Top 10 New Laws and Regulations Affecting California Employers

With 2026 now upon us, so is a slew of new laws and regulations that affect California businesses. Every year, laws passed by the state Legislature and signed into law by the governor take effect, and 2025 was a busy legislative session in Sacramento. The end result is another wave of new legislation that California employers need to stay on top of. Here’s what California employers should be aware of.

1. PROTECTED LEAVE EXPANDED
AB 406, which took effect Oct. 1, 2025, expands on revisions made in 2024 to the state’s paid sick and safe time and crime-victim leave laws, adding new categories of protected absences across multiple statutes and increasing the complexity of managing employee leave.

The law amends both the state’s paid sick leave law — the Healthy Workplaces, Healthy Families Act — and Government Code section 12945.8, which governs unpaid job-protected leave.

The new law added two reasons for which employees can take protected time off:

• To appear in court as a witness to comply with a subpoena or court order, including if the employee is a crime victim.
• To serve on an inquest jury or trial jury.

As of Jan. 1, 2026, the law also extends job-protected leave for employees or their family members who are victims of certain serious crimes (the law identifies 14 qualifying crimes).

Covered workers may now take protected leave to attend court or administrative proceedings related to those crimes, such as arraignments, pleas, sentencing hearings, parole hearings and other proceedings where victims’ rights are at issue.

Employers will have to revise their HR policies to ensure they comply with the new law. This law was followed up with clean-up legislation that moved parts of the law from the state Labor Code to the Government Code.

2. NEW AI-IN-HIRING RULES
As of Oct. 1, 2025, any California employer that uses artificial intelligence and other automated tools in recruiting, hiring, promotion and related human resources decisions must ensure that the tools don’t discriminate against protected classes.

The new regulations, promulgated by California’s Civil Rights Department, cover any “automated decision system,” which the rules broadly define to include any computer-based process that makes or influences employment decisions, such as:

• Artificial intelligence
• Machine learning
• Algorithms
• Statistics
• Other data-processing techniques

If your firm uses AI or another data-driven system in hiring, you’ll want to beef up record-keeping and set testing procedures to ensure that the tools you use comply with the new regulations.

3. NEW NOTIFICATION REQUIREMENTS
The Workplace Know Your Rights Act adds a new notification requirement for California employers. The new law requires employers to distribute a new notification to workers on an annual basis that informs them about several topics:

• Workers’ compensation
• Immigration inspection rights
• The right to organize/unionize
• Constitutional protections during law enforcement interactions at work
• Other developments from the Labor Commissioner

The notices must be in the same language that the employer normally uses to communicate with its employees and must be accessible to employees within a business day of transmission.

Employers have until Feb. 1, 2026, to distribute these new notices to their staff. After that it must be distributed annually.

The law includes a separate provision mandating that employers notify an employee’s emergency contact if they are arrested or detained at work. This only applies if the employee has pre-designated an emergency contact for this purpose and if the employer has knowledge of the arrest.

Employers must provide current employees with the opportunity to designate an emergency contact before March 30, 2026.

4. LABOR RELATIONS BOARD'S PREVIEW EXPANDS
AB 288 is California’s direct response to the National Labor Relations Board’s paralysis due to lack of a quorum under the Trump administration and the board’s retreat from its historical duties. The law expands the jurisdiction of the California Public Employment Relations Board, which enforces labor issues for the public sector, to private sector employer/employee labor relations.

The law states that employees covered by the National Labor Relations Act may petition the PERB if the NLRB has expressly or impliedly ceded jurisdiction.

PERB is authorized to:

• Hear unfair practices charges
• Conduct union elections
• Certify bargaining representatives
• Order certain remedies, among other things

The NLRB has sued to stop the law from taking effect, arguing that the new law is preempted by the National Labor Relations Act.

5. EMPLOYMENT CONTRACT REPAYMENT PROVISIONS
A new law bars employers from including or requiring workers to sign employment-related contracts that impose financial penalties, repayment obligations or fees if the employment ends before a specific date.

AB 692 addresses issues that arise when employers provide signing bonuses, tuition assistance and other benefits and require employees to return the funds if their employment ends prematurely.

6. WAGE JUDGMENT PENALTIES
On Jan. 1, 2026, SB 261 expanded the potential liabilities for employers that fail to pay a final wage judgment. Under the new law, if an employer fails to pay a final judgment within 180 days after the appeal period ends, a court may impose civil penalties up to three times the amount of the unpaid judgment, including interest.

Courts are also required to award reasonable attorneys’ fees and costs to the plaintiffs who prevail in cases that are either brought by them, the labor commissioner or a local district attorney.
 

7. MINIMUM WAGE CHANGE
The state’s minimum wage increased to $16.90 an hour on Jan. 1, 2026. Additionally, the minimum salary requirement for a full-time exempt employee (meaning they are exempt from overtime rules) increased to $70,304.

Keep in mind that many local jurisdictions — counties and cities — may have higher minimum wages than the state. Also, fast food employees have their own minimum wage of $20 an hour. Additionally, for fast food workers to qualify as exempt, they must earn twice the fast-food minimum wage.

8. PERSONNEL RECORD RETAINMENT
Effective Jan. 1, 2026, SB 513 amended Labor Code section 1198.5 by expanding what documents qualify as a “personnel record” to which current and former employees have the right to inspect and copy.

The new law adds education and training records to the definition of personnel records if the employer maintains them.

For HR, the new category may include:

• Training certificates
• Internal or external course completion records
• Vendor-provided training documentation
• Skill or competency tracking records
• Certifications related to job duties

If your organization maintains training or education records, your HR team will need to ensure those records are complete, accurate and ready for inspection.

9. PAID FAMILY LEAVE PROGRAM EXPANDS
California’s Paid Family Leave program provides up to eight weeks of partial wage replacement for employees who are caring for ill family members, bonding with a new child or handling a military-related exigency.

Starting in July 2028, the new law, SB 590, expands these benefits to cover employees who care for a “designated person,” who may be related by blood or with whom the employee has a relationship that is equivalent to a family relationship.

To qualify, the employee, when requesting benefits, must:

• Identify the designated person; and
• Attest under penalty of perjury either how they are related by blood to the designated person or how their relationship is equivalent to a family relationship.

10. PAY TRANSPARENCY AND EQUAL PAY
SB 642 expanded the statute of limitations to bring a civil action for violations of California’s Equal Pay Act to three years after the last date the cause of action occurs from the prior two years. It also requires that an employee is entitled to seek and obtain relief for the entire time during which the violation took place, up to six years.

The legislation also amended the law, which had prohibited employers from paying employees of the “opposite sex” differently for the same job and with the same experience. To account for non-binary genders, the law changed “opposite sex” to “another sex.”