California employers are facing another year of sweeping workplace changes. New laws will raise minimum wage rates statewide, expand pay equity requirements, strengthen workers’ rights, update leave laws, impose new recordkeeping rules, regulate AI in hiring and increase enforcement authority across multiple agencies. Several mid-year changes and extended provisions from pandemic-era protections also take effect.
The most important California workplace law updates are discussed below to help employers understand what’s changing, where new risks may arise and what steps should be taken to stay compliant.
All laws take effect Jan. 1, 2026, unless otherwise noted.
Wage and Hour Laws
Minimum Wage
California: The State minimum wage will increase from $16.50 to $16.90 per hour and the exempt employee salary threshold will increase from $68,640 to $70,304 annually ($5,858.67 per month).
California Healthcare Workers: The gradual minimum wage increase for certain healthcare workers will continue with the following changes taking effect on July 1, 2026):
- For hospitals or integrated health systems with 10,000 or more full-time employees (FTEs) (including skilled nursing facilities operated by these employers), dialysis clinics and covered healthcare facilities run by large counties (more than five million people as of Jan. 1, 2023), the current minimum wage of $24 per hour will increase to $25 per hour.
- For covered health care facilities run by midsize counties (250,000 to five million people as of Jan. 1, 2023), skilled nursing facilities not owned, operated, or controlled by a hospital, integrated healthcare delivery system, or healthcare system, and all other covered healthcare facilities not listed in the other categories and not run by counties, the minimum wage will increase to $23 per hour.
- For intermittent clinics, community clinics, rural health clinics, and certain urgent care clinics, the current minimum wage of $21 per hour will increase to $22 per hour.
- For covered health care facilities run by small counties (less than 250,000 people as of Jan. 1, 2023, the current minimum wage of $18.63 per hour will increase to $19.28 per hour.
- For Safety Net Hospitals, including rural independent hospitals and hospitals with a high or elevated government payor mix, the current minimum wage of $18 per hour (effective July 1, 2025) will increase 3.5% to $18.63 per hour.
City of San Diego: The hourly minimum wage for the City of San Diego will increase from $17.25 to $17.75.
City of San Diego Hospitality: The City of San Diego’s Hospitality Minimum Wage Ordinance establishes a minimum wage for employees working within city limits in the hospitality industry, specifically targeting hotels, event centers and amusement parks. Effective July 1, 2026, the ordinance mandates that hospitality employers pay a minimum wage starting at $19 per hour for hotel and amusement park employees. For event center employees, the minimum wage starts at $21.06 per hour. All categories of covered employees will see incremental minimum wages increase up to $25 per hour by July 1, 2030, with further adjustments based on the cost of living thereafter.
The Ordinance includes provisions to prevent retaliation against employees who exercise their rights under this law and allows for civil penalties against employers who violate the Ordinance. Employers are required to maintain records of hours worked and wages paid, and to provide notices to employees about their rights under the Ordinance. The Ordinance also allows for exemptions through collective bargaining agreements and ensures compliance with other applicable federal and state laws.
Tip Theft
Senate Bill 648 authorizes the California Division of Labor Standards Enforcement (DLSE) to investigate and issue a citation, or file a civil action, when gratuities are taken or withheld in violation of Labor Code section 351. Section 351 prohibits employers or their agents from collecting, taking or receiving any portion of a gratuity paid, given or left for an employee by a patron. They also may not deduct gratuities from an employee’s wages or require an employee to credit all or part of a gratuity toward wages owed.
Artificial Intelligence (AI) Laws for the Workplace
AI Bias in Hiring and Employment
California’s Civil Rights Division issued new regulations on the use of automated employment decision systems (ADS), including AI and algorithm-based tools, in hiring and workplace decisions. Under the new regulations, employers must ensure these systems do not create bias or risk liability under the Fair Employment and Housing Act (FEHA). For more information, see our previous article on the law published when it was passed in October 2025: New California Regulations Target AI Bias in Hiring and Employment Decisions.
The Transparency in Frontier Artificial Intelligence Act
SB 53, known as the Transparency in Frontier Artificial Intelligence Act (TFAIA), mandates large frontier developers (those who train AI models using a certain threshold of computing power) to create and publish a “frontier AI framework” on their websites. A framework is defined as documented technical and organizational protocols to manage, assess and mitigate catastrophic risks. These frameworks must detail their approach to incorporating national and international standards and best practices. TFAIA also requires developers to report catastrophic risks and critical safety incidents to the Office of Emergency Services, which will establish mechanisms for such reporting.
