Top Ten 2026 Labor and Employment Law Updates
- Increase in Minimum Wage
As of January 1, 2026, the minimum wage in California will increase from $16.50 per hour to $16.90 for all hourly/non-exempt employees. This increase in minimum wage means that exempt employees in California must earn a minimum annual salary of $70,304 per year or $5,858.67 per month. Employers should be cautious of the minimum wage requirements in their local areas because some cities have higher minimum wage requirements. Please note that wage rates higher than the general minimum apply to specific occupations, such as commissioned employees, computer specialists, and healthcare workers, among others.
2. Pay Scale Requirements
Governor Newsom approved Senate Bill 642, is designed to amend the Fair Pay Act, strengthen pay transparency, and prohibit discriminatory wage gaps. Employers with 15 or more employees already must post pay scales in job ads and provide the pay scales to current employees upon request. This new Bill will revise the term “pay scale” to mean an estimate of the expected wage range that an employer reasonably expects to pay for the job position upon hiring. This new Bill will also prohibit employers from paying employees at wage rates less than the rates paid to employees of another sex.
Now is a great time to audit your company’s compensation practices and review pay structures, ranges, and differences across gender, race, and other protected classes. Additionally, feel free to call us to ensure your pay scale disclosures comply with this new law.
3. Ban on “Pay or Stay” Contracts
Until now, employers could enter into an agreement with employee to advance loans, funding for assistance programs, the cost of tuition for a transferable credential, and enrollment in an apprenticeship program, among other reasons, while requiring the employee to stay employed to repay the advance. Effective January 1, 2026, Assembly Bill 692 makes it unlawful for employers to include in any employment contract, or to require a worker to execute as a condition of employment, a term requiring the worker to repay an employer a debt if the worker separates from the company.
Contracts entered into on or after January 1, 2026, with any “stay or pay” provisions are deemed void and unenforceable, subject to a few exceptions. For example, an employer can require an employee to repay a debt if the contract isseparate from the employment contract, is not a condition of employment, specifies the repayment amount, provides a prorated repayment amount, and does not require repayment if the worker is terminated.
Employers should review with legal counsel all “stay or pay” contracts regarding training repayment, relocation reimbursement bonuses, or related clawback provisions. If you need assistance drafting any agreements for your employees, please contact Sloat Law Group, APC.
4. Workplace Know Your Rights Act
Senate Bill 294 establishes the Workplace Know Your Rights Act. By February 1, 2026, and annually thereafter, all employers must provide a stand-alone written notice to each current employee of their rights, including labor laws, workers’ compensation, notice requirements related to inspections conducted by an immigration agency, and constitutional rights. The Labor Commissioner will develop a template compliant notice for employers to use.
Additionally, this Bill requires employers to notify an employee’s designated emergency contact if the employee is arrested or detained on their worksite. If the arrest or detention occurs during work hours, or during the performance of the employee’s job duties, but not on the worksite, the employer must notify the emergency contact only if the employer has actual knowledge of the arrest or detention of the employee. Employers must provide all employees the opportunity to name an emergency contact on or before March 30, 2026.
Employers should watch for the notice template from the Labor Commissioner, train human resource professionals and managers on employee rights, and give employees the chance to designate their emergency contact. Contact Sloat Law Group, APC, if you have questions about employee rights and how to ensure your practices comply with the law.
5. Tip Theft
Existing law prohibits an employer from “tip theft” = collecting, taking, or receiving any gratuity that is paid, given, or left for an employee by a patron, or deducting any amount from wages due to an employee on account of gratuity. Currently, an employee could pursue a claim for these violations through the Labor Commissioner’s hearing process or in a lawsuit under the Private Attorneys General Act (PAGA), which are cumbersome and lengthy processes. However, as of January 1, Senate Bill 648 will now authorize the Labor Commissioner to investigate and issue a citation or file a civil action for any gratuities taken or withheld from an employee. The citation process is faster and allows the Labor Commissioner to obtain wages, penalties ($100 or $250 per pay period per employee), liquidated damages and other amounts, without a hearing or litigation.
If you are a restaurant owner or other tip provider, ensure that your tip policies and practices comply with this new law, and contact our office to audit your past tip payments to employees.
6. Employer Pay Data
Private employers with 100 or more employees are required to submit an annual pay data report to the Civil Rights Department, which includes the number of employees by race, ethnicity, and sex in ten (10) specified job categories. Senate Bill 464 will require employers to collect, store and submit any demographic information gathered by an employer or labor contractor separately from the employees’ personnel files. Also, starting January 1, 2027, this Bill will also increase the number of job categories from 10 to 23.
This new law will also require a court to impose a civil penalty against an employer that fails to file the report if requested to do so by the Civil Rights Department. Senate Bill 464 raises the stakes for non-compliance and tightens data handling rules.
Employers, verify with qualified labor law counsel your reporting obligations and make sure you have the proper data storage and reporting methods in place.
