2026 EMPLOYMENT LAW UPDATE – TOP TEN CHANGES
Tue, 02/10/26
It is time to dust off the employee handbook, review your policies and procedures, and make sure they comply with all the new laws, regulations, and interpretations that went into effect during 2025, became effective in late 2025, or January 1, 2026.
Below, we have identified our “top 10” changes. Please keep in mind there were hundreds of laws, regulations, and changes implemented at the local, state, and federal levels throughout 2025. This summary highlights selected changes most likely to impact California employers and is not intended to be exhaustive. So, if you need a handbook/policy review or have any questions, please call us!
1 – Minimum Wage Update:
Updates happen every year. It’s best to put a calendar reminder in November, to make sure your payroll is ready!
Action: Review your payroll to ensure all employees are being paid the new minimum wage, send written notice of the wage change to affected hourly employees, and be sure your salaried exempt employees are earning at least the minimum salary threshold. This includes remote employees working from home in jurisdictions with higher local minimum wages. Many other cities and counties in California, as well as thirty (30) other states have passed higher minimum wage requirements. Remember that employees should be paid minimum wage based on where they work, whether it be a satellite office or their own home, and that location may have a higher minimum wage than your main worksite.
2 – AI Transparency Law for Employment Decisions:
Automated-Decision Systems (“ADS”) are becoming much more prevalent. They may help to screen applicant resumes, direct job advertisements to targeted groups, or use machine learning to analyze data to rate employee performance. This can also be used in hiring, promotion, discipline, or termination decisions. Effective October 1, 2025, when using AI/ADS, California employers must (1) give notice to employees when it is used, (2) provide accommodations to avoid discrimination, (3) retain all records sufficient to document use, decision-making criteria, and compliance for at least four (4) years. If there is a claim, evidence of proactive anti-bias testing and mitigation efforts will be relevant to avoid unfair impact or unintended bias resulting from the use of ADS.
Action: Review all software systems, as well as all recruiting platforms to determine what is using ADS. Update your employee handbook with information on any ADS you employ, including reference on how to request an accommodation. Research and implement anti-bias analysis/testing to avoid discrimination. Maintain documentation throughout. Failure to comply may increase exposure to discrimination and unfair employment practice claims.
3 – Pay Equity Enforcement Act:
Existing law requires employers to disclose the pay scale for open jobs, and to employees upon request. This bill amends the definition of “pay scale” to mean the “good faith estimate of the salary or hourly wage range that the employer reasonably expects to pay for the position upon hire.” Note that the pay scale includes all reasonably expected wages, bonuses, commissions and fringe benefits (e.g. a company car, employer provided housing, etc.) The bill also expands the statute of limitations from 2 to 3 years for pay equity claims and caps the recovery of unpaid wages at 6 years, consistent with existing wage-and-hour limitations.
Action: Review pay scale disclosures in job descriptions/advertisements to ensure accuracy. If you have not done so already, create a protocol for handling employee requests for information.
4 – Workplace Know Your Rights Disclosures:
Effective February 1, 2026, employers must provide an annual written notice to each current employee that explains (1) workers’ compensation benefits, (2) a summary of employee rights to immigration protections, (3) union organizing and concerted activity, (4) constitutional rights when interacting with law enforcement at the workplace, (5) a list of any other rights identified by the Labor Commissioner and the enforcement agencies responsible for these rights.
No later than March 30, 2026, employees may designate an emergency contact, and employers must, if requested by the employee, notify their designated emergency contact in the event the employee is arrested or detained at work.
Action: The Labor Commissioner has published a template notice for employers to use. Please see the link below and adopt this form into your new-hire packets and ensure it is checked for updates regularly. https://www.dir.ca.gov/dlse/Know-Your-Rights-Notice/Know-Your-Rights-Notice-English.pdf
Of note, the Labor Commissioner already published a template notice for employers to provide relevant employees who are subject to an immigration enforcement action. That can be found at: www.dir.ca.gov/DLSE/LC_90.2_EE_Notice.pdf
5 – Ban on “Stay-or-Pay” Employee Debt Repayment:
This new law prohibits contracts requiring an employee to repay a debt upon termination/resignation. Many traditional sign-on and training repayment agreements will no longer be enforceable as drafted. Exceptions exist for certain agreements, including those involving discretionary bonuses or relocation payments, provided they meet set criteria, including: (1) repayment terms must be in a separate agreement from the primary employment contract; (2) the worker must be advised of the right to consult an attorney and given at least 5 business days to do so before signing; (3) any repayment obligation for early separation must be prorated based on the remaining retention period (up to 2 years) and cannot accrue interest; (4) the worker must have the option to defer receipt of the payment until the end of the retention period without repayment obligation; and (5) repayment may only apply if the employee leaves voluntarily or is terminated for misconduct (as defined by the agreement and consistent with law) – meaning there is no repayment permitted if the employee is laid off.
