Pay Data Report with the California Civil Rights Department (CRD) no later than the second Wednesday in May each year for the prior calendar year. Under SB 464, beginning January 1, 2026, courts will be required to impose civil penalties (rather than only permitted) against an employer that fails to file the report if requested to do so by the CRD. Employers will be required to collect and store any demographic information separately from the employee’s personnel records. Beginning on January 1, 2027, the number of job categories that the employer must report will increase from 10 to 23. Starting with reports due in May 2025, public employers with 100 or more employees will become subject to equivalent pay reporting obligations.
Discrimination, Harassment & Retaliation
Senate Bill 303: Bias Mitigation Training
This bill creates Government Code section 12940.2 to clarify that an employee’s assessment, testing, admission, or acknowledgment of their own personal bias, if made in good faith during or as part of bias-mitigation training, cannot be used against the employer as proof of unlawful discrimination under the Fair Employment and Housing Act. The purpose of this new law is to encourage employers to continue offering implicit and unconscious bias training without fearing employee participants may later claim their participation amounted to discriminatory treatment.
Assembly Bill 250: Revival of Statute of Limitations on Sexual Assault Claims
AB 250 amends Code of Civil Procedure section 340.16 to revive specific sexual-assault civil actions by reviving claims that were otherwise timely barred by the statute of limitations. To revive a claim, a plaintiff must demonstrate that one or more entities engaged in a cover up – defined as a “concerted effort to hide evidence relating to a sexual assault that incentivizes individuals to remain silent.”
FEHA Regulations Amened Regarding the Use of AI in Employment
Effective October 1, 2025, the California Civil Rights Department finalized amendments on using artificial intelligence (AI) and automated decision systems (ADS) in the workplace. Under the revised regulations, it is unlawful for an employer to use ADS in a manner that discriminates against applicants or employees.
The regulations clarify the application of existing anti-discrimination laws in the workplace in the context of new and emerging technologies, like AI. The regulations aim to:
Make it clear that the use of an automated-decision system may violate California law if it harms applicants or employees based on protected characteristics, such as gender, race, or disability.
Ensure employers and covered entities maintain employment records, including automated-decision data, for a minimum of four years.
Affirm that automated-decision system assessments, including tests, questions, or puzzle games that elicit information about a disability, may constitute an unlawful medical inquiry.
Add definitions for key terms used in the regulations, such as “automated-decision system,” “agent,” and “proxy.”
Senate Bill 53: Transparency Regarding Use of AI In Employment
Governor Newsom signed SB 53, the “Transparence in Frontier Artificial Intelligence Act,” which becomes effective January 1, 2026. This new law is designed to govern “frontier” models, which are large, cutting-edge systems built by major developers with substantial resources. The aim of the law is to encourage innovation while protecting public safety and property from catastrophic risks. Any large frontier developer must create and publicly post a Frontier AI Framework that explains how it identifies and mitigates catastrophic risks, follows recognized safety standards, and conducts oversight. The law further requires developers to share summaries of risk assessments with the State on a regular basis and prohibits false or misleading statements about their compliance. Enforcement will include civil penalties – potentially up to $1 million per violation – and ongoing oversight by the California Government Operations Agency.
SB 53 protects whistleblowers, i.e., employees who raise concerns about catastrophic risks or violations, with anti-retaliation measures, anonymous reporting options, and the ability for employees to seek injunctive relief in court.
Hiring and Firing
Assembly Bill 692: Employment Contract Repayment Prohibition
AB 692 creates Business and Professions Code section 16608 and Labor Code section 926, which prohibit employers, training providers or debt collectors from entering into employment contracts that impose financial penalties, repayment obligations or fees tied to the termination of employment. The bill would define these contracts as contracts that restrain a person from engaging in lawful possession, trade, or business, and as void and contrary to public policy.
This law does not apply to certain contracts that relate to discretionary bonuses or relocation payments, so long as they meet certain requirements, including:
The repayment terms are in a separate agreement that is different from the original employment agreement;
The employee must be advised of their right to consult an attorney and be given at the minimum five (5) business days to be able to review with the attorney before signing;
Any repayment obligation for early separation must be prorated based on the remaining retention period for the employee, solely up to two years, and cannot accrue interest;
The employee must have the option to defer receipt of the payment until the end of the retention period; and
The repayment may only apply if the employee leaves voluntarily or is terminated for misconduct.
This bill would allow employees who have been subject to the prohibited conduct of a contract to bring an action on behalf of that worker and other persons similarly situated. A violator may be liable for actual damages and/or penalties.
