CDF Labor Law -- A Year-End Compliance Checklist for California Employers

Selene Bendeck • 26 December 2025

As 2025 comes to a close, many California employers are juggling holiday schedules, performance reviews, and planning for 2026. Just as importantly, now is the time to evaluate whether your workplace practices are keeping up with California’s fast-changing labor and employment laws. A structured year-end compliance review can help you identify and resolve issues before they become costly demands, audits, or litigation.


The following checklist highlights key areas California employers should review now as we enter the new year.

Required Policy and Handbook Updates

Your employee handbook is a critical compliance tool. There are several new laws effective in the coming year(s) that will require policy updates, and below are a few:

  • Paid Sick Leave (LC 230.2): Policies must be updated to include an employee’s right to use paid sick leave and take protected unpaid leave if they or a family member are a victim of certain crimes and need to attend related judicial proceedings. This includes proceedings such as a delinquency hearing, post-arrest release decision, plea, sentencing, or any proceeding where the victim's rights are at issue. The definition of a "victim" for this purpose is broad, covering individuals who suffer harm from various felonies.
  • Court/Jury Duty (LC 230): The requirement for employees to provide "reasonable notice" prior to taking time off for jury duty has been removed. However, if an employee uses paid sick leave or other protected leave for this purpose, the standard notice requirements for that leave still apply.
  • Paid Family Leave (Effective July 1, 2028): While not immediate, employers should begin planning for a significant expansion of the Paid Family Leave (PFL) program. Commencing July 1, 2028, employees will be able to take PFL to care for a "designated person," defined as an individual related by blood or whose association is the equivalent of a family relationship.

 

Required Postings and Employee Notices

California has introduced new notice obligations for employers. As a result of the Workplace Know Your Rights Act (SB 294), employers will be required to provide a stand-alone written notice to all current employees, and to new hires, outlining specific workers’ rights. These rights pertain to workers’ compensation, immigration agency inspections, and law enforcement actions at the workplace. The Labor Commissioner is tasked with developing a template notice, which is expected to be available on or before January 1, 2026.

 

Recordkeeping and Retention Reminders

Proper record maintenance is a cornerstone of compliance. A new California law, Senate Bill (SB) 513, expands the scope of Labor Code Section 1198.5, by expanding the scope of records that must be retained. Employers must now include specific training records within the personnel files they are required to maintain. These records should detail the employee’s name, the training provider, the duration and date of the training, the core competencies covered, and any resulting certification or qualification.

 

Reviewing How you Pay Your Workers

Wage and hour compliance remains a high-risk area for California employers. Annual year-end reviews are essential.

  • Minimum Wage Increase: On January 1, 2026, California’s statewide minimum wage is set to increase to $16.90 per hour. This change also raises the minimum annual salary for exempt employees to $70,304 (or $5,858.67 per month). A number of California cities have implemented their own minimum wage requirements that are higher than the State’s minimum wage requirements. Please check your local jurisdiction’s minimum wage laws.
  • Regular Rate of Pay: Ensure you are correctly calculating the regular rate of pay for overtime purposes, paid sick leave, and any required meal and rest period premiums, including all required forms of compensation (including but not limited to shift differentials and non-discretionary bonuses, as examples).
  • Worker Classification: Review your workforce to confirm that all workers are correctly classified, i.e. employees vs. independent contractors, and exempt from overtime vs. non-exempt from overtime laws. Misclassification continues to be a source of significant liability.
  • Stay or Pay / Clawback Clauses: On January 1, 2026, California's AB 692 takes effect, which bans most provisions that make employees repay benefits if they leave. While there are narrow exceptions for things like tuition assistance or sign-on bonuses, these will require separate, compliant agreements with specific legal conditions to be enforceable. Employers in California must promptly review and amend employment agreements, offer letters, and bonus structures to remove any such prohibited clauses.
  • Pay Equity: California's pay equity laws require employers to pay equally for "substantially similar work" regardless of sex, race, or ethnicity. Employers cannot pay less based on sex, race, or ethnicity for work requiring similar skill, effort, responsibility, and working conditions. Conduct internal pay equity reviews to prepare for compliance obligations.

 

Required Employee Trainings

Employers must schedule and meet all California mandated training deadlines. The following are requirements for most all employers:

  • Sexual Harassment & Abusive Conduct Prevention Training: Employers with five or more employees must provide this training every two years.
  • Workplace Violence Prevention Training (SB 553): In conjunction with having a Workplace Violence Prevention Plan, employers must also provide this training annually and whenever changes are made to their Plan.
  • Injury and Illness Prevention Program (IIPP) Training: California’s IIPP requires all employers to have a written and implemented IIPP plan to ensure safe workplaces. Employers must also provide training on their IIPP plan which might include information on how to communicate hazards, conduct hazard assessments, investigate incidents, correct issues, and ensure employee compliance. Training should be provided to new hires and as needed to maintain a safe workplace.

 

Steps California Employers Should Take

A year-end compliance checklist is only valuable if it leads to action. Employers should take concrete steps to prepare for 2026.