The bill establishes a consortium to develop a framework for a public cloud computing cluster, “CalCompute,” to advance safe and ethical AI development. Noncompliance with the TFAIA can result in civil penalties enforced by the California Attorney General. TFAIA preempts local regulations related to frontier developers’ management of catastrophic risk and includes provisions for protecting trade secrets and public safety.
TFAIA includes enhanced whistleblower protections for employees who are responsible for assessing or managing AI risks from retaliation if they disclose information about potential dangers or violations internally or to regulators. Large developers must also maintain anonymous reporting channels.
Employee Policy and Handbook Updates
Expanded Personnel Recordkeeping and Inspection/Production Requirements
SB 513 expands the scope of records that California employers are required to make available to employees or their authorized representative for inspection or copying upon request. The records now include education and training documentation. Revised Labor Code section 1198.5 further mandates that employers who maintain education or training records include all of the following in their records: (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 a training, including skills in equipment or software and (5) the resulting certification or qualification.
Addition of “Designated Persons” to California’s Paid Family Leave Benefits Program
Effective July 1, 2028, SB 590 revises California’s paid family leave (PFL) program to include care for a “designated person,” defined as someone related by blood or with a relationship equivalent to a family member. This definition aligns with the California Family Rights Act’s (CFRA) “designated person” definition. Under the new law, individuals claiming PFL benefits for the first time will be required to identify the designated person and attest to the relationship under penalty of perjury, thereby broadening the scope of eligible care recipients and imposing new procedural requirements.
Post-Emergency Reinstatement Rights for Certain Hospitality and Entertainment Employees
Assembly Bill 858 extends the existing COVID-19-era protections for employees of airport service and hospitality providers, building service providers, hotels, private clubs and event centers who were laid off due to any state or locally declared emergency. Existing rights for rehiring and retention of such workers are described in Labor Code section 2810.8, which was set to lapse at the end of 2025 but was extended to Dec. 31, 2026. This means covered employers will continue to be required to offer available job positions to laid-off employees who are qualified, based on a preference system, and must retain records of these offers for at least three years. The law prohibits employers from taking adverse actions against laid-off employees seeking to enforce their rights and outlines enforcement mechanisms through the Division of Labor Standards Enforcement.
Discrimination and Harassment
Unlawful Discrimination: Victims of Violence
AB 406 expands the reasons employees can take leave under California’s Healthy Workplaces Healthy Families Act (HWHFA) and Government Code section 12945.8. These amendments allow employees to use leave if they or a family member are victims of certain crimes and are attending related judicial proceedings. The law defines “victim” to include those affected by violent felonies, serious felonies and specific crimes like vehicular manslaughter while intoxicated, felony domestic violence and sexual assault. Protected leave encompasses time off to seek medical attention, obtain services from a victim services organization, receive counseling, relocate or take safety measures, and participate in civil or criminal legal processes related to the qualifying act. Employers must maintain the confidentiality of any information provided in support of the leave request.
Additionally, AB 406 revises California’s paid leave laws to incorporate uses previously covered under unpaid leave provisions, including court appearances as witnesses, jury duty and other legal proceedings, effective Oct. 1, 2025. This amendment aligns paid sick and safe time with unpaid leave protections for crime victims, ensuring that employees can access paid leave for these purposes without fear of retaliation or discrimination.
AB 406 further specifies that employers must inform employees of their rights established under the statute in writing. Employers are required to provide this information to new employees upon hire, to all employees annually, upon request and whenever an employee informs the employer that they or a family member is a victim of a qualifying act of violence. The California Civil Rights Department is tasked with developing a form entitled “Survivors of Violence and Family Members of Victims Right to Leave and Accommodations,” which employers may use to comply with these notice requirements.
California Fair Employment and Housing Act: Enforcement Procedures
SB 477 enhances California’s civil rights law by allowing the Civil Rights Department to pause investigations, with parties’ agreement, and remove the requirement to file housing discrimination cases in the county of violation. It equips the state with additional tools to investigate and prosecute civil rights violations in housing and employment. The bill also modifies timelines for issuing right-to-sue notices, allowing extensions through written agreement. This legislation aims to ensure more comprehensive and flexible handling of complex civil rights cases.
Mandatory Bias Mitigation Training
SB 303 clarifies that an employee’s acknowledgment of personal bias during bias mitigation training does not, by itself, constitute unlawful discrimination. The Legislature aims to encourage employers to conduct such trainings and affirms that these trainings are not discriminatory. “Bias mitigation training” is defined as education provided by employers to help employees understand and recognize the influence of conscious and unconscious biases. The training includes strategies to mitigate these biases, such as assessments, workshops and tracking progress. The goal is to educate employees on the impacts of their thought processes and implement strategies to reduce bias.
