New Year, New Laws: 2026 California Employer Resolutions

by Barry Bradley, Jaimee Wellerstein, and Sahar Shiralian

The “holiday haze” has faded, and January is in the rearview mirror, which means that it’s finally time for new beginnings, settling back into routines, and most important, making resolutions. If you’re an employer and business owner, perhaps one of those resolutions is to finally achieve compliance with and stay on top of the myriad of complex California employment laws. A good place to start is to be aware of new employment laws that are on the horizon. We’ve got you covered. Below is a handy “cheat sheet” of the most relevant key employment laws taking effect this year.

Here’s what to expect: 

Employment Law Updates

• Don’t Posture! Send The Poster!! (SB 294): Senate Bill 294 introduces two new requirements in the workplace. First, SB 294 establishes the new “Workplace Know Your Rights Act.” By February 1, 2026, employers must provide employees with an annual written Workplace Know Your Rights Act Notice. The notice must include a clear explanation of the following: (1) workers’ compensation benefits; (2) immigration rights and protections; (3) union organizing and concerted activity rights; and (4) constitutional rights during interactions with law enforcement at the workplace. The California Labor Commissioner has now provided a template notice in English and Spanish on its website for the reference of employers. 
  
  Further, the Labor Commissioner’s website states that employers are also required to provide the notice in the language used for work-related communications and that the employee understands. This notice must be provided annually, in a manner normally used to communicate employment-related information, such as personal service, email, or text message. Employers must also provide it to new hires upon employment and to collective bargaining representatives. 
  
  Employers can become compliant with SB 294 by determining the best distribution method, timely providing the notice, and keeping records of compliance with the notice requirement for three years, including the date that each notice is provided or sent. The template notice on the Labor Commissioner website will be updated annually, so employers should confirm that they are using the most current version each year.
  
  Second, SB 294 also provides employees the chance to name or update emergency contacts and specify if they should be notified of an arrest or detention. Employers must allow employees to designate an emergency contact or collect this information by March 30, 2026 and new employees upon hire. An employer must contact the designated emergency contact if an employee is detained or arrested (1) at the workplace or (2) during work hours or during the performance of the employee’s job duties, even if not at the workplace, if the employer has actual knowledge of the arrest or detention.
  
  SB 294 authorizes enforcement by the Labor Commissioner, public prosecutor, or employee in a public action. An employee may obtain injunctive relief, penalties, punitive damages, and reasonable attorneys’ fees and costs. Failure to properly notify an employee’s emergency contact (if requested by the employee) can result in a penalty of up to $500 per employee per day up to a maximum of $10,000.00 per employee.

• Layoffs? Let Them Down Easier. (SB 617): California employers with more than 75 Employees and who lay off 50 or more of their workforce are required to provide at least 30-Days’ notice of the intended layoff. This new law, which took effect on January 1, 2026,  expands the information employers are required to include under the California Worker Adjustment and Retraining Notification Act (Cal-WARN). Employers are now required to state whether they plan to coordinate services for affected employees through the local workforce development board (LWDB), another entity, or not at all. Employers must provide the LWDB’s contact information (email and phone number) and a description of its services in the notice, regardless of what they decide.
  
  In addition to the above requirement, SB 617 also requires a description of California’s statewide food assistance program (CalFresh) in every Cal-WARN notice, including the following information: (1) a short description of the program, (2) the CalFresh benefits helpline, and (3) a link to the CalFresh website. Employers must also provide their own contact information in the Cal-Warn notice, so employees and agencies can contact them. Further, If an employer chooses to coordinate services through a LWDB or another entity, those services must be arranged within 30 days from the date of the notice.

• Keep Those Training & Education Records! (SB 513): Effective January 1, 2026, this new law expands employee rights by adding education and training records to the definition of "personnel records." SB 513 amends Labor Code § 1198.5, which requires employers to maintain an employee’s personnel records and to produce them to both current or former employees within 30 days of their request to inspect and receive the records. Under this amendment, employers must also allow employees to inspect records pertaining to education or training that the employee received. These records must include the name of the employee, name of the training provider, duration and date of training, the resulting certification, and core competencies and skills of the training. Potential penalties include a $750 civil penalty per violation, injunctive relief, and attorney's fees. 

For the private security industry, this means that the required training of certain employees (eg., security guards) could be subject to disclosure. All the more reason to ensure that your company is compliant with the myriad of training requirements under the Private Security Services Act.