7. Extended Statute of Limitations for Sexual Harassment/Assault Claims
Assembly Bill 250 extends the eligibility period and allows employees to bring certain sexual harassment or sexual assault claims against a company that would have otherwise been barred prior to January 1, 2026, because of the statute of limitations. To revive a claim against an entity, the employee must allege: (1) that they were sexually assaulted, (2) that one or more entities or persons are responsible for damages arising out of the sexual assault, and (3) that the entity or representatives engaged in a cover up or attempt to cover up previous instances or allegations of sexual assault by the alleged perpetrator. This new law will permit a cause of action to proceed if it is already pending in court or allow employees to commence an action between January 1, 2026 and December 31, 2027.
Employers, it is essential that all employees and managers undergo sexual harassment prevention training. Additionally, if an employee alleges they are a victim of sexual harassment or assault in the workplace, take it seriously and immediately launch an investigation. Contact our firm to learn about the appropriate steps to handle an employee’s sexual harassment or assault claim and to review any past personnel situations that could lead to a new claim under this Bill.
8. Paid Family Leave – Designated Person
Senate Bill 590, signed by Governor Newsom, will expand eligibility for benefits under the State’s Paid Family Leave program as of July 1, 2028, so that an employee can take leave to care for a “designated person.” This Bill defines “designated person” to mean any individual related by blood or whose association with the employee is the equivalent of a family relationship. In order to request Paid Family Leave benefits to care for a designated person, the employee must identify the designated person and, under penalty of perjury, attest to how the individual is related by blood or associated in a family-like manner.
By 2028, employers should revise your Paid Family Leave policy in compliance with this new requirement. Several 2026 Handbook revisions are required as well. Contact us today about our 2026 Handbook Package.
9. Paid Sick Leave for Judicial Proceedings and Jury Duty Leaves
While existing law allows employees to use Paid Sick Leave to take time off work for judicial proceedings or jury duty, Assembly Bill (AB) 406 expands these rights. Employees may now use Paid Sick Leave for judicial proceedings if they or a family member are a (redefined) “victim” of certain additional (redefined) “crimes” and suffer direct or threatened physical, psychological, or financial harm due to the commission or attempted commission of the following crimes: vehicular manslaughter while intoxicated, felony child abuse likely to produce great bodily harm or death, felony physical abuse of an elder or dependent adult, felony stalking, solicitation for murder, hit-and-run causing death or injury, felony driving under the influence causing injury, and sexual assault. Employees who are family members of a “victim” also have rights to this type of leave.
Additionally, AB 406 will amend Government Code Section 12945.8as of January 1, 2026, so that employees may take time off from work to attend judicial proceedings related to a crime, including, but not limited to, any delinquency proceeding, a postarrest release decision, plea, sentencing, postconviction release decision, or any proceeding where a right of that person is at issue.
Employees can also use Paid Sick Leave when serving on a jury or inquest, and AB 406 removes the requirement for advance notice to the employer. Employers are prohibited from discharging or otherwise discriminating or retaliating against employees who take this leave.
This Bill was an urgency statute, which means that it took effect immediately to preserve public peace, health, or safety. It was effective as of October 1, 2025, to ensure that the Labor Commissioner and Civil Rights Department implement these changes effectively and also to provide clarity to employed victims of crimes of their rights. Employers are obligated to provide notice of these rights to new hires and to all employees annually.
Employers should review their leave of absence policies now, especially in light of the urgency of this Bill. Contact Sloat Law Group, APC to ensure your policies and notices are up-to-date and include the necessary language.
10. Independent Contractors and Employee Vehicle Business Expense
Senate Bill 809 expands the existing law that requires employers to reimburse business expenses of employees who use their own vehicles for the construction industry and provides an amnesty program to the construction industry. First, the Bill offers amnesty to “eligible construction contractors” who misclassified employee drivers as independent contractors. The Bill authorizes a settlement between the company and the driver, under specific procedures.
Second, the Bill states that mere ownership of a vehicle, including a personal vehicle or a commercial vehicle, used by an individual in providing labor or services for a company, does not make that individual an independent contractor.
Third, this new Bill requires employers to indemnify employees for all expenses or losses incurred when they use their personal commercial vehicle while performing duties for the company. In other words, with respect to construction trucking, a commercial motor vehicle driver employee who owns the truck, tractor, or trailer used to perform their job duties may be entitled to reimbursement for the use, upkeep, and depreciation of their truck, tractor, or trailer.
Employers should ensure compliance with all workplace laws. If you have any questions about how these new laws may affect your business or need assistance preparing compliant policies or revising your practices, please contact the attorneys at Sloat Law Group, APC. We are here to help!
See our Resources page at www.sloatlawgroup.com/resources for new hire forms and other governmental forms and pamphlets, conveniently gathered for you to download, use, or complete for all employees.
Sloat Law Group, APC | 42-600 Caroline Court, Suite 101, Palm Desert, CA 92211 | Phone: 760-779-1313 | Email: info@sloatlawgroup.com