Sexual Assault Statute of Limitations
AB 250 extends the statute of limitations for certain sexual assault lawsuits that would otherwise be barred prior to Jan. 1, 2026, allowing a two-year window from Jan. 1, 2026, to Dec. 31, 2027, for adult survivors to file previously time-barred civil claims. The law applies to cases where the assault occurred after the survivor turned 18 and involves a “cover up” by the defendant, such as using non-disclosure agreements. It targets perpetrators and private entities but excludes public entities like public schools and government bodies. This legislation aims to provide justice for survivors by addressing concealed assaults.
Labor Relations
PERB Authority to Cover Private Sector Labor Disputes
AB 288 expands the California Public Employment Relations Board’s (PERB) authority to cover private sector labor disputes and unfair practices under the National Labor Relations Act (NLRA) when the National Labor Relations Board (NLRB) fails to meet statutory deadlines or otherwise fails to resolve issues in a timely manner. California workers, or their authorized representative, will now be permitted to petition PERB to decide unfair labor practice (ULP) cases and provide relief, creating a state-level “backstop” to ensure workers’ rights are protected when the federal agency is delayed or inactive, provided that the ULP is originally filed with the NLRB within the required time period.
Employers in California may face civil penalties for unfair labor practices, with PERB authorized to order remedies, including binding arbitration and penalties of $1,000 per worker per violation for patterns of unfair practices. California employers must be prepared for increased oversight and potential legal challenges as PERB takes on a more active role in enforcing labor rights, especially in cases where the NLRB is unable to act.
The NLRB filed litigation challenging the enforceability of this new law in the U.S. District Court for the Eastern District of California in a matter entitled Nat’l Labor Relations Bd. v. State of Calif., E.D. Cal., No. 2:25-at-01400. The NLRB seeks to block AB 288, contending that it is preempted by the NLRA and violates the Supremacy Clause of the U.S. Constitution.
Labor Relations for Transportation Network Company Drivers
AB 1340, known as the Transportation Network Company Drivers Labor Relations Act, establishes the rights of transportation network company (TNC) drivers in California to form, join and participate in driver organizations for collective bargaining purposes. The bill mandates that TNCs submit quarterly information about their drivers to the PERB, which will oversee the certification and decertification of driver organizations. It also sets procedures for good faith negotiations between TNCs and certified driver bargaining organizations, including mediation and arbitration processes to reach sectoral agreements.
The Act makes it an unfair practice for TNCs or driver organizations to fail to negotiate in good faith or to interfere with the rights of drivers to organize. It exempts certain mediation and arbitration meetings from the Bagley-Keene Open Meeting Act and restricts public disclosure of driver information submitted to PERB. The bill aims to improve working conditions for TNC drivers while balancing privacy concerns and public access to information.
Contractors and Subcontractors
Labor-Related Liabilities for Direct Contractor and Subcontractor
Existing law requires direct contractors in California, for contracts from Jan. 1, 2022, to be liable for wage debts incurred by subcontractors. This applies to construction-related contracts and defines a direct contractor as one with a direct relationship with the owner. SB 597 extends this requirement to contracts before Jan.1, 2026, and changes the liability terms for contracts after that date. It exempts contractors from liability for fringe benefits if payments are made by joint check. The bill also expands the definition of a direct contractor to include those engaged by any entity on behalf of the owner. Additionally, it grants a joint labor-management committee the right to sue contractors for failing to meet labor standards, including health care expenditures.
Employees and Independent Contractors in Construction Trucking
SB 809 clarifies that owning a vehicle used for work does not automatically classify a worker as an independent contractor. It introduces the Construction Trucking Employer Amnesty Program, allowing construction contractors to avoid penalties for misclassifying drivers if they enter into a settlement agreement with the Labor Commissioner by Jan. 1, 2029, agreeing to reclassify drivers as employees and meet specific conditions. The law mandates that employers reimburse employees for necessary expenses, including vehicle use, upkeep and depreciation, when used for work duties. These provisions are stated to be declarative of existing law, reinforcing current worker classification and reimbursement obligations.
Increased Enforcement for Workers’ Rights and Notice Requirements
Increased DLSE Enforcement and Collection of Wage Judgments
SB 261 amends the Labor Code to significantly enhance enforcement and collection of wage judgments against employers by the DLSE in California. The bill mandates that the Labor Commissioner’s Office post to its website any unsatisfied awards against employers. It also adds Labor Code sections 238.05 and 238.10 to:
- Mandate that if a final judgment for unpaid wages remains unsatisfied for 180 days, the employer/judgment debtor may face a civil penalty up to three times the outstanding amount;
- Prescribe how the additional penalties assessed are to be distributed and used and
- Require courts to award reasonable attorneys’ fees and costs to prevailing plaintiffs, the Labor Commissioner or a public prosecutor (which is significant as more local authorities are prosecuting wage and hour matters) in actions to enforce such judgments.
