2026 Employment Law Update
As 2026 begins, California employers face a new wave of legislation that will again reshape
employer obligations and compliance priorities. Solomon Ward remains committed to helping employers
comply with all existing and new legal requirements. This summary highlights some of the more
significant new laws. Unless stated otherwise, these new laws are effective January 1, 2026. This
is not an exhaustive list. We encourage you to ask specific questions about laws that may apply to
your company. Our team is ready to help.
Changes Affecting Minimum Wages
Starting January 1, 2026, California’s minimum wage will increase to $16.90 per hour.1
Because of this increase, the annual salary requirement for exempt employees will also increase
from $68,640 to $70,304 (based on California’s requirement that exempt employees earn at least
twice the state minimum wage for full-time work). Please note certain computer software employees
have a separate higher minimum exempt salary.
Many jurisdictions in California have enacted their own minimum wage ordinances requiring that
employers pay higher minimum wages for work performed within their geographical boundaries.
Below are several of the city-specific wages:
- City of San Diego: $17.75 per hour (Effective January 1, 2026)
- City of Los Angeles: $17.87 per hour (Effective July 1, 2025)2
- San Francisco: $19.18 per hour (Effective July 1, 2026)
Changes Affecting Substantially All Employers
Outlawing “Stay or Pay” Provisions – AB 692
AB 692 makes it unlawful to require employees to execute, as a condition of employment, a contract
that requires the worker to “pay an employer, training provider, or debt collector for a debt if
the worker’s employment or work relationship with a specific employer terminates.” This law applies to all employment contracts executed on or after January 1, 2026,that improperly require employees to repay certain benefits received during employment.
However, not every payment is protected by AB 692. For example, under certain conditions, employers
can seek repayment for the cost of tuition for a transferable credential, as well as contracts for
the receipt of discretionary or unearned monetary bonuses that are provided at the outset of
employment and not tied to specific job performance.
When violated, AB 692 creates a private right of action for employees, including a minimum of
$5,000 in damages per worker, injunctive relief, and attorneys’ fees and costs.
Penalties for Nonpayment of Wage-Related Judgments – SB 261
California employers that fail to timely pay judgments arising out of the nonpayment of wages will
now be subject to increased liability and penalties.
Under SB 261: (i) a civil penalty of up to three times the outstanding judgment amount may be
assessed if a final wage judgment remains untimely unsatisfied after a period of 180 days; and (ii)
a mandatory award of reasonable attorneys’ fees and costs to prevailing plaintiffs in actions to
enforce wage judgments; and (iii) any “successor” to the judgment debtor (successor as defined by
“any” law) will be jointly and severally liable for all penalties—meaning that business
reorganizations or transfers will likely not shield a company from liability.
SB 261 also expands the enforcement power of the state by allowing public prosecutors to step in on
behalf of employees and seek to enforce unpaid judgments.
New Notice Obligation For Employers With Labor Commissioner Judgments – SB 355
SB 355 creates a new notice obligation for employers with wage judgments issued by the Labor
Commissioner under Labor Code Section 98.2. Employers with judgments issued by the Labor
Commissioner have 60 days to provide documentation to the Labor Commissioner that they have: (1)
fully satisfied the judgment; (2) posted a required bond (if applicable); or (3) entered into a
compliant installment payment agreement. Employers who fail to comply with these requirements face
a $2,500 civil penalty.
Employers who also fail to respond within 90 days of receiving a written notice will be reported
to the Employment Development Department’s Tax Support Division as a
potential tax fraud case (a precursor for investigation).
The “Workplace Know Your Rights Act” – SB 294
The Workplace Know Your Rights Act requires employers to provide annual notices to employees
regarding their workplace rights.
In order to educate workers about their labor and civil rights, employers must provide stand-alone
written notices to new hires and current employees by February 1, 2026, that
(i) describe worker’s compensation benefits, (ii) outline protections against unfair
immigration-related practices, (iii) contain a statement addressing the right to organize a union,
and (iv) summarize an employee’s constitutional rights when interacting with law enforcement at
work. The law requires the California Labor Commissioner to post a template notice on its website
by January 1, 2026. The template notice can be found here: Click Here.
SB 294 also requires employers to notify an employee’s designated emergency contact if that
employee is arrested or detained at the employer’s worksite.
Workplace Bias Training – SB 303
Effective January 1, 2026, employees cannot face workplace discrimination claims based solely on
their honest participation in employer-sponsored bias mitigation training programs. In other words,
an employee’s assessment, testing, admission, and/or acknowledgment of their own personal bias,
when made in “good faith” and solicited or required as part of a bias mitigation training, does
not, by itself, constitute unlawful workplace discrimination under California’s Fair Employment and
Housing Act.
