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As we enter 2026, a new wave of labor and employment laws is set to reshape workplace requirements for California employers. From expanded paid family leave and new AI regulations to strengthened pay equity and whistleblower protections, these changes carry significant implications for businesses across the state. This client alert highlights the most impactful legislative updates. Stay ahead of the curve by understanding your obligations and taking proactive measures to ensure compliance.
Let’s dive into the key developments:
Hiring and Firing
AB 858: Rehiring and Retention of Displaced Workers
AB 858 extends California’s existing COVID-19 recall and reinstatement requirements through January 1, 2027. The law applies to covered employers in the hospitality, airport, event-center, and building-services industries (including hotels with 50+ rooms, airport hospitality/service providers, large event venues, and commercial building janitorial/security operations). These employers must offer available positions in writing to qualified employees who were laid off due to COVID-19 after at least six months of prior employment, following statutory preference rules. The bill also continues the prohibition against retaliation for asserting recall rights.
AB 692: Employment Contract Repayment Prohibition
This bill prohibits employers, training providers, and debt collectors from requiring workers to sign employment or training agreements that impose repayment obligations or “quit fees” when a worker leaves a job. Covered terms include requiring workers to repay “debts” tied to employment—such as onboarding expenses, proprietary training costs, liquidated damages, replacement-hire fees, immigration/visa fees, or similar penalties—if they resign or are terminated.
The law voids such contracts as unlawful restraints of trade for agreements made on or after January 1, 2026. Limited exceptions apply for (1) government-run loan-assistance or forgiveness programs; (2) repayment agreements for truly transferable educational credentials offered separately from employment; (3) approved apprenticeship programs; and (4) certain signing-bonus agreements that meet strict fairness and prorating requirements. Workers may recover actual damages or a statutory minimum of $5,000 per worker, injunctive relief, and attorneys’ fees.
SB 617: California Worker Adjustment and Retraining Act (WARN) Updates
This bill updates California’s WARN Act by expanding what employers must include in 60-day layoff, relocation, or termination notices. Employers must now state whether they intend to coordinate workforce-transition services, such as rapid-response orientations, job-search assistance, or retraining, through the local workforce development board or another entity, and must arrange those services within 30 days of issuing the notice. WARN notices must also include the required description of rapid-response services, contact information for the local workforce board, a summary of CalFresh food assistance and how to apply, and a functioning employer email and phone number for affected workers.
Amendments to FEHA Regulations Regarding Use of AI in Employment
Effective October 1, 2025, new Fair Employment and Housing Act (FEHA) regulations govern employers’ use of artificial intelligence and automated decision systems (ADS) in employment practices. The regulations make it unlawful to use ADS in a manner that results in discrimination against applicants or employees, regardless of whether the system is developed or administered by a third-party vendor. Covered tools include resume-screening algorithms, AI-driven interview analysis, skills or personality assessments, and other automated screening, scoring, or decision-making systems.
Employers must provide specific pre-use and post-adverse-action notices explaining the nature and purpose of the ADS, the data being evaluated, and the individual’s rights under FEHA, including the ability to request human review. Employers are also required to maintain documentation of all ADS uses, inputs, outputs, and associated policies for at least four years. The regulations make clear that employers retain full liability for discriminatory outcomes produced by ADS, even when relying on external vendors.
Training, Notices, and Information Requests
SB 294: The Workplace Know Your Rights Act
This bill requires employers, by February 1, 2026, and annually thereafter, to provide a stand-alone written notice to all employees describing key workplace and constitutional rights. Required content includes rights related to workers’ compensation, immigration-agency inspection notices, protection against unfair immigration-related practices, rights to organize or engage in concerted activity, and employees’ Fourth and Fifth Amendment rights when interacting with law enforcement at the workplace. The notice must be provided in the language the employer normally uses to communicate with employees and in a manner reasonably expected to be received within one business day. New hires must receive the notice upon hire, and authorized representatives must receive it annually.
By March 30, 2026, employers must also give employees the opportunity to designate an emergency contact and specify whether that person should be notified if the employee is arrested or detained. Employers must notify the designated contact if an arrest or detention occurs on the worksite, and, if it occurs during work hours or in the course of job duties but off-site, only when the employer has actual knowledge. Retaliation for exercising rights under the Act is prohibited. Violations carry civil penalties of up to $500 per employee, with heightened penalties of up to $500 per day (capped at $10,000 per employee) for failures related to emergency-contact notification.
