California Employment Law Update – Changes in 2026

New year, new employment laws! A broad array of employment law changes in California took effect beginning January 1, 2026. These changes will impact compliance requirements across wage and hour, paid leave, anti-discrimination, pay transparency, minimum wage, and other workplace policies. Below is a summary of the most significant developments employers should be aware of. Some of these new laws will require employers to revise their policies, practices, and procedures to ensure compliance.

New Laws Requiring Changes to your Employment Policies

• Expanded Leave Rights for Victims of Violence

AB 406 expands and clarifies the reasons for which employees can use paid sick leave. The law permits employees (and in some cases their family members) who are victims of certain qualifying crimes to take job-protected leave to attend judicial proceedings related to those crimes. This includes delinquency hearings, bail/release decisions, pleas, sentencing, post-conviction proceedings, and other hearings where the victim’s rights are at issue. The law also allows employees to use accrued sick leave for jury duty and when appearing as a witness pursuant to a subpoena. Employers should update their sick leave policies to reflect these changes.

Notably, for pending matters, the legislation clarifies enforcement authority based on timing. Claims alleging violations of victim-related protections under the Labor Code that arose on or before December 31, 2024, fall under the jurisdiction of the California Division of Labor Standards Enforcement (DLSE), while claims arising on or after January 1, 2025, are enforced by the Civil Rights Department (CRD).

• No More Stay-or-Pay Agreements (for the most part)

AB 692 prohibits most “stay-or-pay” provisions in employment contracts – terms that require workers to repay costs, fees, penalties, or debts to an employer if their employment ends. Under the law, employers in California may no longer condition employment on agreements that require employees or workers to repay training costs, bonuses, relocation expenses, or similar amounts upon termination of employment because such provisions are treated as unlawful restraints on engaging in lawful work and are void as a matter of public policy. There are, however, narrow exceptions for certain agreements such as tuition reimbursements for a transferable credential and retention bonus repayments, provided certain criteria are met.

The bill applies to all contracts entered into on or after January 1, 2026. The bill creates a private right of action authorizing a worker or worker representative who has been subjected to a violation of AB 692 to bring a civil action on behalf of that worker, other persons similarly situated, or both. Employers found liable for violations of AB 692 will be subject to monetary damages in the amount of the worker’s actual damages or $5,000, whichever is greater. In addition, workers can seek injunctive relief and their reasonable attorneys’ fees and costs incurred in bringing the lawsuit.

• Immigration Related Rights and Emergency Contacts

SB 294, also known as the Workplace Know Your Rights Act, takes effect January 1, 2026, with initial notice requirements beginning February 1, 2026. The new law, set forth in Labor Code sections 1550-1559, requires employers to provide a stand-alone written notice to all current employees and new hires advising them of their constitutional rights when interacting with law enforcement. Notices must be delivered, in the language customarily used for workplace communications, by February 1, 2026, and annually thereafter.

Specifically, the notice must inform employees about rights such as workers’ compensation benefits, notice of immigration inspections and protections against unfair immigration-related practices, the right to organize, join a union, and engage in concerted activity, and constitutional protections when interacting with law enforcement in the workplace, among other things. The Labor Commissioner posted a template notice on its website that employers may use:

• English: https://www.dir.ca.gov/dlse/Know-Your-Rights-Notice/Know-Your-Rights-Notice-English.pdf
• Spanish: https://www.dir.ca.gov/dlse/Know-Your-Rights-Notice/Know-Your-Rights-Notice-Spanish.pdf

The new law also requires employers to offer employees the opportunity to designate an emergency contact and notify that contact if the employee is arrested or detained at the workplace or during job duties (if the employer has actual knowledge). This provision must be implemented by March 30, 2026 for existing employees and upon hire for new employees.

Employers should revise their employee emergency contact designation forms to include a section for this emergency contact and a section authorizing the employer to contact the employee’s designated person in the event of their arrest or detainment. Employers must maintain records of compliance with the requirements of SB 294 for three years, including the date that written notice of workplace rights is provided to employees.