  • Update your employee handbook and policies to reflect all legal changes required for your industry.
  • Ensure you have scheduled training for your employees as required, and are maintaining proper records of that training in accordance with new 2026 requirements.
  • Update Human Resource onboarding and offboarding systems to include all required notices for 2026.
  • Review and, if necessary, amend employment agreements to remove prohibited "stay-or-pay" clauses, which are banned by AB 692 as of January 1, 2026.
  • Conduct internal pay equity (and pay data reporting) reviews to prepare for compliance obligations.


by Selene Bendeck 8 May 2026
Most employment lawsuits don’t start with dramatic misconduct or bad actors. They start with small, avoidable decisions that no one thought would matter—until they did. In my experience representing employers, the practices that cause the most damage are rarely exotic or cutting‑edge. They’re the routine, “we’ll get to it later” items: missing documentation, inconsistent discipline, outdated policies, or decisions made out of frustration instead of process. Employment law rewards preparation and punishes procrastination. The difference between a defensible workplace decision and an expensive lawsuit is often just a few steps that were skipped when things felt busy or manageable. What follows are ten mistakes management‑side employment attorneys see over and over again—and that are far easier to prevent than to defend. Mistake #1: Treating documentation like a chore instead of a shield. In the world of employment law, if you didn’t write it down, it didn’t happen. I’ve seen too many cases lost because management never documented poor performance or gave glowing reviews to an underperforming employee. Here’s a good rule of thumb: if you’re going to take an adverse action against an employee, a stranger should be able to walk in off the street, only review your documentation, and tell you why it was necessary. Mistake #2: Letting things get personal. When a manager’s frustration starts driving employment decisions, you’re headed for trouble. For example, if an employee corrects the behavior they were disciplined for and you fire them anyway without any justification, it’s going to look suspicious. Bring in another supervisor who can evaluate the situation objectively. Mistake #3: Inconsistency in how you treat employees. If I could give employers one piece of advice, it’s this: be consistent. If it’s fine for your favorite employee to come in late three times a week, you can’t fire someone else for the same thing. If you’re absolutely convinced it’s appropriate to treat an employee differently, you had better document that very carefully in writing and make sure you’ve got a policy to back it up. Mistake #4: Neglecting your handbook and policies. Think of your employee handbook as an insurance policy: it sets expectations, communicates standards, and takes away the “I had no idea” defense from employees who violate them. But it’s a double-edged sword—you need to know what’s in it and actually follow it, because a plaintiff’s lawyer will absolutely point to your own policies and ask why you didn’t. Review it annually and don’t be one of those employers whose handbook hasn’t been updated since the Clinton administration. Mistake #5: Retaliating (even when you don’t think you are). Anti-retaliation provisions are baked into virtually every discrimination law as well as many other laws. The sooner you take an adverse action after someone complains, the more it looks like retaliation. I’ve seen managers get fed up with chronic complainers, and it resulted in a huge liability for the employer. If someone has recently complained and needs to be seriously disciplined or terminated, bring in a decision-maker who has no knowledge of the complaint and let them call the shot. Mistake #6: Botching the interactive process under the Americans with Disabilities Act (ADA). When someone asks for an accommodation, the employer is generally in the driver’s seat when it comes to determining what’s reasonable, but the employer has to engage in the interactive process. The interactive process is not a one-way suggestion box—it’s more like couples counseling: if only one party shows up, nobody gets better. When an employee requests an accommodation, request appropriate medical documentation explaining how their specific limitations impact their specific job duties, and ask how long they’ll need the accommodation. If they don’t respond, follow up in writing. That paper trail will be your best friend when the employee claims you failed to accommodate them. Mistake #7: Misclassifying employees under wage and hour laws. Wage and hour law is one of those areas where employers get into trouble because they assume the answer is simpler than it actually is. Whether it’s classifying someone as exempt based on their title instead of their actual duties, or assuming a worker is an independent contractor when the law says otherwise, the consequences of getting it wrong include liability for unpaid wages, double damages, and attorneys’ fees—and it adds up fast when multiple employees are affected. Mistake #8: Ignoring the value of a good investigation. I know of an organization that tried to handle serious misconduct allegations with inexperienced consultants. It was a disaster—they ended up commissioning another investigation (with an experienced law firm) into why the first one went so poorly. Investigating sensitive workplace situations is like surgery: it’s generally not advisable to perform it on yourself. When serious allegations arise, bring in outside counsel with investigative experience. Mistake #9: Assuming “at-will” means “bulletproof.” I hear this all the time: “We’re an at-will state, so we can fire anyone for any reason.” You can fire an employee for any lawful There’s a complex web of state and federal protections you might not be thinking about. At-will employment is not a force field against discrimination, retaliation, or wrongful termination claims. Mistake #10: Waiting too long to call an employment lawyer. I know this sounds self-serving, but hear me out. I’ve seen too many HR professionals reach out to a general business attorney who mostly does real estate or contracts. That’s like suspecting you’re having a stroke and going to your family practitioner for a checkup. The half-hour you spend talking to an employment lawyer is a lot cheaper than the half-a-million dollars that can be spent on litigation. If your gut says you’ve got an employment law-specific problem, listen to it and call someone who practices in that area. Most of these mistakes come down to documentation, consistency, and early intervention. The longer you let things fester, the harder they are to fix—and the more expensive they become. Think of it this way: nobody ever called their employment lawyer and said, “I wish I’d waited longer to reach out.” If any of these hit close to home, give us a call. We’re happy to help you get ahead of the problem before it gets ahead of you.
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