In October, I had the great fortune to travel to Antarctica (for the second time), the South Georgia Island and the Falkland Islands where I concluded that all sticky employee relations challenges can be fixed by having employees watch penguins waddle, hop and slide. As part of the following update of the significant new California employment laws for 2026, I have included a couple of my photos, which will hopefully enhance this article.
Enactment of Workplace Know Your Rights Act (SB 294)
The newly-enacted Workplace Know Your Rights Act requires employers to provide a stand-alone written notice to each current employee of specified employee rights, on or before February 1, 2026 and each year thereafter. It includes a description of the constitutional rights that employees have when interacting with law enforcement at the workplace. Each new employee must receive this notice upon hire.
The Labor Commissioner is required to provide a template notice for employers to use, which is to be posted on its website by January 1, 2026. The Commissioner must also provide a video by July 1, 2026 which will cover employers’ requirements and employees’ rights.
This Act further requires employers to provide current employees the opportunity to identify an emergency contact by March 30, 2026. Employees hired thereafter must be provided this opportunity. Employers are required to notify an employee’s designated emergency contact if the employee is arrested or detained on the worksite. If an arrest or detention occurs at a location other than the worksite, but during work hours or when the employee is performing their duties, the employer is required to notify the employee’s emergency contact only if the employer has actual knowledge of the arrest or detention.
Violations may result in monetary penalties on a per employee per violation basis, up to a maximum of $10,000 per employee.
Certain Employee Repayment Agreements Deemed Invalid (AB 692)
The California Business and Professions Code has long prohibited contracts that restrain individuals from engaging in a lawful profession, trade or business of any kind (so-called “non-compete” agreements). AB 692 makes it unlawful for contracts entered into after January 1, 2026, to require employees to pay their employer, training provider or debt collector for a debt if the employee’s employment or work relationship terminates. It further prohibits contracts which impose any penalty, fee or costs on a worker if their employment terminates. A “debt” refers to an amount owed for employment-related or education-related costs or consumer financial products or services. A “penalty, fee or cost” refers to replacement hiring fees, retraining fees, reimbursement for immigration or visa-related costs, among other things. An employee may bring a civil action on their own and on behalf of others similarly situated for violations.
AB 692 creates some exceptions for contracts which will not be deemed invalid. This includes contracts for: 1) loan repayment assistance or loan forgiveness programs provided by a government agency; 2) repayment of tuition costs for transferable credentials (so long as obtaining the credentials is not a condition of employment, the contract is separate from the employment contract, there is no accelerated payment schedule upon employment separation and repayment is not required if the employee is terminated for anything other than misconduct); 3) Division of Apprenticeship Standards apprenticeship programs; 4) financial bonuses at the outset of employment not tied to specific job performance (subject to certain requirements, including that the employee has the option to defer receipt of the bonus until the end of the retention period without any repayment obligation, the repayment terms are separate from the employment agreement and repayment is not required if the employee is terminated for anything other than misconduct); and 5) a residential lease, financing or purchase of a residence.
Detailed Training Record Requirements for Personnel Files (SB 513)
California Labor Code Section 1198.5 has long required employers to provide employees with a copy of their personnel files upon request. SB 513 specifies that employers who maintain education or training records must ensure that they include the name of the employee, the name of the training provider, the duration and date of the training, the core competencies of the training (including skills in equipment or software) and any resulting certification or qualification. The new law’s proponents described that many employees develop their skills through on-the-job training, yet employers do not always have specific records. By requiring more detailed records, employees would be able to rely on them to establish their skills in the event they were laid off. SB 513 was prompted in large part due to a study which found that there have been a large number of oil refinery workers in California who have been laid off due to industry changes who were particularly impacted by the absence of specific training records.
Equal Pay Act and Pay Transparency Revisions (SB 642)
The California Equal Pay Act has long prohibited employers from paying employees of the “opposite sex” less for substantially similar work. SB 642 revises this verbiage to “another sex” and incorporates the definitions of “sex” from the Fair Employment and Housing Act, which includes gender identity and gender expression. It defines wages to include all forms of pay, including bonuses, employee benefits, stock options, and reimbursement for travel expenses.
