A Look at New California Labor and Employment Laws for 2026

The California Legislature has enacted several new laws that will impact the workplace in 2026. This Holland & Knight alert provides a brief summary of select employment laws that go into effect Jan. 1, 2026, unless stated otherwise.

• Minimum Wage Increases. As of Jan. 1, 2026, the California state minimum wage will increase to $16.90 per hour for all employers, regardless of employee headcount. This also means that as of Jan. 1, 2026, exempt employees in California must be paid a minimum annual salary of $70,304. "Living wage ordinances" in various locales within the state have been enacted, so local standards should be confirmed to ensure compliance with all governing wage requirements. Additionally, the City of Los Angeles Living Wage Ordinance expanded coverage to new categories of entities, including hotel workers, representing a significant expansion of living wage standards to a significant Southern California industry.
• Senate Bill (SB) 648: Labor Commissioner Authority to Issue Citations for Tip Theft. The California Labor Commissioner will have new, express authority to investigate, issue a citation or file a civil action for gratuities that are unlawfully taken or withheld. Employers who fall short of their obligations regarding tips can face a quick administrative process through a Labor Commissioner "Berman" hearing, with the introduction of specific civil penalties, including fines of $100 for employee per pay period for an initial violation and $250 for each subsequent violation, all in addition to the actual tips and wages owed.
• SB 809: Independent Contractors and Employee Vehicle Business Expenses. SB 809 is a safe harbor of sorts: Eligible contractors who sign a settlement agreement approved by the Labor Commissioner to properly classify construction drivers as employees will not be liable for penalties for prior misclassification. The statute also specifies that an employer's Labor Code Section 2802 reimbursement obligation includes use of a vehicle "owned by an employee and used by that employee in the discharge of their duties." SB 809 reflects California's ongoing efforts to effect reclassification of independent owner-operator truck drivers (among others) to employee status.
• Assembly Bill (AB) 858: Extension of Right-to-Rehire Rights for COVID-19 Layoffs. AB 858 amends Labor Code Section 2810.8 by extending the sunset date of the recall and reinstatement rights for certain employees laid off as a result of the COVID-19 pandemic from Dec. 31, 2025, to Jan. 1, 2027. AB 858 also strengthens these protections by specifying that violations occurring on or before Dec. 31, 2026, shall remain enforceable by the Division of Labor Standards Enforcement (DLSE) after the sunset date. This right to recall for airport, hospitality, event center or building services employees continues to present complex and novel challenges for employers managing their workforce.
• SB 261: Penalties for Unpaid Wage Judgments. California employers with unpaid wage judgments will be subject to significantly increased liability in 2026. Potential civil penalties increase to up to three times the amount of the outstanding judgment amount if a final wage judgment remains unsatisfied after 180 days. Additionally, the statute creates significant enforcement opportunities from public prosecutors and "successor" joint and several liability issues. In particular, a "successor" to a judgment debtor – under statute or "any other law" – is jointly and severally liable for penalties assessed for the unpaid wage judgment. Penalties under the new statutory section are in addition to, and not in lieu of, other penalties and/or fines available under law.
• AB 406: Expanded Leave Rights for Victims of Violence. California again expands the leave rights for victims of violent crimes but, in so doing, also significantly expands other leave rights. Perhaps most important, AB 406 specifies that the paid leave law expands to include as a covered reason for use reasons that previously existed only as unpaid leave under state law. Now, employees may use paid leave for appearing in court as a witness to comply with a court order or subpoena, serving on a jury, if they or a family member is a victim of certain crimes and leave is to attend judicial proceedings relating to the crime and/or if the employee "suffers direct or threatened physical, psychological, or financial harm as a result of the commission or attempted commission of" vehicular manslaughter while intoxicated, felony child abuse likely to produce great bodily harm or death, assault resulting in the death of a child under 8 years old, felony domestic violence, felony physical elder or dependent adult abuse, felony stalking, solicitation for murder, a Penal Code Section 1192.7 "serious felony," hit-and-run causing death or injury, felony driving under the influence causing injury or sexual assault.
• SB 513: Preservation of Training Records as "Personnel Records." SB 513 expands the definition of "personnel records" to include records pertaining to any education or training received by an employee. Effective Jan. 1, 2026, employers must maintain all training records in an employee's personnel file, and such records must include 1) the name of the employee, 2) the name of the training provider, 3) the duration and date of the training, 4) the core competencies of the training and 5) the resulting certification or qualification.
• SB 294: The Workplace Know Your Rights Act. Effective Jan. 1, 2026, all employers must provide California employees a stand-alone written notice of worker rights, including labor protections and immigration-related rights when hired and annually thereafter to all current employees. The California Labor Commissioner not later than Jan. 1, 2026, will draft and post a model notice online for employers to use. Employers must also allow employees to designate an emergency contact to be notified if the employee is arrested or detained at work or during work hours and the employer has actual knowledge of the event. Employers who fail to comply may face civil penalties of up to $500 per employee for each violation and up to $10,000 per employee for certain violations.
