California: New laws for employers

At a glance

• California’s employment law landscape continues to shift, with several new laws set to take effect soon.
• Minimum wage: Effective January 1, 2026, the state minimum wage will rise to USD16.90 per hour.
• Know your rights notice: Starting February 1, 2026, employers must deliver a notice of key labor protections, immigration-related rights, and constitutional protections in the workplace to all employees upon hire and annually thereafter. 
• Personnel records: Starting January 1, 2026, employees’ rights to inspect and receive copies of personnel records have been expanded to include education and training records.
• Equal pay: Effective January 1, 2026, amendments to the state’s Equal Pay Act clarify definitions, extend limitation periods, and align remedy structures with federal standards.
• Pay data reporting: A new law expands requirements for annual pay data reporting to the Civil Rights Department. 
• Wage theft enforcement: Starting January 1, 2026, the Labor Commissioner is empowered to pursue tip and gratuity violations, including by issuing citations or filing civil actions.
• Paid family leave program: Effective July 1, 2028, eligibility for benefits under the state’s program will expand to cover time off to care for a seriously ill 'designated person.'
• California Worker Adjustment and Retraining Act (CalWARN): Starting January 1, 2026, existing notice requirements have been expanded to include additional information.
• 'Stay or Pay' contracts: Starting January 1, 2026, a new law prohibits contracts that require employees to repay debts to their employer upon termination, with limited exceptions.

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The California legislature enacted numerous workplace laws, most of which will take effect in 2026. Summarized below are key developments and actions for California employers to consider. 

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. The increase will impact the salary thresholds for exempt employees, as well as other wage and hour obligations. Local ordinances may impose higher minimum wage rates, which likewise may increase in the new year.

Workplace Know Your Rights Act  

Beginning February 1, 2026, SB-294 requires employers to deliver a standalone 'Know Your Rights' notice to current employees on an annual basis and to new employees upon hire. Employers must use the Labor Commissioner’s template, to be published by January 1, 2026. The notice must be distributed by February 1, 2026, and must cover, among other topics:

• Workers’ compensation benefits and contact information for the Division of Workers’ Compensation.
• Employee rights regarding immigration agency inspections and protections against unfair immigration‑related practices.
• Employee rights to organize or engage in concerted activity.
• A summary of constitutional rights when interacting with law enforcement at work. 
• Any other material developments and enforcement agencies identified by the Labor Commissioner.

The new law imposes language, delivery, and recordkeeping responsibilities with respect to the notice. It also requires employers to give all current employees the opportunity to designate an emergency contact by March 30, 2026, and to collect this information at hire thereafter. If requested by an employee, employers must notify the designated emergency contact if the employee is arrested or detained at the worksite. The employer must also notify the contact if the arrest or detention occurs during work hours or while the employee is performing job duties offsite if the employer has actual knowledge of it.

The Labor Commissioner is responsible for enforcement, with penalties for violations.

Personnel records  

Effective January 1, 2026, SB-513 provides employees with the right to inspect and receive copies of their education and training records. Training records must identify the employee’s name, the training provider, the duration and date of the training, core competencies (including equipment or software skills), and any resulting certification or qualification. 

Updates to Equal Pay Act 

Effective January 1, 2026, SB-642 updates California’s Equal Pay Act and related wage provisions to sharpen definitions, extend limitations periods, and align remedy structures with federal concepts. Among other changes, the new law defines 'pay scale' to mean the wage range the employer reasonably and in good faith expects to pay for the position upon hire, which may narrow posted ranges.

Expanded pay data reporting

SB-464 expands employer obligations related to pay data reporting. Effective January 1, 2026, employers must store demographic information gathered for pay data reporting separately from personnel files. In addition, civil penalties for failure to file pay data reports will become mandatory at the request of the Civil Rights Department. Effective January 1, 2027, job categories will also expand from 10 to 23.

Wage theft

Effective January 1, 2026, under SB-648, the Labor Commissioner is empowered to investigate, issue citations, and bring civil actions when employers unlawfully take or withhold any money owed to employees, including gratuities. Until now, the Labor Commissioner could investigate wage theft, but its enforcement authority with respect to tips was limited. SB 648 closes that gap.

Paid family leave

Effective July 1, 2028, SB-590 expands employee eligibility under California’s Paid Family Leave (PFL) program to receive wage replacement benefits when caring for a seriously ill 'designated person,' which is defined as an individual related to the employee by blood or whose association with the employee is equivalent to a family relationship. Employees may identify the designated person by attesting to the relationship at the time of they make a claim for PFL benefits.

California Worker Adjustment and Retraining Act

Starting January 1, 2026, under SB-617, written notices required under CalWARN must include new specified information and indicate whether the employer plans to coordinate services through the local workforce development board or another entity. If so, the employer must also arrange for those services within thirty days from the date of the written notice. 

Prohibition of 'stay or pay' contracts

Building on California’s longstanding public policy against noncompete and restraint‑of‑trade provisions, as of January 1, 2026, AB-692 prohibits employers from entering into 'employment contracts' that include training repayment agreement provisions, as well as other quit-fees or penalties tied to separation from employment, except under limited circumstances.

Key vetoes

A number of bills were vetoed, including:

No Robo Bosses Act: SB-7 would have regulated employers’ use of automated systems in employment decision-making, including by imposing transparency, bias assessment, and recordkeeping obligations. While the bill was vetoed, employers must still comply with recently-approved FEHA regulations (described here) that regulate the use of artificial intelligence in employment within California.

Immigration and work authorization: If enacted, AB-1136 would have required employers to allow employees to take up to five unpaid days off per year to attend to immigration or work authorization matters; provide an unpaid leave of absence if notified of an employee’s detainment or incarceration in connection with pending immigration or deportation proceedings; and provide reinstatement rights to employees terminated for lack of proper work authorization who later produced proper evidence of authorization.