Worklaw Network

Selene Bendeck • 2 January 2026

California Employment Law Update: What Employers Should Expect in 2026

California State Capitol building with white columns and a dome, under a blue sky.

As to be expected, California continues to lead the nation with robust employment protections and expanded employer obligations. A slate of new laws taking effect in 2026 will impact wages, pay transparency, notices, leave rights, enforcement penalties, and more. Employers should begin planning now to reduce compliance risk, avoid penalties, and maintain effective HR operations.

 

Here’s what employers should know as 2026 approaches.

 

Minimum Wage and Salary Threshold Adjustments

Effective January 1, 2026, California’s statewide minimum wage increases to $16.90 per hour for all employees, regardless of employer size. The minimum salary threshold for many exempt employees also rises specific amount dependent on industry. Reach out to a McMahon Berger Attorney for more information to determine your industry’s amount.

Action Steps:

• Update payroll systems to reflect new minimum wage and salary thresholds.

• Confirm exempt classifications align with updated compensation standards.

 

Expanded Pay Transparency and Pay Equity Requirements

California continues to strengthen pay transparency and equal pay enforcement in 2026. SB 642 expands employers’ obligations under the state’s equal pay and transparency laws by requiring that job postings include a good-faith estimate of the wage range the employer reasonably expects to pay at hire. SB 642 also broadens equal pay protections to include non-binary workers and extends the statute of limitations for pay discrimination claims.

Action Steps:

• Include clear, realistic pay ranges in all external job postings.

• Conduct internal reviews of pay practices to address potential disparities.

 

New “Know Your Rights” Employee Notices

Starting February 1, 2026, SB 294 requires employers to provide a stand-alone written notice to all employees at hire and annually thereafter summarizing specific workplace rights. These rights include wage protections, immigration-related workplace rights, labor organizing protections, and other employment entitlements.

Action Steps:

• Adopt and distribute the required worker rights notice at hire and annually.

• Maintain records of distribution and acknowledgment of receipt.

 

Increased Penalties for Unpaid Wage Judgments

New law clarifies that employers who fail to satisfy wage judgments within 180 days may face enhanced enforcement actions, including penalties up to three times the judgment amount plus attorneys’ fees. Unpaid awards may also be publicly posted by the Labor Commissioner.

Action Steps:

• Establish protocols to track wage awards and satisfy judgments promptly.

• Coordinate with outside counsel early in wage claim disputes.

 

Expanded Leave and Worker Protections

Several new laws taking effect in 2026 further expand employee leave rights and workplace protections, increasing compliance obligations for employers. Paid sick and safe leave protections have been broadened to cover additional qualifying uses and strengthen anti-retaliation provisions, making it riskier for employers to discipline or terminate employees for leave-related absences. Certain recall and reinstatement rights enacted during the COVID-19 era have also been extended or clarified for specific industries, requiring employers to offer reemployment opportunities to laid-off workers before hiring new employees. In addition, California has imposed new limits on so-called “stay-or-pay” arrangements, restricting an employer’s ability to require employees to repay training costs, onboarding expenses, or other employment-related debts upon separation, with only narrow exceptions.

Action Steps:

• Review and update leave and attendance policies to ensure they reflect expanded protected leave rights and anti-retaliation standards.

• Train managers and supervisors on handling leave requests and protected absences.

• Audit existing training reimbursement, repayment, and employment-related debt agreements before attempting enforcement.

 

Emergency Contact and Arrest/Detention Notifications

As part of SB 294, employers must give employees the opportunity to designate an emergency contact and must notify that contact if the employer has actual knowledge the employee has been arrested or detained at the worksite. These provisions take effect in early 2026 and carry potential penalties for non-compliance.

Action Steps:

• Modify personnel files to collect emergency contact information.

• Train HR personnel on notification requirements.

 

Use of Artificial Intelligence in Employment Decisions

California lawmakers and regulators continue to scrutinize the use of artificial intelligence and automated decision-making tools in the workplace. While many AI-specific requirements initially focus on developers and large companies, employers that use AI-driven tools for recruiting, screening, hiring, promotion, or performance evaluation should proceed with caution in 2026. Employers remain legally responsible for employment decisions made with the assistance of AI, particularly where such tools may result in biased or discriminatory outcomes. As regulatory guidance evolves, employers should ensure human oversight of automated processes, evaluate vendors carefully, and regularly review hiring and employment practices for compliance with anti-discrimination laws.

 

Practical Tips for Employers in 2026

To prepare for these and other 2026 developments, employers should consider the following:

• Audit compensation policies to ensure compliance with minimum wage and pay transparency rules.

• Update onboarding and annual training materials to include new notice requirements.

• Coordinate early with outside counsel before undertaking layoffs, wage disputes, or classification changes.

• Review contracts and policies that could be impacted by new protections such as pay equity and repayment agreements.

• Early planning and thoughtful implementation of these requirements can help employers reduce litigation risk, improve HR compliance, and adapt to California’s evolving employment landscape.

 

Conclusion

The 2026 California employment law changes continue a clear trend toward increased regulation, heightened enforcement, and expanded employee protections. Employers that take a reactive approach risk significant exposure in the form of penalties, wage claims, and costly litigation. By reviewing compensation practices, updating policies and notices, training management teams, and consulting counsel early, employers can position themselves to comply with evolving requirements while minimizing disruption to their operations. Proactive planning in 2025 will be critical to navigating California’s increasingly complex employment landscape in 2026 and beyond.

 

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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