Navigating California’s 2026 Employment Law Changes:

What Employers Need to Know

As California continues to lead the way in progressive employment legislation, businesses must stay informed of evolving requirements. In 2026, significant updates to employment laws will impact industries across the state, touching on discrimination protections, leaves of absence, employment contracts, notice and recordkeeping requirements, collective bargaining, enforcement, and more.

This article provides an overview of the key legislative changes and practical guidance for compliance. Below is a brief look at the most notable changes coming in 2026. Unless otherwise noted, the new laws take effect on January 1, 2026.

1. Minimum Wage Increases

Effective January 1, 2026, California’s minimum wage will increase to $16.90 per hour. This increase also impacts on the minimum salary requirements for full-time exempt employees, raising the annual threshold to $70,304.

• State minimum wage: $16.90 per hour, effective January 1, 2026
• Exempt salary threshold: $70,304 annually
• Fast food workers: $20.00 per hour minimum; exempt employees must earn at least twice this rate, in accordance with California Labor Code Sections 174–1476

SB 525 establishes higher minimum wage requirements for healthcare workers, with wages reaching up to $25.00 per hour for employees of large healthcare systems by July 1, 2025. Employers must evaluate these increases and adjust exempt employee salaries as needed to remain compliant with overtime exemption requirements.

• Healthcare workers: Must earn at least 1.5 times the applicable healthcare minimum wage or twice the state minimum wage, whichever is greater

Additionally, several cities and counties throughout California have adopted local minimum wage ordinances that differ from the statewide rate. Many of these local increases took effect on January 1, 2026. However, local minimum wage rates do not affect the statewide minimum salary threshold for exempt employees.

2. Discrimination, Harassment, and Retaliation

SB 642 revises the definition of “pay scale” under California’s pay scale disclosure requirements and the California Equal Pay Act. Under existing law, employers must provide pay scale information to applicants and employees upon request, and employers with 15 or more employees are required to include pay scale information in job postings. SB 642 clarifies that a “pay scale” means a good-faith estimate of the salary or hourly wage range the employer reasonably expects to pay at the time of hire.

The California Equal Pay Act generally prohibits employers from paying employees less than employees of a different gender, race, or ethnicity for substantially similar work. SB 642 also extends the statute of limitations for Equal Pay Act claims, allowing recovery to reach back as far as six years.

SB 464 requires that demographic information collected by an employer or labor contractor for pay data reporting purposes be stored separately from employees’ personnel records. In addition, SB 464 makes pay data reporting penalties mandatory, rather than discretionary, for the courts.

SB 303 adds new provisions to the Fair Employment and Housing Act (FEHA) clarifying that an employee’s good-faith assessment, testing, admission, or acknowledgment of their own personal bias—when conducted as part of a bias mitigation or training program—does not constitute unlawful discrimination. Lawmakers introduced this bill to address concerns that information disclosed during bias-related training could be misused in discrimination claims against employees or employers.

3. Leave of Absence

AB 406, effective October 1, 2025, protects employees who are victims of certain crimes—or whose family members are victims—when they take time off to attend judicial proceedings related to those crimes. Covered proceedings include, but are not limited to, delinquency proceedings, post-arrest release decisions, pleas, sentencing, and post-conviction release decisions.

For purposes of this leave, a “victim” is defined as a person against whom specified crimes have been committed, including violent felonies, serious felonies, felony theft or embezzlement, as well as individuals who suffer direct or threatened harm resulting from crimes or delinquent acts identified in the statute. Consolidating victims’ leave provisions within the same code and under the jurisdiction of a single agency is expected to improve consistency in leave administration and enforcement.

Beginning January 1, 2026, employees may also use paid sick leave to attend judicial proceedings related to crimes covered by victims’ leave, as well as for jury duty and witness leave.

SB 590 expands eligibility for California’s Paid Family Leave (PFL) benefits to include individuals who take time off work to care for a seriously ill designated person, defined as any care recipient related by blood or whose association with the employee is the equivalent of a family relationship. Employees must identify the designated person at the time they request PFL benefits and attest to the nature of the relationship. This expansion takes effect on July 1, 2028.

4. Employment Contracts

AB 692 restricts certain voluntary employer-provided benefits—such as monetary bonuses or educational tuition assistance—that are offered to incentivize and retain employees. For contracts entered into on or after January 1, 2026, the law makes it unlawful to include any provision that:

• Requires a worker to repay an employer, training provider, or debt collector for a debt;
• Allows an employer, training provider, or debt collector to initiate or resume debt collection activities, or to end forbearance on a debt; or
• Imposes any penalty, fee, or cost on a worker.

The law includes limited exceptions, including repayment agreements entered into under loan repayment assistance or loan forgiveness programs provided by a federal, state, or local government agency.

Employers that offer incentive-based benefits or similar programs should consult with legal counsel to assess AB 692’s impact on their existing practices and to ensure compliance moving forward.