The new prohibitions will apply to contracts entered on or after January 1, 2026 – and workers who feel aggrieved can file private lawsuits and seek civil penalties for violations. The bill provides penalties for violations at the amount of the greater of the worker’s actual damages or up to $5,000 per worker, injunctive relief, and attorneys’ fees and costs.
Action: Review any policies or practices that may now be prohibited. For any hiring or relocation bonuses, ensure they are documented in accordance with the law.
6 – Expanded Paid Sick and Safe Time: Jury Duty, Victim Leave and Application of Sick Leave:
Existing law permits employees to take time off to attend to certain personal needs associated with being the victim of a qualified act of violence, or assisting a close family member regarding the same (in the latter case, only if the employer has more than 25 employees). Also, existing law protects the right of an employee to take sick leave to attend jury duty. Note that a “Qualified Act of Violence” is very broad, and includes domestic abuse, sexual assault, stalking, acts that cause bodily injury or death, the act of exhibiting, brandishing or using a firearm or other dangerous weapon, acts of violence, or threats of the act of violence to cause physical injury or death, certain violent felonies, certain serious felonies, or felony embezzlement or theft. A victim of a qualified act of violence is anyone who suffers physical, psychological or financial harm as a result of the commission of these acts.
What is new: (i) Employees may use paid sick leave for absences associated with being a victim of a qualified act of violence, (ii) sick leave is also available for jury duty, and appearing in court as a witness under subpoena, (iii) victims now have clear protection from retaliation or discrimination (including discharge) for taking this time off, and (iv) employers must provide notice to employees of these rights, and ensure confidentiality when an employee requests this leave.
Action: Update your sick leave policy to include time off for jury duty, witness duty, and victim leave. Update your qualified acts of violence leave policy to reference the use of sick leave, to ensure confidentiality, and to confirm no employee requesting leave will suffer retaliation. Update your jury duty and witness leave policies similarly. Ensure your workplace posters are updated each year to catch any necessary notices that are required as of January 1st.
7 – SB 617 Change to WARN Act Notice:
In California, employers must provide at least 60 days’ notice to employees if the employer (i) lays off more than 50 employees in 30 days, (ii) relocates a business more than 100 miles, or (iii) closes a qualifying department or location. Certain information must be included in the notice to employees in this circumstance. The new law requires employers to also now include reference to whether the employer will be working with the local workforce development board (regarding helping affected employees find new positions), and to provide information about CalFresh.
Action: If you are considering closing or laying off employees, consult legal counsel to help you determine if you have WARN obligations under state or federal law. WARN triggers can be complex and the requirements for federal and/or state WARN Act compliance are different.
8 – Bias Mitigation Training:
A new law clarifies that an employee’s assessment, testing, admission, or acknowledgment of their own personal bias that was made in good faith and solicited or required as part of a bias mitigation training does not constitute unlawful discrimination. The law is intended to encourage employers to offer such trainings without fear that the process could be mischaracterized. The law does not protect discriminatory conduct or decisions made outside the context of the training.
Action: If you provide bias trainings, remind participants about this protection. Consider whether bias training could be right for your workforce.
9 – Records Relating to Trainings:
Employees have a right to request a copy of their personnel file. This law updates the definition of “personnel file” to include “education or training records.” This includes participation in mandated FEHA training. The law also requires employers who maintain education or training records to ensure the records include the following information: the name of the employee, the name of the training provider, the duration and date of the training, the core competencies of the training course, and the resulting certification or qualification.
Action: If your employees go to a training course that would typically result in a certificate of completion or other confirmation of certain competencies, ensure you document the information required by this new law and that it is saved in your employees’ personnel files. This includes sexual harassment prevention training.
10 – Treble Damages for Unpaid Labor Commissioner Awards:
If an employer is found liable by the Labor Commissioner and fails to pay the judgement, the Labor Commissioner can now add civil penalties if left unpaid for 180 days including: triple penalties, and mandatory attorneys’ fees. The new law also provides broader prosecutorial authority for the Labor Commissioner’s Office to enforce judgments.
Action: Take Labor Commissioner claims very seriously. This forum strongly favors employee claims, whether they have legitimate claims or not. The evidentiary threshold to prove those claims is very low. Although a very informal venue, the awards are just as enforceable as a civil lawsuit. We highly recommend having legal counsel to assist with assessing and handling a Labor Commissioner claim.
The CMPR Employment Law Team is available to provide excellent guidance and defense. Please call us at: (707) 526-4200
Arif Virji – Samantha Pungprakearti – Justin Hein – Sarah Hirschfeld-Sussman