New California Employment Laws for 2026: What Employers and Employees Need to Know

Overview

California continues to expand and strengthen its employment law protections in 2026, introducing significant new requirements for employers and expanded rights for workers. These changes span wage and hour regulations, worker rights education, contract restrictions, wage enforcement, pay transparency, and labor relations. Both employers and employees should understand these changes to ensure compliance and protect their rights.

This guide covers nine major legislative and regulatory changes taking effect in 2026, with implementation dates ranging from January through July. Whether you are an employer managing payroll and compliance, an employee understanding your rights, or a mediation professional helping parties navigate workplace disputes, understanding these changes is essential for handling California's rapidly evolving employment environment.

Minimum Wage Increases

General Minimum Wage Increase to $16.90 (Effective January 1, 2026)

California's statewide minimum wage increases to $16.90 per hour on January 1, 2026. This represents a continuation of the state's annual minimum wage adjustment formula established by previous legislation. The minimum wage applies to all covered employees in all industries, with limited exceptions for certain agricultural workers and trainees under specific programs.

For employers, this increase affects payroll calculations, budget planning, and compensation structures. Employees should verify that their hourly wage meets or exceeds the new minimum, even if they previously earned the prior year's minimum wage.

Exempt Salary Threshold

Coinciding with the minimum wage increase, California's exempt salary threshold - the minimum salary required to classify an employee as exempt from overtime requirements - increases to $70,304 per year. To maintain exempt status under California law, a salaried employee must earn at least this amount. This threshold is tied to the minimum wage and increases annually.

Employers should review exempt employee classifications and ensure all exempt workers meet the updated salary requirement. Employees earning below the exempt threshold may be reclassified as non-exempt and entitled to overtime compensation.

Healthcare Worker Minimum Wage Increase to $25/Hour (Effective July 1, 2026)

Beginning July 1, 2026, California increases the minimum wage for certain healthcare workers employed at healthcare facilities to $25 per hour. This specialized wage floor applies to workers in acute care hospitals, clinics, long-term care facilities, and certain other healthcare settings as defined in the legislation.

This sector-specific increase recognizes the essential nature of healthcare work and the tight labor market for skilled healthcare personnel. Healthcare employers should begin budget adjustments and wage planning immediately to accommodate the July 1 effective date. Healthcare workers currently earning below $25 per hour should confirm that their employers are aware of this requirement.

Key Point: These wage increases are independent - a healthcare worker must receive the higher of either the general minimum wage ($16.90) or the healthcare-specific minimum wage ($25.00), whichever applies to their role and employer.

Know Your Rights Act (SB 294)

Effective February 1, 2026

California's Workplace Know Your Rights Act (Senate Bill 294) mandates that employers provide workers with written notice of their rights under California and federal employment law. This requirement takes effect on February 1, 2026.

Notice Requirements

Employers must provide all employees, at the time of hiring or by February 1, 2026 (whichever is later), with a written notice informing them of their rights, including but not limited to:

• The right to form, join, and engage in activities of labor unions and worker organizations
• The right to engage in concerted protected activity related to wages, hours, and working conditions
• The right to report suspected labor law violations to government agencies
• The right to access their personnel files and wage records
• The right to meal and rest breaks
• Protection against retaliation for exercising these rights
• Information about how to file complaints with the California Labor Commissioner

The notice may be provided in physical, electronic, or other electronic means. Employers may use the Labor Commissioner's official notice form, or employers may create their own notice that meets the statutory requirements.

Recordkeeping and Training

SB 294 requires employers to maintain records of when notices were provided to each employee. Also, employers with 50 or more employees must provide annual training to supervisors and managers on workers' rights and the requirement to inform employees of those rights.

Multi-Language Requirement

The written notice must be provided in English and in the primary language(s) of the workplace. If a workplace has a significant non-English-speaking workforce, employers must translate the notice accordingly to ensure all workers understand their rights.

Stay-or-Pay Agreement Ban (AB 692)

Prohibition on Training Repayment Agreements and Quit-Fee Penalties

Assembly Bill 692 prohibits employers from entering into or enforcing certain restrictive employment agreements often called Training Repayment Agreements (TRAPs) or agreements that impose financial penalties on employees who separate from employment. Effective immediately, employers may no longer:

• Require employees to repay the costs of training or education if the employee leaves employment within a specified period
• Impose financial penalties or "stay bonuses" that reduce compensation if an employee quits
• Include provisions in employment agreements that financially penalize departure through mechanisms such as clawbacks of benefits or prorated compensation reductions

Impact on Existing Agreements

Employers with existing TRAPs or quit-fee agreements must cease enforcement immediately. These agreements are unenforceable under California law regardless of when they were signed. Employers should audit their employment agreements, offer letters, and training program policies to identify and eliminate such provisions.

