At a glance
- California continues to strengthen worker protections through wage increases, enforcement tools, and legal clarifications, signaling a more employee-centric regulatory environment.
- Minimum wage: Effective 1 January 2026, the state minimum wage will rise to USD16.90 per hour, up from USD16.50.
- Wage theft enforcement: Senate Bill 648 empowers the labor commissioner to pursue gratuity violations starting 1 January 2026, including issuing citations or filing civil actions.
- Liquidated damages: Employers must demonstrate a reasonable effort to understand wage laws to claim a good faith defense; ignorance of the law is not sufficient.
- Arbitration fees: The California Supreme Court ruled that equitable defences may preserve arbitration rights despite late fee payments, rejecting automatic forfeiture under Section 1281.98.
Minimum wage
Starting on January 1, 2026, California’s minimum wage rate will increase to USD16.90 per hour from the current USD16.50 per hour, based on the released minimum wage adjustment calculated by the state’s director of finance.
Wage theft
On July 30, 2025, California Governor Gavin Newsom signed Senate Bill 648, which authorizes the state’s labor commissioner to investigate and issue a citation or file a civil action for gratuities taken or withheld in violation of state law. The law takes effect on January 1, 2026.
Liquidated damages
On August 21, 2025, the California Supreme Court held that to prove a good faith defense to liquidated damages for minimum wage violations, 'an employer must show that it made a reasonable attempt to determine the requirements of the law governing minimum wages; proof that the employer was ignorant of the law is insufficient.'
Arbitration fees
On August 11, 2025, in Hohenshelt v. Superior Court, the California Supreme Court held that the Federal Arbitration Act did not preempt the arbitration fee payment rule in Code of Civil Procedure Section 1281.98. The Court rejected a 'rigid construction' of section 1281.98 that would automatically strip employers of their contractual right to arbitration for every non-payment. According to the Court, the must be read 'against the backdrop of longstanding statutes that authorize courts to prevent unjust forfeitures of contractual rights,' including Civil Code Sections 3275, 1511, and Code of Civil Procedure Section 473(b), preserving general equitable defenses.
More to explore
