Many new labor- and employment-related laws are taking effect next year. California employers should focus on the changes taking effect in 2026, spanning discrimination, leaves of absence, pay transparency, record keeping, and collective bargaining.
Unless otherwise stated, these new laws take effect January 1, 2026.
What’s changing in California’s minimum wage and exempt salary thresholds?
Under Labor Code §1182.12, the annual adjustment is tied to inflation and capped at the lesser of 3.5% or the U.S. Consumer Price Index (CPI) change.
For the 12-month period ending June 30, 2025, CPI rose 2.49%, prompting a 2.49% minimum-wage increase effective January 1, 2026.
This also raises the minimum salary for full-time exempt employees to:
- $70,304 per year
- $5,858.67 per month
Employers must also consider industry-specific rates:
- Fast-food workers continue under their own $20/hour minimum (Labor Code §§1474–1476).
- Health-care employees are subject to separate minimums, some of which rose on July 1, 2025.
- Exempt thresholds in those sectors depend on multiples of their respective wage floors (two times for fast food; 1.5 times the applicable health-care rate or two times the state minimum, whichever is higher).
Lastly, local ordinances (e.g., Berkeley, Los Angeles, Milpitas, San Francisco) may require higher local minimum wages.
Employers must pay the higher of the two rates, but remember, only the state minimum wage determines exempt-salary minimums.
What’s changing in California’s discrimination and equal pay laws?
Expanded pay scale transparency, a longer statute of limitations for equal pay claims, and new rules for bias training.
SB 642 updates California’s Equal Pay Act and pay scale disclosure requirements.
- Employers must provide a “good faith estimate” of the salary or hourly wage they expect to pay upon hire in job postings (for employers with 15+ employees).
- The statute of limitations for Equal Pay Act claims increases from two years to three years, and potential recovery can extend up to six years.
- Employers must continue providing pay scale details to applicants and employees upon request.
SB 464 revises pay data reporting rules:
- Demographic data collected for pay reporting must be stored separately from personnel files.
Finally, SB 303 clarifies that an employee’s participation in bias mitigation training, including acknowledging or discussing personal bias, does not constitute unlawful discrimination under the Fair Employment and Housing Act (FEHA).
What are the updates to leaves of absence and victim protections?
California has consolidated and expanded leave protections for victims of violence and updated Paid Family Leave eligibility.
SB 590 expands eligibility for Paid Family Leave (PFL) to cover care for a “designated person”, someone related by blood or with a family-like relationship.
However, this expansion won’t take effect until July 1, 2028.
How do the new laws affect employment contracts and repayment clauses?
Employers face new limits on repayment or “clawback” provisions tied to benefits or incentives.
Under AB 692, contracts signed on or after January 1, 2026, cannot include provisions requiring workers to repay the employer or a training provider if employment ends before a set period, such as repayment for tuition assistance, hiring bonuses, or training costs.
While some exceptions exist for narrowly defined agreements, this law signals a shift toward protecting employee mobility and reducing debt-related employment barriers.
What are the new notice and recordkeeping requirements for 2026?
Employers face new annual notice obligations and expanded data retention requirements.
SB 294 – The Workplace Know Your Rights Act introduces a new annual notice requirement covering:
- Workers’ compensation rights
- Immigration protections
- The right to engage in concerted activity
- Constitutional rights during law enforcement interactions
The Labor Commissioner will release a template notice by January 1, 2026, and employers must distribute it to all employees by February 1, 2026, then annually thereafter (and at new hire).
Employers must also retain compliance records for at least three years, including proof of when notices were issued.
Emergency Contact Requirement
By March 30, 2026:
- Employers must allow existing employees to designate an emergency contact to be notified if the employee is arrested or detained at the worksite.
SB 617 expands CalWARN notice content to include:
- Whether the employer plans to coordinate with the local workforce development board, and
- Information about CalFresh and local workforce resources.
Additionally, SB 513 adds detail to personnel recordkeeping, requiring that education and training records include specific data points, prompting employers to review documentation practices.
How is collective bargaining expanding in 2026?
App-based drivers gain organizing rights, and state labor agencies gain broader enforcement powers.
AB 1340, known as the Transportation Network Company Drivers Labor Relations Act, grants unionization and bargaining rights to certain app-based drivers classified as independent contractors under Proposition 22.
These drivers will be able to form and join driver organizations, bargain collectively, and engage in concerted activities starting in 2026.
Additional Wage and Hour Updates
Industry-Specific Bills
- AB 751 – Makes permanent the rest-period exception for safety-sensitive positions in petroleum facilities and expands coverage to other fuel refineries.
- SB 693 – Adds water corporations to the list of industries exempt from standard meal period rules under CBAs.
Displaced Hospitality Workers
- AB 858 – Extends COVID-related recall rights for hospitality workers to January 1, 2027.
Wage-and-Hour Enforcement Strengthening
SB 261 – Penalties for Unpaid Judgment Noncompliance
If an employer fails to satisfy a final wage judgment within 180 days:
- Penalties may reach three times the unpaid judgment (plus interest).
- Prevailing plaintiffs are also entitled to attorneys’ fees & costs.
- Public prosecutors may enforce unpaid judgments on behalf of employees.
SB 648 – Tip and Gratuity Enforcement Expansion
The Labor Commissioner can now:
- Investigate potential tip violations
- Issue citations
- File civil actions
What should employers do now?
Start reviewing policies, contracts, and compliance systems before January 2026.
With significant updates across multiple employment areas, from pay transparency to collective bargaining, California employers should:
- Review and update job postings, pay policies, and contracts.
- Prepare for new notice templates and distribution requirements under SB 294.
- Audit leave policies to ensure compliance with updated FEHA and CRD standards.
- Train HR and management teams on new reporting and recordkeeping rules.
- Stay alert for agency guidance and upcoming templates from the Labor Commissioner and CRD.
California’s labor laws continue to evolve rapidly, and 2026 brings some of the most wide-ranging changes in years. Staying proactive now ensures compliance, protects your business, and keeps your team informed as we head into a busy new year.
We’ll continue to monitor updates and provide practical guidance to help you stay ahead of California’s ever-changing HR landscape.