Legitimate Training and Development

The ban does not prohibit employers from providing training and development to employees. Employers may require employees to sign non-compete agreements (within California's narrow restrictions) or confidentiality agreements, but they cannot impose financial penalties for separation tied to training participation or employer investment in education.

Employee Implications

Employees who previously signed TRAPs or quit-fee agreements may be relieved of these obligations. If an employer attempts to enforce such an agreement or deduct from final pay based on one, administrative complaints may be filed with the Labor Commissioner or other legal remedies may be pursued.

Expanded Wage Theft Enforcement (SB 648)

Enhanced Labor Commissioner Authority

Senate Bill 648 expands the California Labor Commissioner's authority to investigate and enforce wage and hour violations. The Labor Commissioner gains enhanced investigative powers and can assess civil penalties against employers who fail to pay wages, meal and rest break premiums, overtime, or other compensation due to employees.

Increased Penalty Amounts

SB 648 increases the civil penalties that the Labor Commissioner can assess for wage violations. Employers who willfully violate wage and hour laws face higher financial consequences, incentivizing compliance. Penalties may include:

• Restitution of unpaid wages
• Civil penalties per violation or per employee
• Attorney's fees and costs
• In some cases, penalties that exceed the actual wages owed, creating additional deterrent effect

Expanded Investigation Scope

The Labor Commissioner now has broader authority to investigate wage claims without requiring initial submission through formal claims procedures, allowing faster investigation of wage theft and non-payment issues. This expansion makes it easier for employees to report violations and for the state to pursue enforcement.

Employer Compliance Recommendations

Employers should ensure they are correctly calculating and paying all wages due, including overtime, minimum wage, meal and rest break premiums, and other wage-related compensation. Regular internal audits of payroll practices can identify potential violations before the Labor Commissioner's office becomes involved.

Pay Transparency Updates

Expanded Definition of "Pay Scale" and "Wages"

California's existing pay transparency laws require employers to disclose wage and pay scale information to job applicants and employees upon request. These laws are being refined and expanded in 2026 to clarify what information must be disclosed and to broaden the definition of "wages" subject to disclosure.

What Must Be Disclosed

Employers must provide job applicants with the pay scale for a position before the applicant is required to disclose their current or desired salary. The law defines "pay scale" broadly to include:

• The minimum and maximum salary or hourly wage
• Benefits, bonuses, and other forms of compensation that are part of the position
• Equity compensation if applicable
• Shift differentials or location-based pay variations
• Any other material compensation or benefits affecting the total compensation package

Timing of Disclosure

Employers must provide pay scale information to applicants before or during the application process, and certainly before any discussion of the applicant's current or desired salary. Existing employees are also entitled to reasonable access to information about the pay scales for positions within their organization.

Employee Pay History Inquiries

California prohibits employers from asking applicants about their pay history. This restriction continues to apply in 2026. Pay transparency rules shift the focus to disclosing employer-set pay scales rather than investigating what applicants previously earned.

Enforcement and Remedies

Employees who are denied pay scale information or who suffer retaliation for requesting such information may file complaints with the Labor Commissioner or pursue civil remedies. Employers should ensure hiring managers and HR personnel understand these obligations and implement processes to provide pay scale information in a consistent, transparent manner.

Emergency Contact Requirements

Effective by March 30, 2026

California requires employers to collect and maintain emergency contact information for employees by March 30, 2026. This requirement applies to all employers subject to California employment law.

What Employers Must Do

Employers must:

• Collect emergency contact information from all employees, including name and telephone number of at least one emergency contact
• Provide this information to employees and allow them to update it
• Maintain the information confidentially and securely
• Use the information only for legitimate emergency purposes
• Inform employees of how their emergency contact information will be used and protected

Employee Privacy Considerations

Employees have the right to consent to sharing their emergency contact information with others. Employers should not disclose emergency contact information to third parties without employee consent, except in genuine emergencies or as required by law.

Compliance Timeline

Employers should implement emergency contact collection processes immediately and ensure all employees have provided at least one emergency contact by March 30, 2026. This is a simple compliance requirement that benefits employees by ensuring the employer can reach appropriate contacts during emergencies.

Gig Driver Unionization Rights

Transportation Network Company Drivers Labor Relations Act

California recognizes the right of gig drivers and transportation network company (TNC) drivers - those engaged through platforms like rideshare services - to engage in collective bargaining and union organization activities. Drivers are permitted to form labor unions and negotiate collectively with platforms regarding compensation, working conditions, and benefits.

Scope and Applicability

These protections apply specifically to TNC drivers and certain other types of gig workers classified as independent contractors. The law creates a narrow category of independent contractors who have the right to unionize, acknowledging that traditional classification models may not apply to platform-based work arrangements.