5. Notice and Recordkeeping

SB 294, the Workplace “Know Your Rights” Act, requires employers to distribute a new annual notice to employees covering several topics, including workers’ compensation, immigration protections, the right to engage in concerted activity, and constitutional rights when interacting with law enforcement. SB 294 directs the California Labor Commissioner to develop a template notice by January 1, 2026, which employers may use to satisfy this requirement.

Employers must provide the notice to all current employees no later than February 1, 2026, and annually thereafter. The notice must also be provided to all new hires. For recordkeeping purposes, SB 294 requires employers to retain compliance records for three years, including the date each written notice is provided or sent.

SB 294 further requires employers to notify an employee’s designated emergency contact if the employee is arrested or detained at the worksite, but only if the employee has designated an emergency contact for this purpose and the employer has actual knowledge of the arrest or detention. Employers must provide existing employees with the opportunity to designate an emergency contact by March 30, 2026, and must offer this option at the time of hire for employees hired after that date.

SB 617 requires covered employers to review and update notices required under the California Worker Adjustment and Retraining Notification (Cal-WARN) Act. The updated notices must include whether the employer plans to coordinate services through the local workforce development board, as well as information about the local workforce development board and California’s CalFresh food assistance program.

SB 513 requires employers to include specific information in employees’ education and training records, including the employee’s name, the name of the training provider, the duration and date of the training, the core competencies covered (including equipment or software skills), and any resulting certification or qualification. Employers should review and update their recordkeeping practices to ensure compliance with these requirements.

6. Collective Bargaining

AB 288 expands the jurisdiction of the California Public Employment Relations Board (PERB), a state agency within the Labor and Workforce Development Agency, by granting PERB authority to enforce certain labor laws affecting private-sector employees. These employees are generally governed by the federal National Labor Relations Act (NLRA), which is enforced by the National Labor Relations Board (NLRB). Under AB 288, PERB would have authority to hear unfair practice charges, conduct union elections, certify bargaining representatives, and order specified remedies, among other powers.

Notably, on October 15, 2025, the NLRB filed a lawsuit challenging AB 288 on the grounds that it is preempted by the NLRA. If successful, the challenge would prevent California from regulating labor relations in this area.

AB 1340 applies to rideshare drivers covered by Proposition 22. In 2020, California voters approved Proposition 22, which classified certain app-based drivers as independent contractors. AB 1340, known as the Transportation Network Company Drivers Labor Relations Act, grants covered drivers the right to form, join, and participate in driver organizations; bargain collectively through representatives of their choosing; and engage in concerted activities for the purpose of collective bargaining or other mutual aid or protection.

7. Wage and Hour

AB 751 makes permanent an existing rest period exception for certain positions within petroleum facilities. Under this limited exception, employers may require employees in safety-sensitive positions at petroleum facilities to remain on call and respond to emergencies during their first rest period.

SB 693 revises Labor Code section 512, which governs exceptions to meal period requirements for employees covered by a valid collective bargaining agreement (CBA) and working in certain industries, including construction, commercial driving, utility companies, and others. SB 693 adds water corporations to the list of industries eligible for these CBA-based meal period exceptions.

8. Displaced Workers

AB 858 extends existing recall rights for certain hospitality workers displaced by COVID-19 for an additional year, through January 1, 2027. The law provides covered employees with recall rights when their former employer has open positions.

Under the statute, covered employees are presumed to have been separated from employment for economic, non-disciplinary reasons.

9. Wage-and-Hour Enforcement

SB 261 increases the costs and penalties faced by California employers who fail to pay a final wage judgment. If a final judgment for unpaid wages remains unsatisfied 180 days after the time to appeal has expired—and no appeal has been filed—the judgment debtor (employer) may be subject to a civil penalty of up to three times the outstanding judgment amount, including post-judgment interest.

The employer may qualify for a reduced penalty if it can demonstrate, by clear and convincing evidence, good cause for a reduction. The law also provides that a prevailing plaintiff will be awarded attorneys’ fees and costs in an action to enforce the judgment. In addition, SB 261 expands enforcement authority by allowing public prosecutors, including the Attorney General, district attorneys, city attorneys, county counsel, and other city or county prosecutors—to enforce unpaid wage judgments on behalf of employees.

SB 648 expands the California Labor Commissioner’s authority to enforce state laws governing tips and gratuities. Existing Labor Code section 351 prohibits employers from taking employees’ tips, deducting wages based on gratuities received, or crediting gratuities against wages. SB 648 authorizes the Labor Commissioner to investigate alleged violations and to issue citations or file civil actions to enforce California’s tip and gratuity laws.

Compliance Strategies for Employers

Given these changes, employers should:

• Update employee handbooks, wage posters, and training materials.
• Audit compensation structures and exemption classifications.
• Prepare for enhanced protections and expanded leave rights.
• Consult legal counsel when drafting contracts or addressing specific compliance challenges.

Conclusion

California’s legislative landscape highlights the importance of proactive compliance strategies. Employers should carefully navigate these changes to ensure alignment with evolving employment standards. Consulting with an attorney can provide tailored guidance to help businesses maintain compliance.

For more information or assistance with employment law compliance, contact Thakur Law Firm, APC at [email protected] or (714) 772-7400.