Important 2026 Legal Updates for California Employers
Key Legislative Changes Impacting Businesses
What a year! Immigration Reform, Artificial Intelligence, Pay Transparency, and Worker Protections are some of the hot topics this year. New agendas have emerged from the federal administration, while some state governments are reacting by progressing, regressing, or simply adapting. And you guessed it, California is no exception.
Here is a recap of some of the 2025 employment bills of particular interest to employers passed in this legislative session and signed by the Governor. These laws are effective on January 1, 2026.
In light of increased Immigration and Customs Enforcement (ICE) activity, SB 294 establishes a requirement for employers to provide written notification of workers’ rights by 2/1/26, including constitutional rights when interacting with law enforcement at the workplace. The notice would be provided to employees upon hire and annually thereafter. In addition, employers must provide employees with the opportunity to name an emergency contact by 3/30/26 for the purposes of contacting them if the employee is arrested or detained. The bill also prohibits an employer from discriminating or taking adverse action against an employee exercising their rights under this bill.
The Labor Commissioner will post the template notice on their website by 1/1/26, and by 7/1/26 will develop a video for employees advising them of their rights.
The Equal Pay Act (EPA) prohibits employers with 15 or more employees from compensating some employees an amount less than others of a different gender, race or ethnicity for substantially similar work, keeping in mind that bona fide reasons such as skills, seniority and performance are legitimate.
The law also recognizes that systemic pay inequities are often perpetuated when pay decisions are based on historical pay data. Effective 1/1/26, the regulation seeks to address these issues through pay transparency and reporting requirements. SB 642 is primarily intended to provide clarification in some areas previously lacking definition:
- • The requirement to post pay scales in job postings has been clarified to mean “a good faith estimate of the salary or hourly wage range the employer reasonably expects to pay for the position upon hire and in good faith.” This is much more narrow and useful than posting a wider range to include amounts that the employer would not pay upon hire.
- • The definition of “wages” is revised to include all forms of pay, such as bonuses, benefits and other perks.
- • The pay data reporting requirements for employers with 100+ employees will now be aligned with the Bureau of Labor Statistics (BLS) in its classification of employees, from 10 to 23 job categories.
- • The provision for an employee to obtain relief is extended to six (6) years.
While a clearer definition of pay scales and wages is good news, employers should conduct an internal review of pay practices using total rewards to ensure compliance. All employers who are required to file EPA reports each year (including federal contractors) should ensure that their HRIS data is updated with the new job categories at the beginning of 2026 for accurate pre-review and 2027 reporting.
Employers with 25+ employees are prohibited from discriminating or retaliating against an employee who is a victim, or who has a family member who is a victim, from taking time off from work for reasons related to qualifying acts of violence. Protected time off includes relief in the form of ensuring safety, to seek medical attention or recover from injuries, to secure safe housing, to obtain legal or government services, and to arrange for childcare. In addition, the employer should engage in an interactive process for reasonable accommodation if needed.
These protections are expanded as of 1/1/26 to be included as the reasons employees can take paid sick and safe leave under California’s Healthy Workplaces, Healthy Families Act (HWHFA) and California Government Code section 12945.8.
The existing WARN Act prohibits an employer from implementing a mass layoff without giving written notice to the employees and local agencies. Employers in California who have 75+ employees, or layoffs of 50+ employees, are covered by the California WARN Act. Effective 1/1/26, SB 617 would require employers to also include in the notice:
- • Whether the employer plans to coordinate services through the local workforce development board or another entity; and
- • Information regarding the statewide food assistance program known as CalFresh.
The federal WARN Act has not changed; however, it does have different thresholds for covered employers, and communications should be thoughtfully written to integrate both laws.
Employees currently have the right to inspect and receive a copy of certain personnel records, such as performance or grievances, and employers are expected to make the contents of those records available upon request. SB 513 adds education and training records to be added to those personnel files so that they will also be available for inspection or copy at the employee’s request. Effective 1/1/26, the education and training records must include the following:
- • The name of the employee.
- • The name of the training provider.
- • The duration and date of the training.
- • The core competencies of a training including skills in equipment or software.
- • The resulting certification or qualification.
Employers are advised to (1) ensure that they are capturing the required education and training information, and (2) that the records are maintained in the employees’ personnel files, and made available for inspection or copy.
