Business Vantage Point Blog

With a new year comes new obligations. For employers, that means making several key changes to ensure they are compliant with the changing California employment law landscape.

In 2025, the California Legislature enacted into law several bills that alter and expand employer obligations as of January 1, 2026. These new measures include changes in the minimum wage, pay reporting, stay-or-pay provisions and notice requirements — and will require employers to review and update their handbooks, job postings, onboarding materials, recordkeeping practices and relevant notices to employees. 

Contracts

AB 692: Ban on ‘Stay or Pay’ Provisions

As of January 1, 2026, employment agreements shall not require a worker to repay a debt, or impose a fee or penalty upon the worker, when the employment relationship terminates. This will bar common arrangements that require workers to reimburse employers for costs such as relocation or training programs and that impact certain promissory note arrangements, with exceptions for specified tuition and upfront discretionary bonus repayments. This limitation on “stay or pay” agreements is part of the state’s continued efforts to protect employee mobility pursuant to Section 16600 of the California Business and Professions Code.

Compensation

Increased Minimum Wage

California’s minimum wage will increase to $16.90 per hour for all employers statewide, regardless of employee headcount. This likewise increases the minimum annual salary for exempt employees to $70,304. Living wage ordinances have been adjusted in various counties and cities, so employers should confirm requirements with the relevant localities to ensure compliance. For instance, the City of Los Angeles Living Wage Ordinance significantly expanded coverage to new categories of entities, including hotel workers.

SB 464: Expanded Pay Data Reporting and Penalties

As of January 1, 2026, all employee demographic data must be stored separate from employee personnel files. Civil penalties for failure to comply with the state’s pay data requirements will become mandatory (rather than permissive) upon request of the Civil Rights Department.

Beginning January 1, 2027, employers with more than 100 employees must report pay data for 23 job categories (up from 10).

SB 261: Penalties for Unpaid Wage Judgments

California employers with unpaid wage judgments will be subject to significantly increased liability in 2026. If a final wage judgment remains unsatisfied after 180 days, potential civil penalties may increase to up to three times the outstanding judgment amount. Additionally, SB 261 creates significant enforcement opportunities for public prosecutors as well as "successor" joint and several liability issues.

SB 642: Updates to Equal Pay and Pay Transparency Laws

In 2022, SB 1162 required employers with 15 or more employees to include an expected pay scale in job postings, as well as to provide employees with pay scale information for their current roles upon request. For 2026, pay transparency laws were amended to require more accurate salary estimates “upon hire” in job postings and to ensure the value of stock, bonuses and other benefits are factored into equal pay determinations. Additionally, employers cannot pay employees of “another” sex — not just the “opposite” sex — less for “substantially similar work.”

Workplace Notices

SB 294: Workplace Know Your Rights Act Notice

Beginning February 1, 2026, all employers must provide a standalone written notice to all current employees and employees upon hire regarding workplace rights related to union organizing, immigration and other workplace protections, and provide such notice annually thereafter. The Labor Commissioner’s Office has prepared a model notice available in English and Spanish.

Additionally, by March 30, 2026, employers must allow employees to designate an emergency contact and must notify the contact if the employee is arrested or detained on the employer’s worksite. If the arrest or detention occurs during work hours, or during the performance of the employee’s job duties, but not on the worksite, the employer shall notify the employee’s designated emergency contact only if the employer has actual knowledge of the arrest or detention of the employee.

Employers that fail to comply may be subject to penalties of $500 per employee for each day the violation occurs, up to a maximum of $10,000 per employee.

SB 617: WARN Act Notice Expansion

California has enacted legislation that significantly expands the information that employers must include in their WARN notices and the actions they must take under the California Worker Adjustment and Retraining Notification Act (CalWARN). Employers can no longer simply include the federal WARN Act notice content in their CalWARN notices.

As of January 1, 2026, existing CalWARN Act notice requirements for layoffs, closures and relocations have been expanded to include information on whether an employer plans to coordinate reemployment services through a local workforce board or another entity, the workforce board’s contact information and description of services, and a description of CalFresh, the state’s food assistance program.

Leaves of Absence

AB 406: Expanded Uses of Paid Sick Leave

As of October 1, 2025, employees may use paid sick leave if they or a covered family member are crime victims and must attend specified court proceedings, such as sentencing hearings and delinquency hearings.

Discrimination

California Civil Rights Division regulations clarify that antidiscrimination laws apply to Automated-Decision Systems (ADS) (including vendor tools) used in employment as of October 1, 2025. Employers can be liable if ADS use results in unlawful disparate treatment/impact or fails to accommodate disabilities.

Training

SB 513: Personnel Records – Training/Education

As of January 1, 2026, education and training records must be maintained in employee personnel files. Such documents must specify certain information, including employee name, training provider, date and duration of training, core competencies of training and certification, and these records must be available for employee inspection within 30 days of request. This applies to all employers that maintain such records.

SB 303: Bias Mitigation Training

As of October 1, 2025, California law clarifies that acknowledging personal bias during employer-provided bias mitigation training does not constitute unlawful discrimination. The law is intended to encourage bias mitigation training, including self-reflection exercises, without fear of retaliation or discrimination claims arising from such activities.

Next Steps

Employers are invited to contact Stradley Ronon’s employment team to discuss compliance with these and other California employment law requirements.