A Survey of 2026 California Employment Law Changes Every Employer Should Know
Christian Wellisch
Every January, California employers wake up to a new stack of compliance obligations, and 2026 is no exception. Dozens of new laws take effect this year touching everything from minimum wage to AI accountability. Below is a practical survey of the changes most likely to affect small and mid-sized California employers — not an exhaustive list of every bill, but the ones worth building into your policies now.
Pay Goes Up, Again
California's statewide minimum wage climbs to $16.90 per hour as of January 1, 2026, pushing the minimum salary threshold for exempt status to $70,304 per year for most employers. Fast food workers remain at a separate $20 floor, large hospital employees move to $25 per hour in July, and computer software professionals must clear a much higher $58.85-per-hour ($122,573.13 annual) threshold to qualify for that specific exemption. If you haven't checked your exempt employees' salaries against the new numbers, that's the first thing to look at.
A New Notice Requirement: "Know Your Rights"
Starting February 1, 2026, California employers must give every current employee, new hire, and authorized representative a standalone written notice — separate from the handbook — explaining workers' rights around workers' compensation, immigration-related protections, the right to organize, and constitutional rights during law enforcement encounters at work. It must be delivered by hand, email, or text and received within one business day, and employers must keep records of who received it and how for three years. This applies regardless of company size.
The End of "Stay-or-Pay" Contracts
Effective this year, California employers can no longer require employees, trainees, or program participants to sign agreements that force them to repay training costs, visa expenses, or other "debts" if they leave the job, voluntarily or not. There are narrow exceptions for legitimate loan-forgiveness programs and certain signing-bonus arrangements structured with specific safeguards, but a blanket repayment clause in an offer letter is now a liability rather than a retention tool. Violating contracts are void, and workers can sue for actual damages or $5,000, plus attorney fees.
Pay Transparency Gets Sharper Teeth
Job postings already had to include a good-faith salary range; 2026 tightens that requirement and extends equal pay protections to employees of any sex, not just comparisons between men and women. The statute of limitations to bring a pay equity claim also grows from two years to three, with lookback recovery of up to six years. "Wages" for comparison purposes now explicitly includes bonuses, stock options, and benefits, not just base pay.
Expanded Leave for Victims of Violence
AB 406 broadens job-protected leave, both paid and unpaid, for employees who are victims of certain crimes or violence, including workplace violence, with expanded provisions taking full effect January 1, 2026. Handbooks, payroll systems, and leave-tracking processes all need to reflect the update.
AI Accountability Arrives
Two new laws, AB 316 and SB 53, make clear that businesses using AI tools for hiring decisions, performance monitoring, or anything else can't point to the algorithm as a defense if that tool causes harm. If your business uses AI in any employment-related decision-making, this is the year to have that use reviewed.
Rounding Out the List
A handful of narrower changes are also worth a mention: expanded personnel record rights now cover education and training documentation employers maintain (SB 513); pay data reporting for larger employers gets more granular starting in 2027 (SB 464); and new protections shield employers who conduct good-faith bias mitigation training from having that training used against them as evidence of discrimination (SB 303).
Where to Start
Not every business needs to act on every item above, but most California employers should, at minimum, update their exempt salary thresholds, prepare the new "Know Your Rights" notice, and review any repayment or training-cost clauses in offer letters and employment agreements before they're used again.
This post is provided for general informational purposes only and does not constitute legal advice. Reading it does not create an attorney-client relationship. For advice about your specific situation, please contact our office directly.