In light of the rush to market of innovations using Artificial Intelligence (AI), there have been concerns that the technology has not undergone adequate risk assessments to prevent catastrophic risks from both malicious uses and malfunctions. SB 53 would regulate “frontier” development, defined as large-scale machine-learning models that exceed existing capabilities.
While most of the legislation involves transparency, testing, risk management and internal governance, it also includes a component that specifically includes Whistleblower Protections for those reporting potential violations or danger to public health or safety resulting from these capabilities. Covered employers (frontier developers) should: update whistleblower policies to include frontier AI disclosures; create anonymous reporting channels; and provide a notice to employees of their rights and responsibilities through postings and/or annual written notices.
Existing law in California for communicating consumer data breaches required that notifications be made “in the most expedient time possible and without unreasonable delay.” With SB 46, the requirement will be that disclosures be made within 30 calendar days of discovery, with a caveat that would give some leeway for gathering salient information. Should the breach involve more than 500 people, the employer has 15 additional days to notify and provide the Attorney General with an electronic sample.
This is important for employers to know because employees are considered consumers of an organization with respect to their privacy rights, and would require notification of data breaches.
Currently, the Labor Commissioner is charged with enforcing unsatisfied wage judgments if the final judgment remains unsatisfied for 30 days. Included in enforcement actions is that the employer could be prohibited from conducting business in the state. Effective 1/1/26, SB 261 would, among other things, require the employer to be subject to a civil penalty of up to three (3) times the judgment amount if the nonpayment of work performed remains unpaid after 180 days.
Note that this does not include mere claims; the key concept is “final judgment.” To avoid these potentially hefty penalties, employers are advised to settle any final wage judgments promptly.
Existing law states that contracts generally cannot restrain anyone from engaging in a lawful profession. It has been determined that requiring workers to enter into an employment agreement that requires a debt to be paid if the work relationship terminates is a form of restraint, if indeed that is a condition of employment. AB 692 makes it unlawful for contracts entered into on or after 1/1/26 to include terms of a debt, should the employment relationship terminate. Persons violating this provision would be liable for civil penalties and relief.
Examples of unlawful debt collection provisions would include signing bonuses or tuition reimbursement benefits. There are, however, narrow exceptions such as loan or tuition repayment agreements. Employers who include such terms in employment agreements should modify their agreements and update their policies.
Other Trends
While not all bills get signed, sometimes existing law will expand and adapt to the times. Governor Newsom vetoed SB 7, the “No Robo Bosses” bill, which was intended to add controls and accountability to ensure that the use of AI and Automated Decision Systems (ADSs) doesn’t result in a disparate impact. Not to worry, the California Civil Rights Council (CRC) stepped in and adopted new regulations to address AI and ADSs, effective October 2025. Technologies under scrutiny are those used for screening candidates, measuring aptitude or performance and predicting personality or culture fit, among others. In addition, liability may not be limited to the employer but can include a third-party agent or representative. Employers with five or more employees should conduct internal bias testing of technologies used to accomplish these tasks to make sure they don’t result in disparate impact by inadvertently screening out a protected class.
Predictive Scheduling, meaning that employee schedule changes require reasonable notice, is gaining traction in a few localities in California, most recently in Los Angeles County. Other locations are in Northern California: Berkeley, Emeryville, San Francisco and San Jose. While the details differ between localities, the trend is:
- • The focus is generally on retail, hospitality and restaurant establishments.
- • The legislation typically requires schedules to be provided 14 days in advance
- • Often with a “predictability pay” penalty that ranges up to 1.5 x the normal rate of pay.
- • Many require a schedule to be provided at hire.
- • Some provide at least 10 hours between two shifts.
- • There are different thresholds that include the number of employees and locations.
Employers in these industries and localities should become familiar with any local laws affecting Predictive Scheduling.
Next Steps
It’s crucial to review your communications, recruitment processes, and employee handbook to ensure compliance with the latest legal requirements. At SDHR Consulting, we specialize in creating compliant job descriptions, job postings, and employee handbooks for 2026.
It is always a good idea to ensure you are fully compliant in all areas by partnering with our HR experts for a comprehensive HR Audit/Gap Analysis. We also offer Leadership Training for your supervisors, equipping them with the knowledge and best practices they need to navigate legal compliance and drive success within your organization.
