New California Employment Laws for Jan 1 and Coming in 2026

FEDERAL UPDATES

One Big Beautiful Bill

The One Big Beautiful Bill (OBBB) Act is designed to help employers and employees alike. The provisions are aimed at incentivizing employers to offer more benefits to employees.

Employer incentives and requirements include:

• Paid Family/Medical Leave Credit

• Childcare Credit Boost

• Student Loan Repayment

• New Tax Deductions

AI Policy Discussions

There is also ongoing discussion around AI policy at the federal level, signaling that employers should expect more attention on how AI tools are used in the workplace.

CALIFORNIA UPDATES

California Wages: 2026 Minimum Wage and Salary Thresholds

Effective 1/1/2026

California employers have a few big pay updates to prepare for:

• Statewide minimum wage increases to $16.90.

• Minimum salary threshold for exempt employees rises to $70,304 annually.

If you operate in multiple cities or counties, double-check local rates. Many areas have higher minimum wages and stricter requirements.

Make sure every employee is being paid according to where they physically work, not where your HQ is located.

If you’re increasing anyone’s pay due to minimum wage updates, you must issue a new WTPA (Wage Theft Prevention Act) notice.

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California Wages: New Enforcement and Penalties

S.B. 648, Tip Theft

This law strengthens enforcement when employees report tips that are taken, skimmed, withheld, or paid late.

The Labor Commissioner may investigate complaints and may issue citations or file civil actions.

Cost and penalties:

• $100 per employee per pay period for an initial violation

• $250 per employee per pay period for subsequent violations

Additional requirements:

• Employers may not deduct credit card processing fees from tips

• Credit card tips must be paid out by the next payday

• Employers may not credit tips against wages

S.B. 261, Unpaid Final Wages

Final judgments for unpaid final wages that remain unpaid for 180 days without an appeal can result in:

• Civil penalty of up to three times the outstanding judgment amount

• Post-judgment interest

• Attorney’s fees and costs for enforcement

This also allows public prosecutors to step in and enforce unpaid judgments.

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California Notices: New and Expanded Requirements

S.B. 294, Workplace Know Your Rights Act

Notice deadlines:

• Must be provided to current employees by 2/1/2026

• Must be provided to new hires moving forward
• Must be provided annually thereafter

The notice must clearly explain:

• Employee’s right to workers’ comp benefits

• Employee’s right to organize or engage in concerted activity

• Information about laws prohibiting immigration-related practices

• Employee’s constitutional rights when interacting with law enforcement at work

Additional requirement:

• Must expressly inform employees of their right to designate an emergency contact if arrested or detained at work

S.B. 617, Cal-WARN Act Notices

Employers must add the following to Cal-WARN notices:

• A statement regarding plans (or not) to coordinate outplacement services

• Contact info for the local workforce development board

• A description of CalFresh services and related contact info

• Contact info for a designated employer contact to assist if needed

If an employer chooses to coordinate outplacement, it must be arranged within 30 days from the date of the written notice.

A.B. 858, COVID Recall Rights

COVID recall rights are extended through 1/1/2027.

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California Records and Agreements

S.B. 513, Personnel File Requirements

This expands the scope of “personnel records” to explicitly include education and training records.

For each training, employers must have on record:

• Employee name

• Name of trainer

• Date and duration of training

• Core competencies addressed

• Resulting certification or qualification

Violations can result in:

• $750 penalty

• Injunction

• Attorney’s fees

This is also classified as an infraction under the Labor Code.

A.B. 692, “Stay or Pay” Agreements

These agreements may not:

• Require repayment of debts if employment ends

• Allow debt collection or end forbearance if employment ends

• Impose penalties, fees, or costs if employment ends

Exceptions include:

• Tuition repayment for transferable credentials

• Upfront discretionary payments (example: sign-on bonus, relocation assistance) that are not tied to specific job performance

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California: New Areas and Emerging Risk

A.B. 1340, Gig Drivers

Applies to rideshare drivers covered under Prop 22 who work with Transportation Network Companies (TNCs), which connect drivers and passengers via an app.

This provides the right to:

• Unionize

• Bargain collectively

• Engage in concerted activities

All without being classified as employees. The California Public Employment Relations Board (PERB) will enforce this law.

CRD Regulations on Automated Decision Systems

The CA Civil Rights Department (CRD) issued regulations on Automated Decision Systems (ADS).

Applies to employers with 5+ employees.

Key requirements:

• Employers must ensure ADS does not directly or indirectly discriminate based on protected characteristics

• Employers must retain related records for four years, including information used, produced, or customized for the ADS

Bias testing is not required at this point, but it is recommended and may become mandatory later.

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California: Expansions and Definition Changes

S.B. 642, Equal Pay Amendments

• Updates “pay scale” to mean a good faith estimate of the salary or wage range the employer reasonably expects to pay upon hire

• Prohibits paying an employee less than an employee of “another sex,” explicitly including non-binary genders

• Requires evaluation of total compensation, not just base pay

The definition of wages now includes bonuses, stock, stock options, allowances (cleaning, gasoline), and other forms of indirect compensation.

S.B. 464, Pay Data Reporting

• Covered employers must store demographic data collected for reporting separately from the employee’s personnel file

• Pay data reporting penalties shift from discretionary to mandatory

• Beginning in the 2027 reporting year (for 2026), job categories increase from 10 to 23

S.B. 406, Victims of Crime Leave

Crime victims’ leave expands to include additional violent and serious felonies, including theft or embezzlement.

Employers are prohibited from discharge, discrimination, or retaliation for attending judicial proceedings, including delinquency proceedings or proceedings related to a covered crimes.

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A Note on PAGA and Cal/OSHA Activity

A trend highlighted by Jackson Lewis suggests growing attention to Cal/OSHA violations in PAGA-related activity. PAGA notices are increasingly including potential claims tied to health and safety violations, and pre-litigation requests for payroll and personnel records are also asking for occupational safety and health records. Examples include:

• Injury and Illness Prevention Program

• Hazard Communication Program

• Injury logs

• Workplace Violence Prevention Plan

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Practical Takeaways for Employers

Based on the updates above, here are a few areas employers may want to prioritize:

• Review 2026 wage rates and exempt salary thresholds now, especially for California and city-specific minimums

• Tighten tip handling and payout processes to avoid escalating penalties

• Confirm final wage procedures are strong and track judgment risk if disputes arise

• Build a plan for the new “Know Your Rights” notice timing and annual distribution

• Expand record retention practices to capture the training details required under S.B. 513

• Review any “stay or pay” agreement templates to ensure they meet the new restrictions

• Audit any automated tools used in hiring, promotions, scheduling, or performance decisions and align record retention with ADS rules

• Be ready for deeper safety documentation requests tied to Cal/OSHA and PAGA activity

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How We Can Help

Staying ahead of employment law changes can feel overwhelming, especially as requirements continue to expand at both the federal and California level. HR Elite partners with employers to help make sense of these updates and turn compliance into a manageable, ongoing process. From wage and classification reviews to policy updates, required notices, recordkeeping practices, and guidance around evolving areas like AI and workplace safety, our team provides practical, real-world support tailored to your business. We help you reduce risk and focus on what matters most: supporting your people and running your organization with confidence.

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