Assembly Bill 858: COVID-19 Right of Recall Extended
AB 858 expands the sunset date for COVID-19-related recall and reinstatement rights to January 1, 2027 for employees in the hospitality and business services industry (including, but not limited to, hotels, event centers and employer that provide maintenance services).
Senate Bill 617: CalWARN Notices Expanded
This bill introduces new requirements for employers in California when providing written notice under the California Worker Adjustment and Retraining (CalWARN) Act when implementing a mass layoff, relocation or termination at a covered establishment. Employers will be required to include whether they plan to coordinate services through the local workforce development board or another entity. They must also include certain language regarding rapid response activities offered by the local workforce development board, as well as information related to statewide food assistance programs, such as CalFresh, and a functioning email address and telephone number of the employer.
Wage and Hour Laws
Senate Bill 642: Pay Equity and Pay Scale Definition
Existing law under the California Equal Pay Act requires employers to provide pay scale information to applicants and employees when requested; employers with 15 or more employees must prove “pay scale” information in job postings. SB 642 revises the definition of “pay scale” to mean “a good faith estimate” of the salary or hourly wage range the employer reasonably expects to pay for the position upon hire. The new law also increases the statute of limitations under the Equal Pay Act from two (2) to three (3) years, and claims may relate back up to six (6) years. Additionally, the definition of “wages” and “wage rates” was changed to include “all forms of pay, including but not limited to, salary, overtime pay, bonuses, stock, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, cleaning and gasoline allowances, hotel accommodations, reimbursement for travel expenses, and benefits.”
Assembly Bill 774: Wage Garnishment Law
AB 774 updates California’s Wage Garnishment Law by requiring employers to provide levying officers with additional information in the employer’s return related to wage garnishments. This allows judgment creditors to obtain more complete information from employers when collecting judgments.
Senate Bill 261: DLSE Strengthened Enforcement on Wage Judgments
Under this bill, employers who fail to pay their final wage judgments will face significant penalties – up three times the amount of the unpaid judgment plus interest if the judgment remains unpaid for 180 days after the appeal period expires. The new law will allow for the recovery of attorneys’ fees and costs and broader enforcement options for the Labor Commissioner, including successor employer liability. The bill requires the full amount of the penalty unless the employer can show by clear and convincing evidence that good cause existed to lower the penalty. Half of the penalty amount would go to the employee, and the other half would go to the Division of Labor Standards Enforcement (DLSE) for enforcement of labor laws.
Assembly Bill 751: Rest Periods for Safety Sensitive Positions
AB 751 extends the exemption of certain rest-period requirements for employees in specifically designated “safety-sensitive” positions at petroleum facilities and specifically applies to refineries that use alternative feedstocks to produce fuel.
Senate Bill 809: Employee Vehicle Business Expenses and Independent Contractors
SB 809 clarifies that existing law does not consider ownership of a vehicle used to perform labor or services for compensation, whether personal or commercial, as determinative of a worker’s status as an independent contractor. It further clarifies that the Labor Code provision requiring employers to reimburse employees for necessary work-related expenditures (Labor Code section 2802) includes costs associated with the use of personal and commercial vehicles. In the context of construction trucking, SB 809 requires employers to reimburse employees who are commercial drivers and who own their trucks, tractors, or trailers for expenses related to use, maintenance, and depreciation. Further, the new law creates the “Construction Trucking Employer Amnesty Program,” that allows qualifying construction contractors to avoid statutory or civil penalties for previous misclassifications for drivers as independent contractors. To qualify, contractors must enter into a qualifying settlement agreement by January 1, 2029.
Leaves of Absence
Assembly Bill 406: Judicial Proceeding and Jury Duty Leaves
On October 1, 2025, Governor Newsom signed AB 406 into law, which took immediate effect. AB 406 expands the scope of paid sick leave and job-protected unpaid leave, allowing crime victims and their family members to take lawful leave while participating in judicial proceedings.
AB 406 also amends existing jury duty leave law (Labor Code Section 230) by removing the requirement that employees provide reasonable advance notice before taking time off to serve on a jury. However, when employees use paid sick leave or unpaid job-protected leave specifically for jury duty, the standard notice requirements apply (reasonable advance notice unless not feasible).
The new law also restores the enforcement authority of the Division of Labor Standards Enforcement (DLSE).
Senate Bill 590: California’s Paid Family Leave Expanded to Cover Designated Persons
Under SB 590, starting July 1, 2028, California’s Paid Family Leave (PFL) benefits will extend to employees who need time off to care for a “designated person” – an individual related by blood or with a relationship equivalent of a family relationship. When applying for family temporary disability benefits, employees must identify this person and declare under penalty of perjury how they are related by blood to the person or how their relationship is equal to a family relationship.