SB 303: Bias Mitigation Training
This bill clarifies that when employees participate in employer-provided bias-mitigation training, such as taking bias assessments, discussing unconscious bias, or acknowledging personal bias in good faith, those activities cannot, on their own, be used to claim that the employer or employee committed unlawful discrimination under FEHA. The law is intended to encourage employers to offer such trainings without fear that the training process, or employees’ statements made during it, could be mischaracterized as discrimination. It does not protect actual discriminatory conduct or employment decisions made outside the context of the training.
SB 464: Strengthening Pay Data Reporting Requirements
This bill strengthens California’s pay data reporting requirements for private employers with 100 or more employees. It requires employers and labor contractors to collect any demographic data used for pay-data reporting separately from personnel files to enhance privacy protections. Effective January 1, 2027, the number of job categories that must be reported will expand from the current 10 categories to 23, aligning the reporting structure more closely with federal occupational classifications and enabling more granular pay-equity analysis.
The bill also makes civil penalties mandatory, rather than discretionary, when the Civil Rights Department (CRD) asks a court to impose penalties on employers who fail to file required pay-data reports. Individual-level data collected under the statute remains confidential and exempt from Public Records Act disclosure, though CRD may continue publishing aggregate, anonymized statewide statistics.
SB 513: Personnel Records
This bill broadens employees’ existing right to inspect their personnel records by clarifying that “personnel records relating to performance” now explicitly include education and training records. Employers that maintain such records must ensure they contain specific information: the employee’s name, the training provider, the date and duration of the training, the core competencies covered (including equipment or software skills), and any resulting certification or qualification.
SB 19: Criminalization of Threats of Mass Violence
This bill criminalizes threats of mass violence made against California workplaces, as well as schools, houses of worship, and medical facilities. The law covers not only verbal threats, but also images or threats posted online or through other electronic means. While not aimed exclusively at employers, SB 19 provides an important legal tool for employers to protect their employees from threats of violence and to respond appropriately to potential risks in the workplace.
Leaves of Absence
SB 590: Paid Family Leave Expansion to Designated Persons
This bill expands California’s Paid Family Leave (PFL) benefits to allow employees, beginning July 1, 2028, to take leave to care for a “designated person,” defined as someone related by blood or whose relationship with the employee is the equivalent of a family relationship. When requesting PFL benefits for a designated person for the first time, the employee must identify that individual and attest under penalty of perjury to the nature of the relationship. This change broadens eligibility beyond traditional family members and aligns PFL with newer caregiving definitions in state leave laws.
AB 406: Paid Sick Leave for Jury Duty and Victims of Violence
AB 406 updates and expands California’s protections for employees who are victims of domestic violence, sexual assault, stalking, or other qualifying acts of violence. Beginning January 1, 2026, employees may use paid sick leave not only for their own medical needs, but also when they must appear in court for jury service, to comply with a subpoena or court order as a witness, or to attend judicial proceedings related to a qualifying act of violence involving themselves or, in certain cases, an immediate family member.
The bill also strengthens existing job-protected leave rights for victims and their family members by clarifying that employers may not discharge, discriminate, or retaliate against an employee who takes protected time off to seek medical care, obtain services from victim-support organizations, secure psychological counseling, relocate or engage in safety planning, or seek legal relief such as restraining orders. Employers with 25 or more employees are subject to broader obligations, including providing time off for a victim’s family members and honoring leave needed to obtain supportive services.
The law also requires employers to provide written notice of these rights to all employees and to maintain confidentiality regarding any information shared by an employee seeking leave or accommodations.
Wage and Hour
SB 642: Strengthening Pay Equity Laws
This bill updates California’s pay equity law to provide broader, more inclusive protections. It strengthens California’s Equal Pay Act by replacing “opposite sex” with “another sex” to ensure protections apply broadly, including to nonbinary employees, and extends the statute of limitations for wage discrimination claims from two to three years. Employees may now also seek back pay for the entire period of violation, up to a maximum of six years. Additionally, the bill expands the definition of “wages” to include all forms of compensation, such as salary, bonuses, stock options, and allowances (e.g., travel stipends).
