Law Advocate Group, LLP 
California employers face a significant shift in workplace regulation as new laws take effect on January 1, 2026. In response to recent legislation, companies must re-evaluate their employment practices and compliance obligations across pay transparency, wage equity, leave rights, labor relations, and personnel records. Below is a summary of the key developments in California employment law that employers should prioritize in their 2026 readiness efforts.
Pay Transparency & Equal Pay
California continues to strengthen its pay transparency and equal pay requirements. In 2026, new amendments will require employers to disclose clearer pay ranges, ensure wage equity across all genders, and consider all forms of compensation when conducting pay audits.
Senate Bill 642 (“SB 642”) – Pay Transparency Amendments
Under California’s existing pay transparency statute (Labor Code § 432.3), employers are required to disclose the pay scale for positions in job postings or upon request. SB 642 revises the definition of “pay scale” to mean a good-faith estimate of the salary or hourly wage range the employer reasonably expects to pay for the position upon hire.
For employers, this means refining job postings and internal disclosures to ensure the range reflects what will be paid to a new hire on day one, rather than a broad position band.
SB 642 – Equal Pay Law Revisions (Labor Code § 1197.5)
The amendments expand the equal pay law in several key dimensions:
- The term “opposite sex” is replaced by “another sex,” making clear that non-binary and gender-diverse employees are protected.
- The definitions of “wages” and “wage rates” are broadened to include salary, overtime, bonuses, stock or stock options, profit-sharing, benefits, allowances, hotel accommodations, travel reimbursements, and more.
- The statute of limitations for equal pay claims is extended to three years. In addition, an affected employee may recover wages for up to six years of violations.
- A cause of action now occurs when:
- A compensation decision/practice is adopted;
- An individual becomes subject to it; or
- Each time wages/benefits are paid under that practice.
Action for Employers: Audit your job postings and pay disclosures to reflect compliant “pay scale” ranges. Review compensation policies and practices, including all forms of pay (bonuses, equity, allowances) to ensure equitable treatment by sex and gender identity. Train HR and leadership on the updated definitions and extended claim periods.
Pay Data Reporting & Demographics – Senate Bill 464 (“SB 464”)
Under existing law, California employers with 100 or more employees must file an annual pay-data report to the California Civil Rights Department (CRD). Reports must be broken down by race, ethnicity, and sex across job categories. SB 464 expands employer obligations by:
- Increasing the number of job categories to 23 (starting 2027).
- Mandating penalties for non-reporting when requested by the CRD.
- Requiring that the demographic data collected for pay-data reports be stored separately from general personnel records.
Action for Employers: Review record-keeping and data-storage policies. Ensure pay-data reports are prepared and demographic information is stored securely and separately from other personnel files with appropriate access controls.
Unconscious Bias Training & FEHA Enforcement
California is emphasizing diversity, equity, and inclusion in the workplace. New legislation encourages unconscious bias training while expanding the state’s authority to investigate and enforce discrimination complaints under FEHA.
Senate Bill 303 (“SB 303”) – Bias Mitigation Training
SB 303 promotes unconscious bias or bias-mitigation training under the California Fair Employment and Housing Act (FEHA). It clarifies that an employee’s assessment, testing, or acknowledgment of personal biases during required or voluntary bias-mitigation training does not constitute unlawful discrimination. Conducting such training is not, in itself, unlawful discrimination. “Bias mitigation training” is defined to include education, workshops, toolkits, assessments and tracking mitigation efforts.
Senate Bill 477 (“SB 477”) – FEHA Investigation & Enforcement Expansion
SB 477 gives the CRD enhanced enforcement tools under FEHA. It includes the ability to investigate more complex cases, pause investigations (with consent), or prosecute. The statute of limitations for a complainant is tolled for one additional year if the complaint is appealed and the CRD affirms closure.
Action for Employers: Incorporate bias-mitigation training into compliance programs. Ensure HR is aware that participating in such training will not be considered discriminatory. Also, review internal complaint-investigation processes and ensure they align with FEHA’s enhanced enforcement parameters.
Employment Contracts – “Stay-or-Pay” Bans
Assembly Bill 692 (“AB 692”) prohibits “stay-or-pay” contract terms effective January 1, 2026, and will apply to those signed on or after that date. These are clauses in employment contracts that require a worker to repay the employer, a training provider, or a debt collector if the worker leaves their job. In some cases, they authorize debt collection upon termination or impose penalties, fees, or other costs when the employment ends.