• SB 642: Effective January 1, 2026, the Pay Equity Enforcement Act (SB 642), significantly amends California’s Equal Pay and Pay Transparency laws by broadening key definitions, extending the statute of limitations to three years with recovery for the entire period a violation exists (not to exceed six years), and specifying categories of unlawful practices under the act. SB 642 significantly broadens the definition of “wages” to include all forms of pay, including, inter alia, bonuses, stock, stock options, cleaning or gasoline allowances, hotel accommodations, and reimbursement for travel expenses. SB 642 also states that employers may not pay employees of a different sex (previously the "opposite sex")  meaning that the law now includes non-binary genders. Lastly, SB 642 clarifies California's pay scale disclosure law to specify that a "pay scale" is a "good faith estimate of the salary or hourly wage range that the employer reasonably expects to pay for the position upon hire." 
  
  To achieve compliance with SB 642, employers should ensure that all job postings posted on or after January 1, 2026 contain the required pay scale information. Employers should also revise their pay policies and practices to prohibit pay inequity with respect to non-binary individuals and to ensure that all forms of wages are paid equally across sexes, not just salaries and hourly rates.

• Stay-or-Pay Becomes “Leave-And-Skate” (AB 692): Starting January 1, 2026, AB 692 bans “stay-or-pay” contracts, including training repayment agreements. However, tuition reimbursement or retention bonuses are exceptions under this law. Specifically, SB 692 prohibits any provision that requires repayment of benefits or training costs and seeking to recover "debt" from employees upon their separation from employment. There is a $5,000 minimum civil penalty for violations of AB 692.

• Immigration Process Leave of Absence: (AB 1136): This new law requires employers to provide workers with up to five unpaid days per year (consecutive and nonconsecutive) to attend matters dealing with immigration status or work authorization (such as interviews and proceedings). AB 1136 also provides for reinstatement rights for up to two years for employees who have been terminated due to lack of proper work authorization but later produce it. Employers would be required to reinstate employees to their former job classification with no loss to seniority. The law also generally prohibits employers from discriminating against employees because they are subject to immigration or deportation proceedings.

• Deadbeat Employers – Beware! (SB 261): Effective January 1, 2026, California employers with unpaid wage judgments will be subject to significantly increased liability. SB 261 imposes additional civil penalties for any unpaid final judgments for unpaid wage claims after 180 days, if no appeal is pending. Employees should pay careful attention to this new law - penalties can be up to three times the amount of the original judgment! As a result of this new law, employers should promptly implement compliant practices that ensure wage claims are timely resolved.

• Don’t Bully Your Employees.  (SB 399): This new law bans “captive audience” meetings where political matters are discussed, including formation of a union. Specifically, an employer is prohibited from subjecting or threatening to subject an employee to discharge, discrimination, or retaliation because the employee declines to attend an employer-sponsored meeting or refuses to listen to any communications with the employer or its agents where the purpose is to communicate the employer’s opinion about religious or political matters, including communications related to unionization. An employer who violates this section shall be subject to a civil penalty of five hundred dollars ($500) per employee for each violation.

• New Minimum Wage: While the baseline minimum wage in California is now $16.90 per hour, there are a lot of exceptions that raise the rate, depending upon geographical location or the type of work being performed (or both!). Check out our Minimum Wages For 2026 Article here.

Other Business Considerations

• Tax Code Changes: Congress passed a major tax reform bill in late 2025, which has ushers in some new changes for business owners. First, the bill introduces a new deduction for overtime and tips. If employees are racking up overtime or working for tips, they could see a tax break, but only if payroll is set up correctly. The 20% Qualified Business Income (QBI) deduction is now permanent for pass-through entities. Employers should be revisiting their payroll structure, updating tax planning forecasts, and ensuring eligible employees get the right info about the new deduction.

• The Corporate Transparency Act (CTA) Pause: One of the most misunderstood federal rules to hit small businesses in recent years, the Act requires many companies — LLCs, S-corps, etc. — to report their “beneficial owners” (think, anyone with significant control or ownership) to FinCEN. Originally, existing businesses had to file by January 1, 2025, with a penalty up to $10,000 and even facing jail time for willful violations. For 2026, most businesses can hold off on reporting unless they’re foreign-owned or involved in higher-risk activities because enforcement has been paused as the government re-evaluates how burdensome the rule is for small domestic companies. In the meantime, businesses should keep a current record of all beneficial owners (names, addresses, DOBs, IDs) and monitor FinCEN updates to stay prepared.

• Artificial Intelligence in Hiring: California’s Civil Rights Department issued new guidance on AI, effective Oct. 1, 2025. It explicitly prohibits the use of “Automated Decision Making Systems” in any process if the effect is to “discriminate or perpetuate discrimination.”  Employees must be notified if any part of their application or background check was reviewed by AI. Further, employees are entitled to review the findings and any assessment criteria and related data used by AI. If a business uses automated systems that discriminate, the company maintains full liability. Simply put, do not entirely rely on artificial intelligence in the hiring process.

---