The purpose of this law is to encourage employers to conduct bias mitigation trainings and to
affirm that conducting those trainings does not, itself, constitute unlawful discrimination.
Employer Pay Data Reporting – SB 464
SB 464 strengthens employer pay data reporting to enhance pay equity enforcement by the Civil
Rights Department. There are two changes to existing law requiring employers with 100+ employees to
submit annual pay data reports showing compensation by race, ethnicity, and sex.
First, it mandates that courts impose civil penalties on non-compliant employers when requested by
the Civil Rights Department—changing from discretionary “may impose” to mandatory “shall impose”
language. Penalties reach $100 per employee for initial violations and $200 for subsequent
failures.
Second, beginning January 1, 2027, SB 464 expands required job categories from 10 broad
classifications to 23 more specific occupational groups aligned with Bureau of Labor Statistics
standards. For example, the current “Professionals” category splits into separate categories for computer/mathematical occupations, architecture/engineering, healthcare
practitioners, legal occupations, and others. The bill also requires employers to store demographic
data collected for reporting separately from personnel files, protecting employee privacy.
Personnel Files Now Include Education and Training Records – SB 513
Effective January 1, 2026, SB 513 expands the Labor Code’s definition of “personnel records” to
explicitly include education and training documents. Moreover, SB 513 requires employers who
maintains “education or training records” to ensure that those records include at least the
following data: (1) the Employee’s name; (2) the trainer’s name; (3) date and duration of training;
(4) core competencies of training, including skills in equipment or software; and (5) any resulting
certification or qualification.
Employers should take this opportunity to speak with their employment counsel regarding their
personnel records maintenance procedures.
The Pay Equity Enforcement Act – SB 642
Private employers with 100 or more employees / workers hired through labor contractors are
currently required to comply with annual pay data reporting requirements administered by the
California Civil Rights Department (“CRD”). This includes reporting pay, demographic, and other
workforce data (including job categories, pay bands, and the race/ethnicity of each employee or
worker).
SB 642 establishes a three-year statute of limitations for civil actions alleging violations of
these pay transparency requirements, as well as a six-year “look-back” period to obtain relief for
an existing violation. SB 642 also clarifies that job postings must include a “good faith estimate”
of the expected compensation (often referenced as “pay scale”) and expands the definition of
“wages” to include all forms of compensation, including stocks and stock options.
Employment Gratuities – SB 648
SB 648 enhances enforcement of existing laws protecting employee gratuities by clarifying the Labor
Commissioner’s authority to investigate violations and take action against employers who mishandle
tips. While California law already prohibits employers from taking, collecting, or deducting any
portion of tips left by customers, this bill clarifies the Labor Commissioner’s enforcement
authority. The commissioner can now investigate complaints, issue citations, or file civil actions
against violators using the same procedures applied to minimum wage violations.
The law reaffirms that tips are the sole property of employees and that employers accepting credit
card gratuities must pay workers the full amount without deducting
processing fees. Payment must occur by the next regular payday.
Laws Related to Protected Leaves
Additional Protections for Victims of Crime – AB 406
AB 406 expands certain rights and protections for employees who take protected leave due to certain
legal proceedings and/or because they are victims of a “qualifying act of violence.”
Effective October 1, 2025, Labor Code 246.5 was revised to allow employees to use paid sick leave
for jury duty and to appear in court as a witness pursuant to a valid subpoena.
AB 406 also allows employees to use leave if they or a family member are a victim of certain crimes
or if they are attending judicial proceedings related to that crime, including any proceeding where
a right of that person is at issue. AB 406 expands the protections afforded to employees from last
year’s AB 2499.
Together, AB 406 and 2499 are among the more complex new employment laws, and employers should
consult with their employment counsel about their specific requirements and update their policies
accordingly.
Expanding the Use of Paid Family Leave to Include “Designated Persons” – SB 590
Effective July 1, 2028, SB 590 will expand state-funded paid family leave benefits to include
individuals who take time off work to care for a seriously ill “designated person” (i.e., any
individual related to a worker by blood or whose association is the equivalent of a family
relationship).
SB 590 also codifies and defines the term “designated person” under Section 3302 of the
Unemployment Insurance Code.
Conclusion
We stand ready to help your company with advice and practical solutions regarding your
employment practices. For more information, please contact our Employment Law Team.
***The information provided in this article is for informational purposes only and not to provide legal advice. Contact your attorney to obtain advice regarding any particular issue or problem.***
- Certain hotel workers working within the City of Los Angeles has a separate minimum
wage. ↩︎ - Certain health care workers and covered fast food restaurant employees have
separate higher minimum wages.↩︎