There are some exceptions, including separation agreements, tuition-reimbursement contracts for transferable credentials, and certain signing-bonus agreements. These exceptions apply only if the agreements are structured separately and meet all required conditions.
Violating contract terms are void as against public policy, and employees may bring private actions to recover actual damages or $5,000 per worker (whichever is greater), injunctive relief, and attorney’s fees.
Action for Employers: Review all employment and training-related agreements executed on or after January 1, 2026 to ensure they do not include prohibited “stay-or-pay” terms. Update templates and train recruiting/HR personnel accordingly.
Labor Relations & Independent Worker Rights
California is asserting greater control over private-sector labor disputes and extending organizing rights to app-based gig workers. These changes reflect the state’s growing focus on collective bargaining and worker protections.
Assembly Bill 288 (“AB 288”)
AB 288 expands state authority into private-sector labor disputes by granting the California Public Employee Relations Board (PERB) the ability to hear certain unfair labor practice cases when the National Labor Relations Board (NLRB) does not act. This has resulted in legal challenges regarding preemption by the National Labor Relations Act.
Assembly Bill 1340 (“AB 1340”) – TNC Driver Labor Relations
AB 1340, sometimes referred to as the TNC Drivers Labor Relations Act, grants rideshare and gig-drivers who use their personal vehicles via a transportation-network-company (TNC) app rights to join and participate in driver organizations, engage in concerted activities for mutual aid or protection, and bargain collectively through representatives. It also sets procedures for driver organizations and provides standards for bargaining and unfair labor practice claims.
Action for Employers: If your workforce model involves app-based drivers, contractor classifications or collective bargaining exposure, review your policies and contracts in light of AB 1340. If you operate in industries subject to labor-board jurisdiction, monitor AB 288 implications and potential changes to labor-relations exposure.
Wage Protections & Expense Reimbursement
New wage-protection laws heighten penalties for unpaid wage judgments and expand enforcement against tip theft. Moreover, it clarifies rules for vehicle-expense reimbursement to further protect workers’ earnings and rights.
Senate Bill 648 (“SB 648”) – Tip Theft Enforcement
California law already prohibits employers from taking or deducting gratuities given to employees by customers. SB 648 authorizes the California Labor Commissioner’s Office to investigate and cite employers for tip theft.
Senate Bill 261 (“SB 261”) – Unpaid Wage Judgment Penalties
SB 261 increases penalties for employers who fail to satisfy wage judgments. If a wage judgment remains unpaid 180 days after the appeal period, a civil penalty of up to three times the outstanding judgment may be imposed. Additionally, courts must award attorney’s fees/costs to a prevailing plaintiff.
Senate Bill 809 (“SB 809”) – Vehicle Expenses & Independent Contractors
SB 809 clarifies that mere ownership of a vehicle (personal or commercial) used in performing work does not automatically classify someone as an independent contractor. It also confirms that Labor Code § 2802, which mandates reimbursement for business expenses, applies to employees who use their personal or commercial vehicles for work. Specifically, employers must reimburse employees for vehicle-related expenses incurred while performing job duties.
Action for Employers: Review tip-pooling policies, ensure compliance with gratuity protections, and verify that judgments are tracked and paid timely to avoid penalties. Moreover, for employees who use personal vehicles for business, ensure that proper expense-reimbursement systems are in place, and re-evaluate contractor classifications with SB 809 in mind.
Leave Rights & Personnel Recordkeeping
Employers must update leave and recordkeeping policies in 2026. New laws expand time-off rights for crime victims and extend paid-family-leave eligibility. In addition to this, training-record retention must be included in personnel files.
Assembly Bill 406 (“AB 406”) – Expanded Leave for Crime Victims
Earlier revisions expanded leave rights for employees who are victims of qualifying acts of violence or whose family members are victims. AB 406 further prohibits employers from retaliating or discharging employees (or their family members) for taking time off to attend judicial proceedings related to criminal matters. It also expands the use of paid sick leave for such purposes. These new sick-leave provisions took effect October 1, 2025.
Senate Bill 590 (“SB 590”) – Paid Family Leave for “Designated Persons”
SB 590 expands eligibility for California’s Paid Family Leave program to include a seriously ill “designated person” (not just a blood relative). Consequently, employees must identify the individual and attest to the relationship. This change takes effect July 1, 2028.