• Pay Equity and Pay Transparency Enhancements

California Senate Bill 642, effective January 1, 2026, strengthens and clarifies the state’s Equal Pay Act and pay transparency requirements to promote broader pay equity and reduce wage disparities.

Currently, California’s pay transparent law requires employers to disclose a position’s pay scale upon request by an applicant or employee and requires employers with 15 or more employees to include the pay scale for a position in any job posting. The law revises the definition of “pay scale” to mean a good-faith estimate of the salary or hourly wage range that an employer reasonably expects to pay for a position upon hire — increasing transparency and closing loopholes that previously allowed overly broad pay ranges. The law expands the definition of “wages” for pay equity purposes to include all forms of compensation — such as bonuses, stock, stock options, reimbursements, benefits, and other pay elements — meaning equity analyses must consider the total compensation package.

SB 642 also updates California’s Equal Pay Act to prohibit wage disparities based on sex, phrased as “another sex” instead of “opposite sex,” extending protections to nonbinary employees and reinforcing protections across gender identities.

Finally, SB 642 provides for a three-year statute of limitation for equal pay violations and specifies that the cause of action accrues “after the last date the cause of action occurs,” as opposed to the first occasion. Thus, employees who bring a claim within three years can obtain relief for the entire period in which the violation occurred, not to exceed six years.

• Training Records as Personnel Records

SB 513 expands what is considered “personnel records” under California Labor Code section 1198.5 and enhances employee access to these records. Effective January 1, 2026, employers must maintain all training records in an employee’s personnel file, and such records must include: (1) the name of the employee, (2) the name of the training provider, (3) the duration and date of the training, (4) the core competencies of the training, and (5) the resulting certification or qualification. SB 513 clarifies that such records must be made available to employees for inspection.

Employers should update their personnel files to include all required training records.

• Expanded Pay Data Reporting Requirements

SB 464 strengthens the state’s pay data reporting laws for covered employers with 100 or more employees. The law requires covered employers and labor contractors to maintain employee demographic data (including race, ethnicity, and sex) separately from personnel records and imposes civil penalties for failure to file required pay data reports when requested by the CRD ($100 per employee for first failure to file, and up to $200 per employee for each subsequent failure). In addition, during the next reporting cycle, employers must classify employees using 23 Standard Occupational Classification (SOC) job categories instead of the ten (10) EEO-1 categories for pay data reporting purposes.

Employers should review their data collection, recordkeeping, and reporting processes now to prepare for these expanded compliance obligations.

• Bias Mitigation Training

SB 303 explicitly states that an employee’s assessment, testing, admission, or acknowledgment of personal bias, when those things are made in good faith and are required or solicited as part of a bias mitigation training, does not by itself count as unlawful discrimination under state law. Under existing law, employers are required to prevent workplace discrimination and can face liability for discriminatory conduct. SB 303 ensures that participating transparently in bias awareness and mitigation training (including self-reflection exercises) won’t automatically expose employees or employers to discrimination claims simply because the training involved discussion of personal biases.

• Cal-WARN Amendments

SB 617 requires enhanced notice requirements under Cal-WARN. Employers must now include additional information in the Cal-WARN notice that they provide to employees when a mass layoff, relocation, or termination is planned. Specifically, employers are now required to state whether they plan to coordinate services for affected employees through the local workforce development board (LWDB), another entity, or not at all. Regardless of their choice, employers must provide the LWDB’s contact information and a description of its services in the notice.

• Extended “Right to Recall” protections for Hospitality and Services Workers

During COVID-19, California created temporary “right of recall” rules so workers who were laid off would get first priority to be rehired when businesses reopened. Those rules were set to expire and were limited mainly to COVID-related layoffs. AB 858 extends the sunset date of the recall and reinstatement rights of employees laid off until January 1, 2027. AB 858 applies only to employees working in hotels, private clubs, event centers, airport hospitality operations, airport service providers, and building services to office, retail, or other commercial buildings.

