2026 Employment Law Compliance Checkup

A host of new employment laws came into effect in California as of January 1, 2026. We’re offering this one-month-in checklist to make sure you’re on top of the changes, and outlining what to do if you missed the January 1st deadline.  

Changes to California Employment Law in 2026 

California’s Minimum Wage Increase 

California’s minimum wage is now $16.90 per hour for most employers, though some employers (including fast food restaurants and some healthcare providers) and cities/counties have a higher minimum wage. You can review UC Berkeley’s list of cities and counties with a higher minimum wage here. Bear in mind that some cities and counties will increase their minimum wages throughout the year, so it may be important to monitor announcements throughout 2026, depending on your location.  

The minimum salary for exempt employees also increased for 2026, reaching $70,304.  

Stay or Pay Agreements Restricted in California 

So-called stay or pay agreements are restricted from being included in employment contracts entered on or after January 1, 2026. Stay-or-pay agreements generally refer to any claw back clauses included in employment contracts that require workers to pay back an employer, training provider or debt collector for training, education, or sign on or retention bonuses if their employment ends within a certain period.  

AB 692 makes it unlawful for employers to include stay-or-pay clauses in any employment contract from this date. In practice, this means that these terms must be outlined in a separate agreement, if permitted. It’s also unlawful to require a worker to execute that separate agreement as a condition of their employment or a work relationship. 

For any agreement containing any claw back provisions for a sign on or retention bonus or repayment of tuition costs (in limited circumstances) to be valid, the following are some of the requirements that must be met:   

1. A separate agreement must be signed, containing only the terms of the claw back provisions.  
2. The employee must be given five business days to obtain legal advice about the agreement and must be informed of their right to do so.  
3. The repayment provisions cannot include accrued interest and must be prorated for the remaining term.  
4. The repayment provisions cannot extend beyond two years from the date of receipt of payment.  
5. The worker must be given the option to defer their receipt of the payment to the end of the retention period, thus removing the repayment obligation.  
6. The employer can only recoup payments if the employee solely elects to separate from the employer or the employee is fired due to misconduct.  

Contracts related to tuition repayment come with specific requirements in addition to those listed above. It may be worth consulting with an employment attorney if you’re looking to implement these specific separate agreements, given how narrow the exceptions are.  

Penalties for Noncompliant Agreements 

AB 692 grants workers a right of action to recover damages from the employer for noncompliant agreements, up to the amount of actual damages sustained or $5,000 per worker (whichever is greater). 

Worth noting is that any employment contracts that do contain these terms are deemed to be void and contrary to public policy. This can have broader impacts, since it’s usually determined on the facts whether the entire contract is void or only the unlawful clauses. If the entire contract is void, then it can impact other critical protections you include in your employment contracts, like confidentiality agreements, assignments of intellectual property, and more. 

In other words, if your new employment contracts still contain these terms, they are creating substantial risk for your business. While the law does not apply retroactively, any new contracts or your employment agreement templates should be carefully reviewed. Additionally, if you’ve signed employment contracts containing these clauses since January 1, 2026, it’s worthwhile consulting with counsel to work out your next steps.  

Cosmetic Changes to WARN Notices  

SB 617 introduced some cosmetic changes to WARN notices for employers conducting mass layoffs in 2026. Notices must now include the following information:  

• Whether the company plans to coordinate services through the local workforce development board, another entity, or not at all 

• A functioning email and telephone number to contact the local workforce development board 

• Details about California’s food assistance program, CalFresh, including the CalFresh benefits helpline, and the link to the CalFresh website.  

These new requirements are in addition to the existing WARN notice requirements, which are outlined here.  

It’s worthwhile conducting a review to ensure your WARN notices contain all the required information. 

Limited Carve Out For Good Faith Personal Bias Admissions From Employees 

The California Fair Employment and Housing Act (FEHA) has been amended to show that good faith admissions of personal bias during bias mitigation training does not automatically constitute unlawful discrimination.  

This law change is designed to encourage employers to conduct bias mitigation training, without fear of discrimination claims.   

The carve out is quite narrow, however. SB 303 outlines that ‘an employee’s assessment, testing, admission, or acknowledgment of their own personal bias that was made in good faith and solicited or required as part of a bias mitigation training, does not, by itself, constitute unlawful discrimination’. So, it’s possible that the employee’s admission could still be used to prove discrimination in a broader context or if the admission is not made in good faith in response to the training session.   

Effective February 1, 2026: Workplace Know Your Rights Laws 

From February 1, 2026, employers must give employees an annual, stand-alone written Know Your Rights Act Notice, in addition to any existing Labor Code notices. The Know Your Rights Act Notice must detail:  

• Workers’ compensation benefits  

• Immigration-related information  

• Information about union organizing and concerted activity  

• Information about constitutional rights relevant for workers engaging with law enforcement at the workplace, including Fourth and Fifth Amendment protections. 

You can find a template version of the notice here.   

By March 30, 2026, SB 294 also requires employers to allow employees to designate an emergency contact in case the employee is arrested or detained at work, including work offsite during work hours. Employers are required to contact the designated person, however, the employer’s obligations only come into effect when they’re notified of an offsite arrest.  

There are record keeping requirements laid out in the bill too, requiring employers to keep records for three years about when the notice was provided. Additionally, employers are not permitted to retaliate against employees who exercise their rights under this law.  

Rapid Fire Employment Law Changes for 2026 

• Employers with 15 or more employees must now include pay scale information in job postings, while all employers must provide employees with pay scale information, regardless of size. The pay scale must reflect what the employer would pay a new employee starting employment with the company, as opposed to an estimate for the position as a whole. 

• California’s Equal Pay Act amendments updated the definition of ‘wages’ to include all forms of pay, such as bonuses, stock, stock options, allowances, and travel expenses for the purposes of section 1197.5. This definition is not expanded across the rest of the Labor Code.  

•  Courts are required to issue penalties against non-compliant employers who fail to submit their Pay Data annual reports starting this year. The penalties are $100 per employee for first time offenders and $200 per employee for subsequent failures.  

• Employees may now use paid sick leave to attend judicial proceedings for specific violent crimes, where either they or their family members were the victim. Also, a reminder that from October 1, 2025, employees are permitted to use paid sick leave when taking time off for jury or witness duty.  

• SB 513 has expanded what details employers must keep in their personnel records for employees as they relate to training and education, if the employer chooses to keep training records. Employers must now include the employee’s name, name of the training provider, date and duration of training, core competencies of the training, and the certification/qualification if any. It’s worth noting that the law does not require employers to keep these records – it just outlines what must be included if the employer chooses to. However, given the other training requirements (like required sexual harassment training records), many employers will choose to keep training records – and therefore must comply with these new requirements.  

• The sunset date for the recall and reinstatement rights of certain employees laid off as a result of COVID-19 has been extended to January 1, 2027 (from December 31, 2025). This impacts employers in airport, hospitality, event center and building services. See AB 858 for more information.  

Even with this rapid fire round, this is not a complete list of all employment law changes for 2026 across all industries in California. Plus, the employment law landscape means businesses must contemplate federal law changes as they come into effect, and any relevant laws across state lines, depending on where your workforce is located. This blog post did not contemplate any changes in other states, nor at the federal level.  

If you need assistance with your employment law compliance in 2026, reach out. Our experienced attorneys are available to work with you.    

• Employment Law