Senate Bill 513 (“SB 513”) – Training & Education Records
Under existing Labor Code § 1198.5, employees may inspect personnel records relating to performance or grievances. SB 513 now also permits employees to inspect records related to their training or education. Employers must retain training records showing employee name, provider, duration, date, core competencies and certification or qualification.
Senate Bill 617 (“SB 617”) – Cal-WARN Notice Amendments
SB 617 amends the state’s version of the federal WARN Act (the California WARN Act). It requires that 60-day advance notices for mass layoffs, relocations or terminations include information on whether rapid-response services will be provided (through the local workforce development board or not). Details about the state’s food-assistance program (CalFresh) must be provided in such advance notices.
Assembly Bill 858 (“AB 858”) – COVID-related Recall Rights Extended
AB 858 extends recall and reinstatement rights for employees laid off in certain industries related to the COVID-19 pandemic to January 1, 2027. These industries include hotels, private clubs, event centers, airports, building services. Additionally, employers must offer laid-off employees information on qualified job openings and give them preference in hiring.
Action for Employers:
- Update leave-of-absence and sick leave policies to reflect crime-victim protections
- Revise paid-family-leave policy drafts for future eligibility changes
- Audit training-record file structure
- Ensure layoff-notice templates reflect the additional Cal-WARN requirements
- Particularly for hospitality, airport and building-services sectors, review recall rights and job-offering obligations under AB 858
Emerging Rights & Whistleblower Protections
California’s 2026 employment laws include first-of-their-kind protections for AI industry whistleblowers. In addition, it dictates tougher workers’ compensation penalties for contractors.
Senate Bill 53 (“SB 53”) – AI Whistleblower Protections
SB 53, known as the Transparency in Frontier Artificial Intelligence Act, provides whistleblower protections for employees of large AI-development companies. The law prohibits retaliation against workers who assess or manage AI safety risks and report violations. This includes reporting “catastrophic risks,” defined as threats to at least 50 lives or $1 billion in damages. Employers covered by SB 53 must provide anonymous internal reporting channels and post notices to inform employees of these rights.
Senate Bill 291 (“SB 291”) – Workers’ Compensation Penalties for Licensed Contractors
SB 291 strengthens compliance obligations for licensed contractors (or applicants) in California. For example, it imposes heavier penalties when workers’ compensation coverage is missing. Depending on the entity type, civil penalties can reach up to $10,000, $20,000 or $30,000 per violation for sole-owner licensees, partnerships, corporations, LLCs or tribal businesses.
Action for Employers: For employers in AI development or other highly-regulated tech sectors, establish or review whistleblower procedures in compliance with SB 53. To avoid the steep penalties, contractors and licensing-entities should closely audit worker’s compensation coverage and licenses.
Key Compliance Steps for 2026
- Update job-postings and internal pay disclosures to reflect the “good-faith estimate” for new-hire pay under SB 642.
- Audit compensation data and practices to account for all forms of “wages” (bonuses, stock, allowances) and verify pay equity across sexes and gender identities.
- Review record-storage and reporting systems to accommodate SB 464’s separate demographic-data requirement and expanded job-category reporting.
- Revise employment-contract templates, especially for training or retention agreements, to remove prohibited “stay-or-pay” clauses under AB 692.
- Revise policies and trainings around unconscious bias, FEHA enforcement, leave rights, and whistleblower protections.
- Ensure layoff, recall and personnel-record policies comply with SB 617, AB 858 and SB 513.
- Ensure reimbursement and expense-tracking practices are up to date with SB 809 and other wage-protections requirements.
- Monitor contractor classification and workers’-comp obligations, particularly in light of SB 809 and SB 291.
By integrating these steps into your compliance calendar and HR policy updates, your organization can prepare effectively for the wave of new California employment law obligations taking effect in 2026.
Contact a Los Angeles Employment Attorney
Consulting a Los Angeles employment lawyer early on can help you avoid costly disputes and protect your rights before conflicts escalate. The employment attorneys of Law Advocate Group offer comprehensive solutions to individuals and California businesses in matters involving employment litigation, workplace harassment and sexual harassment, employer defense, and PAGA lawsuit defense.
Call us today at (310) 651-3065 or fill out a contact form to set up an initial consultation with a member of our Los Angeles employment law firm.