SB 642 increases the statute of limitations for violations of the Equal Pay Act from two to three years after the last date the cause of action occurs and entitles employees to obtain relief for the full period of time in which a violation exists, up to six years.
The California Labor Code currently addresses pay scale transparency by requiring covered employers to disclose to employees, upon request, the pay scale for their position and to include the pay scale on job postings. “Pay scale” was defined as the salary or hourly wage the employer reasonably expected to pay for the position. SB 642 broadens this definition to mean a good faith estimate of the salary or hourly wage range the employer reasonably expects to pay upon hire.
Updates to Employer Pay Data Reporting Requirements (SB 464)
Current law requires employers with 100 or more employees to submit an annual pay data report to the California Civil Rights Department (CRD) that specifies the number of employees by race, ethnicity and sex in 10 specified job categories, the number of these employees whose pay falls within federal pay bands, the median and mean hourly rate and the total number of hours worked. This requirement includes employers that have 100 or more employees hired through labor contractors.
SB 464 requires employers to store this employee demographic data separately from employees’ personnel files. Beginning January 1, 2027, there will be 23 specified job categories. The new law further provides that if an employer fails to file this annual report, the court is required to impose a civil penalty against it if requested by the CRD.
Regulations on the Use of Artificial Intelligence for Employment Decisions
Effective October 1, 2025, the California Civil Rights Department (CRD) regulations on “automated decision technology” prohibit the use of tools that discriminate (intentionally or unintentionally) against applicants or employees based on protected characteristics (e.g., sex, race, age or any other characteristic protected from discrimination by the Fair Employment and Housing Act). This potentially includes AI tools that make predictive assessments, that measure an applicant’s personal traits or cultural fit, that screen resumes for particular terms or patterns, and that analyze facial expressions. Employers are required to keep records of the data for four years and are not insulated from liability by using tools sourced from third parties.
The California Privacy Protection Agency issued regulations going into effect on January 1, 2026, covering cybersecurity audits, risk assessments, automated decisionmaking technology, among other things. Businesses covered by the California Consumer Privacy Act that use AI to make significant decisions (including employment and compensation) will be required to issue pre-use notices to applicants and employees beginning on January 1, 2027. The CCPA applies to for-profit businesses that do business in California and meet any of the following: have a gross annual revenue of over $25 million; buy, sell, or share the personal information of 100,000 or more California residents or households; or derive 50% or more of their annual revenue from selling California residents’ personal information.
Enhanced Whistleblower Protections for Reporting Artificial Intelligence Safety Violations (SB 53) and Governor’s Veto of SB 7
In June 2025, the Joint California Working Group on AI Frontier Models issued its final report which emphasized the growing evidence of a risk of severe harm, such as AI-enabled hacking or biological attacks. SB 53 arose out of this report and applies to large AI “frontier” models (as defined). Among other things, it requires these developers to publish safety protocols and transparency reports for each AI model, which must explain whether and how catastrophic risks (defined as events causing more than 50 deaths or $1 billion in damage) are assessed and mitigated. It further establishes a critical incident reporting system through the Office of Emergency Services. It requires OES to establish a mechanism to be used by developers or a member of the public to report a critical safety incident and prohibits developers from retaliating against employees for disclosing information to state or federal authorities.
Governor Newsom vetoed SB 7 which would have required employers (regardless of the number of employees) to provide written notice to employees or applicants that they were using an AI tool to make employment-related decisions.
Expansion of Paid Family Leave Eligibility to Correspond to Paid Sick Leave and California Family Rights Act (SB 590)
In 2022, the California Paid Sick Leave law and the California Family Rights Act expanded the definition of “family member” to include an employee’s “designated person.” SB 590 expands eligibility for benefits under the California Paid Family Leave (PFL) program to include employees who take time off to care for a seriously ill “designated person.” It is defined as a person who is related by blood or whose association with an individual is the equivalent of a family relationship. It further provides that when an employee initially requests PFL benefits to care for a designated person, they must identify the designated person and under penalty of perjury attest that the person is related by blood or that the person is in an equivalent family relationship. The legislative analysis states that this expanded definition is necessary because of the prevalence of multigenerational households and because the LGBTQ+ community is more likely to rely on individuals other than biological relatives for care.
