California’s 2026 Employment Law Changes: What Employers Need To Know And Do

California’s 2026 slate of employment law changes brings higher statewide wages, new disclosure and reporting rules, fresh notice and recordkeeping duties, targeted industry changes, and agency guidance that tightens how employers use AI and handle immigration inspections. Most items take effect January 1, 2026, with a few notable future dates flagged below.

Payroll, Wage, and Hour Employment Law Changes

Minimum wage and exempt salaries (SB 3). The state minimum wage rises to $16.90 per hour on January 1, 2026. The standard exempt salary threshold becomes $70,304 per year. SB 3’s CPI-based formula drove the 40-cent increase after a 2.49% CPI change.

Equal Pay Act updates and pay scale disclosure (SB 642). Employers must provide a pay scale on request and, for certain employers, in job postings. “Pay scale” now means the expected wage range an employer reasonably and in good faith intends to pay at hire. The law replaces “opposite sex” with “another sex” for substantially similar work and clarifies that “wages” include salary, overtime, bonuses, equity, certain allowances, and benefits. The statute of limitations moves to three years in all cases, with up to six years of damages in some situations. Effective January 1, 2026.

Pay data reporting expansion (SB 464). Employers with 100 or more employees must continue to report annual pay data to the Civil Rights Department. Beginning with the 2026 reporting year, the job categories expand from 10 to 23. Demographic data collected for this purpose must be kept separate from personnel files.

Gratuities enforcement (SB 648). The Labor Commissioner can investigate, cite, or sue when tips are taken or withheld in violation of law.

Federal tax changes intersecting payroll, 2025 to 2028 (H.R. 1, OBBBA). Qualified overtime and qualified tips may be deductible by individuals within set caps. For 2025, employers must still withhold taxes on overtime and tips; the IRS will update withholding tables for 2026. Expect more immigration enforcement funding, which should translate into more I-9 audits and worksite visits.

Independent contractor status and vehicle costs (SB 809). Labor Code section 2781 exempted certain subcontractors who provide construction trucking services from the ABC test.  Upon the expiration of section 2781, SB 809 allows contractors that hire trucking subcontractors to avoid penalties by participating in an amnesty program in which they agree to reclassify the trucking subcontractors as employees, pay any necessary restitution and unpaid taxes, and provide workers’ compensation insurance to the truckers. Additionally, SB 809 clarifies that the mere fact of owning a truck does not make the truck owner an independent contractor unless all of the requirements for an independent contractor relationship are satisfied, and employees who provide their own trucks to perform work for an employer are entitled to expense reimbursement for the usage of their personal vehicles.

Employee Notices, Records, and Layoff Communications

Know-Your-Rights notice and emergency contacts (SB 294). Employers must provide a stand-alone notice of worker rights to all new hires and current employees by February 1, 2026, and annually thereafter, in the employee’s usual language. The Labor Commissioner will publish a template by January 1, 2026. Employers must also allow employees to designate an emergency contact and notify them if an employee is arrested or detained under specified circumstances. Penalties reach $500 per employee per violation and, for emergency-contact violations, $500 per employee per day, up to $10,000 per employee.

Personnel records must include training data (SB 513). On request, employers must allow employees to inspect records relating to education and training received during their employment and to maintain specified details, such as the training provider, dates and duration, core competencies, and any resulting certification. Noncompliance can result in a $750 penalty plus attorney’s fees and costs.

Cal-WARN notice content expands (SB 617). Layoff notices must now include whether the employer will coordinate services with a local workforce development board, contact details for the board and its rapid response offerings, information about CalFresh, including the helpline and website link, and a required workforce-services paragraph.

State backstop for NLRA enforcement (AB 288). This new law expressly confirms California workers’ rights to organize, join unions, and engage in collective bargaining.  Additionally, AB 288 empowers PERB to enforce labor rights for private sector workers.  When the NLRB cannot act in a timely manner, private-sector workers and unions can petition PERB to enforce NLRA rights, subject to exceptions. Effective January 1, 2026.

Bias-mitigation training safe harbor (SB 303). An employee’s good-faith admission or acknowledgment of personal bias that was solicited or required as part of a bias-mitigation training does not constitute unlawful discrimination under FEHA.

Leaves and Benefits

Crime-victim and court-related leave clean-up, plus PSL coordination (AB 406). Enforcement authority for two unpaid leave provisions moves to the Civil Rights Department on January 1, 2026. Employers with 25 employees or more must provide job-protected paid sick leave for employees  to use for themselves or a family member  for a “qualifying act of violence.”

Restrictions on repayment-style retention bonuses and tuition assistance (AB 692). For contracts entered into on or after January 1, 2026, employers and their agents may not require repayment or penalties for employment ending, with limited exceptions.

Paid Family Leave expansion in 2028 (SB 590). Effective July 1, 2028, benefits can extend to care of a “designated person,” defined broadly to include close non-relatives.