The pace of legislative change in California remains fast and aggressive. Looking forward to the end of year festivities, a suite of new California employment laws in 2026 will take effect, drastically altering compliance requirements for employers and significantly expanding the rights of employees across the state. These laws touch upon everything from how you manage employee debt and post jobs, to new protections for gig workers, and mandates for wage judgment enforcement. For employers, compliance is mandatory to avoid severe legal and financial penalties. For employees, understanding these new protections is crucial for safeguarding your rights and benefits.
Whether you’re an employee who wants to better understand your rights or an employer who wants to make next year the Year of Flawless Compliance, this blog will help provide insights as to what to expect in 2026.
What Are the Key New California Employment Laws in 2026? What Employees & Employers Need to Know to Prepare for the New Year
The breadth of the coming 2026 California employment laws is far-reaching. To ensure you start the new year on the right legal foot, we have distilled the most essential information that employees and employers need to know. Keep reading for a clear path to compliance.
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Wage, Compensation, and Pay Equity Overhaul
California is tightening rules on pay transparency, increasing minimum pay, and strengthening legal recourse for pay disparities.
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1. Minimum Wage and Exempt Salary Increase
The statewide minimum wage rises to $16.90 per hour for all employers, regardless of size. The minimum annual salary required for most exempt employees will also increase to $70,304 (which is twice the state minimum wage).
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2. Equal Pay and Transparency Protection (SB 642)
The Equal Pay Act now explicitly protects individuals of “another sex” (moving beyond “opposite sex”) for substantially similar work, extending protections to non-binary individuals. The statute of limitations to file an equal pay claim is extended from two to three years, and you can recover back pay for the entire violation period, up to six years.
Also, the definition of “wages” is broadened to include nearly all forms of compensation (bonuses, stock options, travel allowances) for equal pay disputes. Job postings must provide a “good faith estimate” of the salary or wage range the employer reasonably expects to pay upon hire.
3. Gratuities and Tip Protection (SB 648)
Employers and agents are explicitly prohibited from taking, collecting, or withholding an employee’s gratuities. If a tip is paid via credit card, the full amount must go to the employee, without deductions for credit card processing fees. Tips must be paid no later than the next regular pay date.
Employers must ensure no tips are withheld, and all credit card processing fees are absorbed by the business, not deducted from the employee’s tip amount.
New Contract Restrictions and Firing Protections
New laws target punitive contract clauses and extend protections for displaced workers.
1. Ban on “Stay-or-Pay” Clauses (AB 692)
Employees cannot be required to sign a contract that imposes financial penalties, fees, or repayment obligations (like “quit fees” or training costs) if the employee’s employment ends. A violation of this law can result in a penalty of up to $5,000 per worker.
Additionally, employers should be aware that any “training repayment agreement provision” (TRAP) or “stay-or-pay” clause in an employment contract is now void. Limited exceptions for tuition repayment or sign-on bonuses must be clearly defined in a separate contract and must be prorated.
2. Displaced Worker Recall Extended (AB 858)
The sunset date for COVID-19-related recall and reinstatement rights for displaced workers in the hospitality or business services industries has been extended to January 1, 2027.
This means employers must continue to offer available positions in writing to qualified, laid-off workers in the hospitality and business services sectors through the new January 1, 2027, repeal date.
Notices, Records, and Employee Information
These laws impose immediate new notice and record-keeping duties on employers.
1. Workplace Know Your Rights Act (SB 294)
This law mandates that workers receive a standalone written notice on their rights, including constitutional rights when dealing with law enforcement at work, union rights, and immigration inspection notice.
Workers must also be given the opportunity to designate an emergency contact for notification if they are arrested or detained at work.
Employers must provide the new rights notice to all workers by February 1, 2026, and implement a system by March 30, 2026, to collect and store emergency contact information and ensure notification protocols are in place.
Violations related to the emergency contact provision can incur penalties up to $10,000 per worker.
2. Expanded Personnel Records (SB 513)
A worker’s right to inspect personnel records is expanded to include education and training records. Employers must maintain and make available all education and training records, including the training provider’s name, duration, date, core competencies, and resulting certification.
3. Layoff Notice Expansion (SB 617)
Notices required under the Cal-WARN Act for mass layoffs must now include detailed information about local workforce development services, CalFresh (food assistance) program details, and the local workforce board’s contact information.
New Worker Protections and AI Rules
California is defining the legal boundaries for technology use and expanding labor protections for non-traditional workers.
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1. FEHA Regulations on AI Use (Effective Oct. 1, 2025)
Workers are protected from discrimination resulting from an employer’s use of Automated-Decision Systems (ADS) (e.g., AI tools, algorithms, or computer-based assessments) in employment decisions.
Employers must provide mandatory pre-use and post-use notices to applicants and workers explaining how the tool is used and the right to appeal. It is unlawful to use ADS in a discriminatory way. Employers must also retain ADS-related documents and data for at least four years.
Related Article: Implications of the Trump AI Executive Order: What Employers and Employees Need to Know
2. Gig Worker Unionization (AB 1340)
Transportation Network Company (TNC) drivers can now form labor organizations and bargain collectively (concerted activities for mutual aid) without being classified as employees.
This process is overseen by the Public Employment Relations Board (PERB). TNCs must comply with new information and process requirements under the Transportation Network Company Drivers Labor Relations Act.
3. Civil Claims Revival (AB 250)
The statute of limitations is revived for certain previously barred sexual assault claims against entities that engaged in a “cover-up” of the assault. New claims can be filed between January 1, 2026, and December 31, 2027. Related
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Book Me for a Segment to Bring Law to Light as an Expert on New California Employment Laws in 2026 for Your Audience.
The comprehensive sweep of new California employment laws in 2026 legislation, from the ban on “stay-or-pay” clauses and the expansion of Equal Pay protections to the new AI disclosure rules, is a powerful testament to why employee rights and compliance vigilance are paramount. Make no mistake, technology, demographic shifts, and evolving labor demands are constantly reshaping the workplace and the laws that govern it. But as evidenced by the new Know Your Rights Act and the mandatory penalties for wage violations, human oversight and accountability cannot be replaced.
By taking proactive steps now to audit your hiring systems, update policies, and ensure compliance with these complex, sweeping new laws, employers can leverage the power of a highly skilled workforce while mitigating their legal risk. On the other side of that same coin, employees should also ensure they know their expanded rights.
To learn more about my work as a mediator and neutral, including my focus on employment, Title IX, sex abuse, class action, and mass torts mediated cases, please reach out to me on LinkedIn @Angela J. Reddock-Wright, Esq., AWI-CH, or click here.
You may also reach me at Signature Resolution.
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This communication is not legal advice. It is educational only. For legal advice, consult with an experienced employment law attorney in your state or city.