Protections for Bias Mitigation Training (SB 303)
In response to the current federal crackdown on diversity, equity and inclusion efforts, SB 303 was passed which recognizes that training and educational programs on individuals’ biases could be used against employees and employers. This law provides that bias mitigation training and employees’ assessments, admissions or acknowledgments of their own personal biases that were made in good faith and solicited as part of the training do not, alone, constitute unlawful discrimination. Bias mitigation training is defined to include education of employees on understanding or acknowledging the influence of conscious and unconscious thought processes and how to mitigate the impact of their personal biases.
This new law does not require employers to provide this type of training, although it is not unusual for employers to include unconscious bias as part of their harassment prevention training.
FEHA Enforcement and Statute of Limitations Clarification (SB 477)
In order to pursue a lawsuit for an alleged violation of the Fair Employment and Housing Act (FEHA) for employment discrimination, harassment and related claims, employees must first submit a claim to the California Civil Rights Department. The employee can generally request that the CRD close the claim and issue a right to sue notice. Otherwise, the CRD will investigate the claim and either pursue a lawsuit on behalf of the employee or it will close the matter and issue a right to sue notice. The employee then has one year to file a civil action. SB 477 tolls the time for the employee to file a lawsuit if the employee timely appeals the CRD’s closure of the matter until one year after the CRD issues written notice that the matter remains closed following the appeal.
Expansion of Sexual Assault Statute of Limitations Against Entities (AB 250)
In the past several years, the California Legislature has passed several bills modifying the statutes of limitations for sexual assault claims against both the alleged perpetrators and the entities that allegedly covered up the assault, including expanding the time to sue to ten years after the date of the assault or three years after the plaintiff discovered an injury resulting from the assault, whichever is later. In a prior legislative session, a bill revived claims that otherwise would have been time-barred, including claims alleging that an entity engaged in a cover-up of the assault, as long as such claims commenced between January 1, 2023 and December 31, 2023. AB 250 expands the window for bringing claims against an entity to December 31, 2027.
New California Minimum Wage and Salary Requirements for Overtime Exemptions
Effective January 1, 2026, the state-wide minimum wage will increase to $16.90 per hour, except fast food restaurant employers must pay a minimum wage of $20.00 per hour and health care employers are subject to minimum wage requirements defined by the Labor Code. Various local ordinances require minimum wages higher than the state-wide requirement and thus, employers must ensure that the correct rate is applied depending on the employee’s work location.
In California, the Administrative, Executive and most Professional overtime exemptions require the payment of a monthly salary at the minimum rate of two times the California minimum wage times 2,080 hours. Thus, beginning January 1, 2026, the minimum salary threshold is $70,304 per year.
The California computer software overtime exemption’s minimum thresholds are tied to the Consumer Price Index and adjust each year. For 2026, the minimum hourly rate of pay to qualify for this exemption is increasing to $58.85, the minimum monthly salary will increase to $10,214.44, and the minimum annual salary will be $122,573.13.
Your 2026 HR Compliance Checklist
- Monitor the Labor Commissioner’s publication of the Workplace Know Your Rights Act notice and ensure distribution to all employees by February 1, 2026.
- Ensure all employees have the opportunity to identify an emergency contact and maintain this information so that it is easily accessible.
- Have your legal counsel review all contracts that require employees to pay for employment-related or education costs, including repayment agreements.
- Update employee training records for compliance and ensure they are maintained in employees’ personnel files.
- Conduct regular analyses of employees’ total compensation by gender and other protected characteristics and review job postings to ensure compliance with pay scale transparency requirements.
- Ensure employee demographic data used to prepare the annual pay data report is stored separately from employees’ personnel files.
- Review all AI tools being used to make employment and compensation decisions and ensure that they do not result in discrimination.
- Ensure the correct minimum wage rate is applied. Review the salaries of all overtime exempt employees and ensure that the new minimum salary thresholds are met to maintain the exemption classifications.
- As always, review harassment prevention training records for all supervisory and non-supervisory staff and provide required training, as well as training on workplace violence prevention.
For more information or assistance with employment law compliance matters, please contact Ms. Topliff at topliff@joblaw.com.