Annual Stand-Alone Notice to Employees Under the Workplace Know Your Rights Act
In addition to the all-in-one posters California employers use for statutorily required notices, SB 294 requires a stand-alone written notice to each employee beginning on Feb. 1, 2026, upon hire and annually after, detailing specified rights under federal and state law, including:
- independent contractor misclassification protections
- heat illness prevention
- workers’ compensation
- paid sick days
- protection against unfair immigration-related practices
- right to notice of federal immigration inspections
- right to organize a union in the workplace and
- constitutional rights when interacting with law enforcement at the workplace.
The Labor Commissioner will develop a template notice and a video to assist employers in complying with these requirements, which must be available by Jan. 1, 2026, and July 1, 2026, respectively. Employers are required to maintain records of compliance for three years.
Additionally, employers must notify an employee’s designated emergency contact if the employee is arrested or detained at the worksite, provided the employee has designated a contact. Employers are prohibited from retaliating against employees for exercising their rights under this Act, and violations can result in penalties of up to $500 per employee per violation, with specific provisions for emergency contact violations reaching up to $10,000 per employee. Enforcement will be carried out by the Labor Commissioner or a public prosecutor, with potential civil actions and penalties.
Cal-WARN Notice Changes
SB 617 amends Labor Code section 1401 to require employers providing notices under the California Worker Adjustment and Retaining Act (Cal-WARN) to include whether they plan to coordinate services through the local workforce development board or another entity, and to provide information about the statewide food assistance program, CalFresh. Employers must also include a functioning email and telephone number for the local workforce development board and a description of rapid response activities. Additionally, if services are to be coordinated, arrangements must be made within 30 days from the notice date.
Pay Equity and Employer Pay Data
Revisions to California’s Equity Pay Act
SB 642 strengthens California’s Equity Pay Act by revising employment wage payment regulations. It updates the definition of “pay scale” to mean an estimated wage range that an employer expects to pay upon hiring, made in good faith. The bill also modifies existing wage discrimination laws, prohibiting employers from paying employees less than those of another sex, rather than the opposite sex, for similar work. It also extends the time to commence a civil action for wage recovery to three years after the last occurrence of the cause of action, allowing relief for violations up to six years. Additionally, it clarifies when a cause of action occurs and defines terms like “wages,” “wage rates” and “sex” for its purposes, without affecting other legal definitions.
Employer Pay Data
SB 464 introduces several changes to existing pay data reporting laws. It mandates that employers collect and store demographic information separately from personnel records. Starting Jan. 1, 2027, the number of job categories for reporting will increase from 10 to 23. The bill also requires courts to impose civil penalties on employers who fail to file the required pay data report when requested by the Civil Rights Department. These changes aim to enhance enforcement and address wage disparities more effectively.
Employment Contracts
Ban on “Stay-or-Pay” Contracts
AB 692 prohibits employment contracts from requiring employees to repay any debt, including but not limited to training expenses, in the event of a termination of employment. The law applies prospectively to contracts entered on or after Jan. 1, 2026. “Worker” is defined to include employees and prospective employees, but independent contractors and certain other categories are excluded. “Penalty, fee, or cost” broadly includes replacement hire fees, retraining fees, quit fees, reimbursement for immigration or visa costs, liquidated damages, lost goodwill and lost profit.
There is a limited exclusion for certain retention bonuses, which are allowed if:
- established in a separate agreement
- the employee is given at least five business days to consult an attorney
- any repayment obligation is prorated and not subject to interest and
- the employee has the option to defer payment to the end of the retention period, which cannot exceed two years from the receipt of payment; repayment may only be required if the employee voluntarily leaves or is terminated for misconduct.
An exception also exists for tuition repayment for a “transferable credential,” provided certain requirements are met, such as separate contract, specified repayment amount, no required credential for employment, proration and exclusion of repayment unless the worker is terminated for misconduct.
Employees can bring private lawsuits for violations, with remedies including actual damages or $5,000 (whichever is greater), injunctive relief and reasonable attorneys’ fees and costs.
Stay Compliant by Acting Now
Staying ahead of California’s rapidly evolving employment laws is critical to reducing risk and maintaining compliance. If you have questions about how these 2026 updates apply to your workplace, Duckor Metzger & Wynne, APLC’s Employment & Labor Law attorneys can help assess your obligations and prepare the right next steps.
Contact us to discuss how to align your organization with California’s new employment law requirements before they take effect.