Labor Law
Assembly Bill 288: Expansion of PERB’s Authority to Private Employers
AB 288 expands the jurisdiction of California Public Employment Relations Board (PERB) to include oversight of private sector employers subject to the National Labor Relationships Board (NLRB) under the National Labor Relations Act (NLRA). Employees would be able to petition PERB for relief when the NLRB fails to provide a timely remedy. Among other things, PERB would be able to certify elections, decide unfair labor practice cases, and order binding mediation or other relief (including civil penalties). The legislation also creates a PERB Enforcement Fund to receive collected penalties and support PERB’s increased workload.
Noteworthy Employment Law Decisions from 2025
Carranza v. City of Los Angeles: “Totality of the Circumstances” Hostile Work Environment
In Carranza, plaintiff, a Los Angeles Police Department officer, became the target of a degrading campaign involving a doctored nude photo circulated among other officers. Despite her requests, the department failed to take corrective action, allowing the photo’s distribution to continue unchecked. The court found this created a hostile work environment, making it difficult for the plaintiff to perform her duties. The court applied the 2019 amendments to FEHA, which allow a single incident to establish liability if it unreasonably interferes with work performance or creates an intimidating environment. This case emphasizes a broader interpretation of what constitutes a hostile work environment under FEHA, looking at the “totality of the circumstance.” This approach considers the overall impact of the harassment, rather than requiring a pattern of bad acts, and recognizes the impact of widespread, unchecked distribution of harmful materials. This case highlights the importance of employers taking appropriate corrective action upon learning of potential harassment. Also, employers should implement policies and training to address and prevent harassment, considering the broader implications of the “totality of the circumstances” approach.
Bradsbery v. Vicar Operating, Inc.: Meal Period Waivers
In Bradsbery, the court ruled that prospective meal period waivers for shifts of five to six hours are enforceable, provided the waivers are written, voluntary, and revocable at any time.
Iloff v. LaPaille: Good Faith Defenses and Liquidated Damages
Labor Code section 1194.2 provides proven minimum wage violations are sufficient for liquidated damages, which are designed to compensate employees for unpaid minimum wages and to penalize employers. In Iloof, the California Supreme Court ruled that an employer may claim a good faith defense to liquidated damages. A good faith defense requires “an employer must show that it made a reasonable attempt to determine the requirements of the law governing minimum wages,” such as by taking affirmative steps to understand wage and hour laws. However, the court reiterated ignorance of the law is not a defense.
Kruitbosch v. Bakersfield Recovery Services: Coworker Harassment
In Kruitbosch, a California court determined that while a coworker’s off-site harassment is not automatically imputable to an employer, the employer can still be liable under the FEHA for its response to a complaint. In this case, alleged that a female coworker subjected him to unwanted sexual advances, including sending him unsolicited nude images, visiting his home uninvited, texting him sexual propositions and an offer of drugs, and leaving a cucumber covered with a condom in his driveway. The conduct occurred while the employee was on a month-long leave of absence because his partner died.
The court reaffirmed that offsite harassment must be work-related to be actionable. However, the court made clear that an employer’s response to an off-site harassment complaint itself can create a hostile work environment, even if the off-site harassment is not work-related. The court emphasized that the “totality of the circumstances” must be evaluated to determine whether a work environment is reasonably perceived as hostile or abusive. Here, the court determined that the employer’s response could have altered Kruitbosch’s working environment in an objectively severe manner – it refused to investigate the complaint, failed to admonish the alleged harasser, and made a mockery of the employee’s complaint
Caldrone v. Circle K Stores, Inc: Age Discrimination and In-Office Hiring
In this age discrimination case, the Ninth Circuit Court of Appeals found summary judgment was inappropriate where Plaintiff raised issues of material disputed facts as to whether the employer followed its established practice of seeking internal applications for an available position. The court found the employer’s decision not to post a promotion and instead handpick a younger candidate supported the older employees’ claims. The court found that the failure to follow the standard hiring procedure prevented the older, qualified employees from applying and, combined with evidence of the decision-maker’s ageist comments, created a triable issue of pretext for discrimination.
Ames v. Ohio Dept. of Youth Services: Requirements for Reverse Discrimination
In Ames, the United States Supreme Court ruled that Title VII discrimination plaintiffs who are members of a “majority group” are not required to meet a higher evidentiary burden than those in minority groups. Accordingly, a plaintiff who falls within a majority group, such as heterosexual or male, has the same burden of proof as other protected categories.
Conclusion
The employment law changes taking effect in 2026 are significant and will impact nearly all California employers. We encourage you to contact our office for comprehensive compliance support, including updates to employee handbooks, revisions to employment agreements, evaluations of compensation practices, and other proactive measures to help ensure your organization is fully prepared for the new year