• SB 590: Designated Person for Paid Family Leave. SB 590 allows employees to receive benefits under the state paid family leave program when taking time off to care for a seriously ill designated person. California's paid family leave program currently provides up to eight weeks of partial wage replacement for eligible employees who take time off to care for seriously ill family members, bond with a new child or assist with a qualifying military exigency. This bill expands the definition of "family member" to now include a designated person, defined as "any care recipient related by blood or whose association with the employee is the equivalent of a family relationship."
• SB 464: Pay Data Reporting and Demographic Data. SB 464 places stricter pay data reporting requirements on California employers. While existing law requires California employers with 100 or more employees in the U.S. to provide pay and demographic information to the California Civil Rights Department (CRD), the new law increases the number of job categories included in reports from just 10 different categories to 23 and requires employers and labor contractors to store demographic data separately from personnel records. SB 464 also imposes mandatory penalties of $100 per employee for first failure and $200 per employee for subsequent failures, when requested by the CRD.
• AB 692: Prohibition of "Stay or Pay" Provisions in Employment Contracts. AB 692 adds new sections to the Government Code and Labor Code generally making it unlawful for employers to seek to recover "debt" from employees upon their separation from employment. The statute also prohibits entering into contracts with employees requiring them to repay such debt, subject to a number of exceptions. "Debt" is defined under the statute as "money, personal property … employment-related costs, [and] education-related costs," among other things. Employers also may not include in contracts terms obligating employees to pay any type of "replacement hire fee, retraining fee, replacement fee, quit fee, reimbursement for immigration or visa-related costs, liquidated damages, lost goodwill, and lost profit," upon separation. Hiring bonuses may also be impacted by the new law unless they meet specific, rigorous statutory requirements.
• AB 751: Extension of Rest Period Exemption at Petroleum Facilities. California's meal and rest period requirements generally prohibit working on-duty meal periods. A statutory exception to the rest period requirement set to expire on Jan. 1, 2026, allows specific employees holding safety-sensitive positions at petroleum facilities to take on-duty rest periods, including by being required to stay on the premises to monitor for and respond to emergencies. AB 751 rescinds the sunset date and extends this exception indefinitely.
• AB 963: Recordkeeping Requirements for California Public Works Projects. Owners and developers working on public works projects in California already face complex recordkeeping and record retention requirements, including copies of certified payroll records, contracts and certain monthly reports. AB 963 adds to the requirements and gives third parties access to sensitive records. Under the new law, owners and developers are required to provide such records to joint labor-management committees and multiemployer trust funds, in addition to the DLSE. Records must be produced within 10 days of the request, and penalties are steep: $100 per day, per worker, for failure to provide payroll records and $500 per day for failure to provide construction contracts and other information.
• SB 642: Equal Pay and Pay Scales. SB 642 clarifies California's pay scale disclosure law to specify that a "pay scale" is a "good faith estimate of the salary or hourly wage range that the employer reasonably expects to pay for the position upon hire." The new legislation also updates California's Equal Pay Act such that employers may not pay employees of a different sex (as opposed to the "opposite sex") different wage rates for substantially similar work, subject to certain exceptions. SB 642 also provides for a three-year statute of limitation for equal pay violations and specifies that the cause of action accrues "after the last date the cause of action occurs," as opposed to on the first occasion. Employees can recover a maximum of six years back wages under the new law.
• SB 477: Fair Housing Employment and Housing Act Enforcement. SB 477 is designed to overhaul the Civil Rights Department's group/class complaint procedure. Among various statutory revisions such as defining what constitutes a "group or class complaint," the legislation generally extends the time to bring a civil suit in Superior Court after a case closure notice issues. The legislation also creates a new mechanism for preserving and prosecuting long-stale claims. If CRD determines that an individual's complaint relates, in whole or in part, to a director's or group or class complaint and the individual does not request a right-to-sue notice, CRD will not issue a right-to-sue notice until "after the director's complaint or group or class complaint has been fully and finally disposed of," including all appeals and "related proceedings."
• SB 617: Changes to Cal-WARN Notices. Certain covered entities must give advanced notice of a mass layoff, relocation or termination of operations at a covered establishment. California's existing Worker Adjustment and Retraining Notification (WARN) Act, Labor Code Section 1400 et seq., largely mirrored the federal WARN Act until SB 617 takes effect. Under the new legislation, employers must include additional information in WARN notices, including whether the employer plans to coordinate services through the local workforce development agency, a different agency or not at all, as well as a specific statement regarding local workforce development boards, specific notice of the CalFresh food assistance program and contact information for CalFresh, and functioning email address and telephone number of the employer.

For more information or questions on the new California labor and employment laws and their potential impact on employers and employees, please contact the authors.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.