To qualify, an employee must have worked for at least six months and have been separated from employment on or after March 4, 2020, for a COVID-related reason. Covered employers must offer open jobs to qualified former employees based on seniority and qualifications, before hiring new workers.

Other New Laws to Keep in Mind

• Minimum Wage Increases

Effective January 1, 2026, California’s minimum wage increased to $16.90 per hour for all employers, regardless of size. Keep in mind, however, that many cities and counties already require the payment of minimum wages higher than $16.90 per hour, as do some statutes regulating certain industries (such as healthcare). The following (non-inclusive) cities required a higher minimum wage:

• Alameda: $17.46/hour
• Berkeley – $19.18/hour
• Hayward – $17.79/hour (if 26+ employees)
• Los Angeles – $17.87/hour
• Pasadena – $18.04/hour
• San Diego – $17.75/hour
• San Francisco – $19.18/hour
• San Jose – $18.45/hour
• Santa Clara – $18.70/hour
• Santa Monica – $17.81/hour
• West Hollywood – $20.25/hour

Also effective January 1, 2026, exempt employees in California must earn an annual salary of at least $70,304 to be classified as exempt from California’s overtime requirements (in addition to meeting other duties requirements).

• Paid Family Leave – Designated Person (SB 590)

Beginning July 1, 2028, SB 590 will broaden who can receive wage-replacement benefits from the California Employment Development Department under California’s Paid Family Leave program. Previously, benefits were only available when caring for certain defined family members. SB 590 allows workers to collect paid family leave benefits to care for a “designated person,” defined as someone related by blood or whose association with the claimant is the equivalent of a family relationship. When requesting benefits to care for a designated person, the employee must identify the individual and attest under penalty of perjury to the nature of the relationship, including either how the designated person is related by blood or how their association with the designated person is the equivalent of a family relationship.

• Collective Bargaining for App-Based Drivers

AB 1340, the Transportation Network Company (TNC) Drivers Labor Relations Act, establishes that rideshare drivers have the right to join a union and negotiate for better wages, benefits, and protections, without losing their independent contractor status.

• Revival Window for Sexual Assault Claims

AB 250 allows survivors of adult sexual assault (age 18 or older at the time of the assault) to revive civil lawsuits that would otherwise be time-barred because the statute of limitations has expired. To use this revival window, the person must show the assault happened when they were an adult and that the claim would otherwise be barred by the statute of limitations. Note that AB 250 applies only to private actors; public entities are not covered under this revival mechanism, so those claims remain subject to standard deadlines. Further, claims that have already been fully litigated to final judgment or settled in writing before January 1, 2026, are not revived. The law takes effect January 1, 2026, and the revival window stays open until December 31, 2027.

• New Tolling Rules under FEHA

The CRD is responsible for enforcing the California Fair Employment and Housing Act (FEHA), which bars discrimination in employment and housing based on protected traits. CRD investigates discrimination complaints, takes enforcement action, and works to stop unlawful conduct. SB 477 clarifies tolling rules under the FEHA. Under prior law, the one-year statute of limitations (SOL) for a complainant to bring a civil lawsuit began to run after the CRD closed its file and issued a right-to-sue notice. Effective January 1, 2026, if a complainant timely appeals the CRD’s decision to close its file, the one-year SOL to file a civil action is tolled and does not begin to run until the CRD issues written notice that its file remains closed following the appeal.

Existing law authorizes the director to bring a civil action in the name of the department, acting in the public interest, on behalf of an aggrieved person if conference, conciliation, mediation, or persuasion fails to eliminate an unlawful practice. Existing law imposes a deadline of one or two years for the department to bring a civil action, as specified. Existing law requires those deadlines to be tolled during a dispute resolution proceeding.

There are a lot of changes coming this year for employers in California. If you have any questions regarding these changes, please reach out to the attorneys at LBBK!