Prohibition on Anti-Union Retaliation

Employers and platforms are prohibited from retaliating against drivers who engage in union organizing, collective bargaining, or concerted activities related to wages, hours, and conditions of work. Retaliation includes termination of the driver relationship, unfavorable algorithm adjustments, or other penalties based on union or concerted activity.

Impact on Gig Workers and Platforms

Gig drivers should be aware they have the right to organize and collectively bargain despite their independent contractor status. Platforms and gig economy employers must be aware that they cannot penalize workers for union activity and must accommodate driver organizing and collective bargaining efforts to the extent required by law.

PERB Expansion (AB 288)

Expanded Jurisdiction Over Unfair Labor Practices

Assembly Bill 288 expands the authority of the California Public Employment Relations Board (PERB), which investigates and resolves labor relations disputes. The expansion applies to additional categories of workers and employers previously outside PERB's jurisdiction.

Extended Coverage

PERB's jurisdiction now extends to cover additional public sector workers and certain categories of employees previously excluded from labor relations protections. This expansion strengthens workers' rights to organize and engage in collective bargaining in the public sector.

Unfair Labor Practice Definitions

The expanded jurisdiction clarifies and broadens what constitutes an "unfair labor practice" under California law. Practices that interfere with workers' rights to organize, prohibit retaliation against union activity, and require employers to bargain in good faith with labor representatives now apply to a broader range of employers and workers.

Compliance for Public Employers

Public agencies and institutions should review their labor relations practices to ensure compliance with expanded PERB jurisdiction. They should have clear anti-retaliation policies, provide appropriate notice of employee labor rights, and comply with labor relations statutes applicable to their sector.

Employer Compliance Checklist for 2026

To ensure compliance with California's 2026 employment law changes, employers should take the following actions:

Immediate Actions (January - March 2026)

• Update Payroll Systems: Ensure minimum wage calculations reflect the January 1, 2026 increase to $16.90 and verify exempt employee salaries meet the $70,304 threshold.
• Audit Employment Agreements: Review all offer letters, employment agreements, training program agreements, and bonus plans to identify and remove any training repayment agreements (TRAPs) or quit-fee penalties. Cease enforcement of any such agreements immediately.
• Implement Know Your Rights Notice: Distribute written notice of employee rights to all current employees by February 1, 2026. For new hires, provide the notice at the time of hiring. Translate notice into primary workplace languages.
• Establish Record-Keeping System: Create a system to track and document when Know Your Rights notices are provided to each employee. This documentation is required under SB 294.
• Plan Emergency Contact Collection: Develop a process to collect emergency contact information from all employees and ensure completion by March 30, 2026.
• Design Supervisor Training Program: For employers with 50+ employees, develop annual training on workers' rights and the requirement to inform employees of those rights. Plan to deliver training to supervisors and managers.

By Mid-Year (April - June 2026)

• Review Pay Transparency Practices: Ensure all job postings and recruitment materials include pay scale information for open positions. Train HR and hiring managers on pay transparency disclosure requirements.
• Prepare Healthcare Wage Increase Implementation: If applicable, begin budget and operational planning for the July 1 healthcare worker minimum wage increase to $25/hour. Review job classifications and payroll systems.
• Conduct Payroll Audit: Perform a full audit of payroll practices to identify any potential wage and hour violations. Address any issues proactively to reduce exposure to Labor Commissioner enforcement under the expanded SB 648 authority.
• Review Labor Relations Policies: For public employers, review policies affected by PERB expansion to ensure anti-retaliation protections and labor relations compliance.

Ongoing Throughout 2026

• Maintain updated emergency contact information and ensure employee access to their contact records.
• Conduct annual supervisor and manager training on workers' rights and SB 294 notice requirements (for employers with 50+ employees).
• Monitor changes in pay scale definitions and ensure compensation packages remain competitive and compliant.
• For gig economy employers, review platform practices to ensure no retaliation against drivers engaged in union organizing or concerted activity.
• Stay informed about regulatory guidance from the California Labor Commissioner and other enforcement agencies regarding implementation and interpretation of these new laws.

Conclusion

California's 2026 employment law changes reflect the state's continued commitment to worker protections, wage fairness, labor rights, and transparency in employment relationships. These changes affect employers across all industries and sizes, requiring updates to payroll systems, employment agreements, notice procedures, training programs, and labor relations practices.

Employees should be aware of their expanded rights, including the right to receive notice of their labor protections, the prohibition on training repayment agreements and quit-fee penalties, expanded access to pay scale information, and protection for union organizing activities (where applicable).

Both employers and employees benefit from understanding these changes early and implementing compliance measures proactively. Doing so reduces the risk of violations, disputes, and enforcement actions while promoting fair, transparent, and legally compliant workplaces.

For specific legal advice regarding how these changes apply to your particular situation, consult with a qualified employment law attorney licensed to practice in California.