SB 648: Employee Gratuities
This bill strengthens protections for employees who receive tips and gratuities. It explicitly prohibits employers and their agents from taking, sharing, or withholding gratuities intended for employees. If a patron leaves a tip via credit card, the entire amount must be paid to the employee without deductions for credit card processing fees. Employers are required to pay tips no later than the next regular payday and to maintain detailed records of all tips, which must be available for inspection by the Division of Labor Standards Enforcement (DLSE).
Minimum Wage Increase
Beginning January 1, 2026, the statewide minimum wage in California will rise to $16.90 per hour, up from $16.50. This adjustment impacts not only hourly wages, but also the salary thresholds for exempt employees and calculations for premium pay. Employers should review local ordinances for potentially higher minimum wage rates in specific cities or counties.
Litigation, Claims, and Enforcement
SB 261: DLSE Enforcement of Wage Judgments
SB 261 dramatically increases the consequences for employers who fail to satisfy final wage judgments issued by the Labor Commissioner. If a judgment for unpaid wages remains unsatisfied 180 days after the appeal period expires, a court may impose civil penalties of up to three times the outstanding judgment amount, including accrued interest.
The bill also closes avoidance loopholes by making successor employers jointly and severally liable for these penalties, preventing businesses from evading wage debts through asset transfers or reorganization. In any action to enforce a final wage judgment—including actions brought by employees, the Labor Commissioner, or a public prosecutor—the court must award reasonable attorneys’ fees and costs to the prevailing plaintiff. The law further clarifies that judgment creditors, the Labor Commissioner, and public prosecutors are all entitled to recover their fees when enforcing judgments.
AB 250: Revival of Statute of Limitations on Sexual Assault Claims
AB 250 expands the revival window for certain sexual-assault civil claims and may expose private employers to lawsuits that were previously time-barred. From January 1, 2026 through December 31, 2027, adults who were sexually assaulted may file claims that would otherwise be barred if they allege that the employer (or its officers, employees, or agents) engaged in a cover-up of prior allegations involving the perpetrator. “Cover-up” includes efforts to hide or suppress information, such as using NDAs or failing to disclose known misconduct. The law revives related claims arising from the assault, such as sexual harassment or wrongful termination.
SB 477: Revisions to FEHA’s Enforcement Procedures
SB 477 updates several key enforcement procedures under FEHA. It formally defines a “group or class complaint” as any complaint alleging a pattern or practice of discrimination, clarifying the basis for systemic investigations. The bill also expands tolling of statutes of limitation, pausing deadlines during internal CRD appeals, petitions to compel, and any written tolling agreement. It further requires the CRD to delay issuing right-to-sue notices when an individual’s complaint is tied to a director’s complaint or a group/class complaint, and to wait until all related administrative and court proceedings are fully resolved. Finally, SB 477 removes fixed venue restrictions for FEHA housing discrimination actions, allowing those cases to be filed under California’s general venue rules.
AB 1523: Court-Ordered Mediation
AB 1523 increases the cap for court-ordered mediation from $50,000 to $75,000 beginning January 1, 2027, and adds several conditions that must be met before a court may order a case into mediation. The case must already be set for trial, at least one party must express interest in mediation, and there must be no active discovery disputes. Parties may stipulate to a mediator, but if they fail to do so within 15 days, the court will appoint one at no cost. Mediations may be conducted remotely by agreement, and they must conclude with either an agreement or a statement of nonagreement at least 120 days before trial.
Employers should review their policies, update handbooks, and train HR and management staff to ensure compliance with these new requirements. For questions or assistance, feel free to contact Jeffer Mangels Butler & Mitchell’s Labor & Employment Group.
JMBM’s Labor & Employment attorneys counsel businesses and management on workplace issues, helping to establish policies that address problems and reduce job-related lawsuits. We act quickly to resolve claims and aggressively defend our clients in all federal and state courts, before the Department of Labor, the NLRB, and other federal, state and local agencies, as well as in private arbitration forums. We represent employers in collective bargaining negotiations and arbitration. If you have questions or need guidance on how these changes may affect your business, please contact a JMBM attorney.
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