2026 California Employment Law Updates

Key Changes for SMB Employers

As we begin 2026, California employers, especially small and mid-sized businesses, face a wave of new employment laws that impact everything from compensation practices and repayment agreements to job postings, records, and state enforcement.

Here are the most important changes for SMBs and people managers, focusing on what’s already in effect, and what’s coming later in 2026 or beyond.

Laws Now in Effect (As of Jan 1 or Feb 1, 2026)

1. Minimum Wage & Exempt Salary Thresholds

Effective January 1, 2026

• New statewide minimum wage: $16.90/hour

• New minimum exempt salary: $70,304/year

• Higher rates may apply in fast food and healthcare sectors; also watch for local minimum wage ordinances

What to do: Review pay and exemption classifications. Adjust pay scales or reclassify as needed.

2. Limits on Training & Bonus Repayment (AB 692)

Effective January 1, 2026

• Clawback clauses for bonuses or training are largely prohibited unless:

  • A separate, written agreement exists

  • Repayment is prorated, interest-free, and limited to voluntary quits or misconduct

• New private right of action with damages and attorney’s fees

What to do: Review offer letters, training reimbursements, and bonus repayment terms for compliance.

3. Pay Equity Expansion (SB 642)

Effective January 1, 2026

• “Wage rates” now include bonuses, benefits, stock, reimbursements, and more

• Statute of limitations expanded to 6 years

• Job postings must state good-faith pay range on hire

What to do: Update compensation audits and job posting templates.

4. Triple Penalties for Unpaid Wage Judgments (SB 261)

Effective January 1, 2026

• Employers have 180 days to satisfy wage judgments

• After that, courts may impose up to 3x the judgment amount

• Half of the penalty goes to the employee, half to the state

What to do: Prioritize resolution of DLSE decisions and court wage orders.

5. Training Records Count as Personnel Records (SB 513)

Effective January 1, 2026

• If maintained, training records must be:

  • Disclosed within 30 days of request

  • Retained for 3 years post-employment

  • Include provider name, date, core skills, certifications, etc.

What to do: If you keep training records, standardize and store them with personnel files.

6. Mandatory Penalties for Pay Data Reporting Non-Compliance (SB 464)

Effective January 1, 2026

• Applies to employers with 100+ employees

• Courts must issue fines:

  • $100/employee (first-time offense)

  • $200/employee (repeat offenses)

• Demographic data must be stored separately from personnel files

What to do: Ensure timely, compliant submissions ahead of the May 2026 deadline.

7. Quarterly Data Reporting for Gig Platforms (AB 1340)

First deadline: March 31, 2026

• Applies to Transportation Network Companies (TNCs)

• Must report details for drivers with 20+ rides

• Data includes name, contact, license number, ride count

What to do: If applicable, prepare data pipelines and compliance processes now.

8. Extension of COVID-Era Right to Rehire (AB 858)

Now extended through January 1, 2027

• Employers must offer rehire to laid-off pandemic workers if qualified

• Must maintain related records for 3 years

What to do: Review internal hiring policies to ensure compliance with notification and recordkeeping.

9. Tip Theft Enforcement Now Allowed (SB 648)

Effective January 1, 2026

• Labor Commissioner can now issue citations for violations of Labor Code § 351

• Employers cannot keep or divert employee tips

What to do: Review and confirm tip handling policies meet current standards.

10. Construction Industry: Driver Reimbursement and ABC Test (SB 809)

Effective Immediately

• Reimbursement required for employee-owned commercial vehicles

• Simply owning a truck does not make someone an independent contractor

• Contractors can join a limited amnesty program through 2029

What to do: If you’re in construction or contracting, review worker classification and vehicle policies.

11. Rest and Meal Break Exemptions

Effective January 1, 2026

• Petroleum safety workers: Existing rest break exemption is now permanent

• Water utility employees: Exempt from meal break rules if covered by a CBA

What to do: Ensure you're eligible before applying these exemptions.

12. Expanded State Role in Labor Disputes (AB 288)

Effective January 1, 2026 (but being challenged by the NLRB)

• CA agencies (PERB/ALRB) may hear unfair labor claims if NLRB delays action

• Applies to union organizing, ULPs, and election disputes

• Lawsuit pending:  parts of this law are already enjoined; could be struck down

What to do: If your business is unionized or undergoing organizing, keep legal counsel informed.

13. Mandatory Immigration Rights Notice (SB 294)

Effective February 1, 2026

• Employers must give employees written notice of:

  • Workers’ comp rights

  • Right to organize

  • Rights in immigration inspections

  • Constitutional protections

• State template expected from Labor Commissioner

What to do: Post or distribute notices once the state template is available.

Laws Taking Effect Later in 2026 and Beyond

14. Emergency Contact Requirement for Detentions (SB 294)

Effective March 30, 2026

• Employees may designate an emergency contact

• Employers must notify that person if the employee is detained or arrested at work

What to do: Update onboarding and emergency forms.

15. Instructional Videos on Worker Rights (SB 294)

Due by July 1, 2026

• State will release compliance videos for:

  • Employers: obligations under SB 294

  • Employees: workplace and immigration-related rights

What to do: Integrate these into training once available.

16. Expanded Job Categories for Pay Data Reports (SB 464)

Applies to 2027 Reporting (Due May 2027)

• Expands categories from 10 to 23

• Applies to employers with 100+ employees

What to do: Adjust HR/payroll systems in 2026 to be ready for the new format.

17. Paid Family Leave for “Designated Persons” (SB 590)

Effective July 1, 2028

• Employees can claim PFL when caring for non-relatives with a family-like bond

• Must attest to the relationship under penalty of perjury

What to do: Plan for future policy updates in leave administration systems.

Need Help?

If you have questions about how any of these new laws apply to your business, or if you'd like support reviewing your policies, updating employee documents, or preparing for compliance, connect with and EHRP Advisor.