As 2026 approaches, California is set to implement a new wave of significant employment law changes. Whether you are an employer striving to maintain a compliant, efficient workplace—or an employee seeking to understand your rights, these updates will directly impact the way California workplaces operate.
The new laws address critical areas such as pay transparency, data privacy and breach reporting, paid family leave, artificial intelligence regulation, employee notices, wage enforcement, and employment contracts. For businesses operating in California, proactively adapting to these changes is essential to minimize risk, strengthen compliance, and maintain positive employee relations.
Southern California trial attorney, former prosecutor, and mediator Paul P. Cheng, Esq., emphasizes:
“Employers should view these new requirements not as burdens, but as strategic opportunities to strengthen internal policies, build employee trust, and create a more resilient organization. Proactive compliance is an investment, not a cost.”
Below is a comprehensive summary of the most important employment law changes taking effect in 2026 and beyond.
Pay Equity & Mandatory Compensation Reporting
1. Equal Pay Act Reform (SB 642)
SB 642 significantly expands California’s equal pay framework:
- Broadens the definition of “wages” to include benefits and non-salary compensation.
- Extends the statute of limitations and potential recovery period.
- Strengthens protections for nonbinary employees.
- Requires employers to provide more specific and accurate salary ranges in job postings, eliminating speculative or excessively broad pay ranges.
2. Expanded Pay Data Reporting With Mandatory Penalties (SB 464)
Beginning January 1, 2027:
- Employers with 100 or more employees must submit annual demographic pay data to the Civil Rights Department (CRD).
- Job categories increase from 10 to 23, requiring more granular reporting.
- Courts must impose civil penalties when CRD seeks enforcement for noncompliance.
Attorney Paul Cheng notes:
“Pay transparency in California is no longer optional, it is the new baseline. SB 642 and SB 464 signal increased scrutiny on wage practices and hiring processes. Now is the optimal time for employers to conduct internal pay equity audits.”
Required Notices & Mandatory Reporting Obligations
1. Workplace Notice Rights Act (SB 294)
By February 1, 2026, and annually thereafter, employers must provide written notice to employees outlining key labor rights.
Penalties include:
- Up to $500 per employee for failing to provide required notices.
- Up to $500 per day (max $10,000) for failing to notify an employee’s emergency contact if the employee is arrested or detained.
2. Updated Cal-WARN Act Requirements (SB 617)
Effective January 1, 2026, mass layoff, termination, or relocation notices must also include:
- Information about the CalFresh food assistance program;
- Identification of the Workforce Development Board that will coordinate support services.
3. New 30-Day Data Breach Disclosure Rule (SB 446)
Starting January 1, 2026:
- Employers must notify affected consumers within 30 days of discovering a data breach.
- Breaches affecting 500+ California residents must be reported to the Attorney General within 15 days.
Businesses should review and update incident response protocols immediately.
Wage Claims & Labor Dispute Enforcement
1. Expanded Jurisdiction of the Labor Commissioner & PERB (AB 288)
AB 288 expands the authority of the Public Employment Relations Board (PERB) to include certain private sector labor disputes.
Note: This law is currently being challenged by the National Labor Relations Board (NLRB) and may face delays or changes depending on the litigation outcome.
2. Strengthened Wage Judgment Enforcement (SB 261)
Beginning January 1, 2026:
- Employers who fail to pay wage-related judgments within 180 days will face mandatory attorney’s fees, costs, and penalties up to triple the unpaid amount.
- Local prosecutors may enforce judgments on behalf of employees.
Attorney Paul Cheng advises:
“SB 261 significantly increases the consequences of unpaid wage judgments. Employers should address outstanding wage issues immediately and evaluate payroll compliance to avoid severe penalties.”
Employment Contracts & Employee Benefits
1. “Stay or Pay” Contracts Become Illegal (AB 692)
Effective January 1, 2026, California bans “stay-or-pay” clauses requiring employees to reimburse employers for costs, fees, or penalties if they leave before completing a minimum employment term.
Employees may sue for:
- Actual damages or $5,000, whichever is greater;
- Attorneys’ fees and litigation costs.
2. Expanded Paid Family Leave for a “Designated Person” (SB 590)
Beginning July 1, 2028, employees may take up to 8 weeks of paid family leave to care for a “designated person” with whom they have a family-like relationship.
Artificial Intelligence (AI) Regulation & Pandemic Recall Rights
1. Frontier Artificial Intelligence Transparency Act (SB 53)
A first-of-its-kind law regulating advanced AI models. SB 53 requires:
- AI developers to implement safety protocols;
- Conduct risk and harm assessments;
- Report safety incidents;
- Provide whistleblower protections for employees who report misconduct.
This marks the beginning of California’s regulatory framework for AI in the workplace.
2. Extension of COVID-Related Recall Rights (AB 858)
Recall and retention rights for hospitality and airport service workers terminated due to the pandemic are extended to January 1, 2027.
Conclusion: Navigating California’s Changing Employment Landscape
In a rapidly shifting legal environment, both employers and employees benefit from knowledgeable guidance. With decades of combined experience representing both employers and employees, the Law Offices of Paul P. Cheng, APC offers strategic, practical counsel tailored to California’s complex employment laws.
If you have questions about any of the 2026 employment law updates, or need tailored legal advice, please contact our Employment Law Team at:
626-356-8880
info@pprclaw.com
Legal Disclaimer:
This article is for informational purposes only and does not constitute legal advice. No attorney-client relationship is formed by reading this material. Because the law evolves continuously, you should consult legal counsel regarding your specific situation.