As 2025 draws to a close, many California employers are focused on holiday operations, performance reviews, and strategic planning for the new year. During this transition period, it is essential for businesses to ensure that their employment practices keep pace with California’s rapidly evolving labor and employment laws.
Former prosecutor, mediator, and prominent Southern California trial attorney Paul P. Cheng, Esq. notes that a structured year-end compliance review can help employers proactively identify risks and prevent costly claims, audits, and litigation. The checklist below highlights key compliance areas California employers should review as they prepare for 2026.
Employee Handbook & Policy Updates
Your employee handbook remains one of the most important compliance tools in the workplace. Several recent and upcoming legal changes require employers to review and update relevant policies, including:
- Protected Leave for Crime Victims & Family Members (Labor Code §230.2)
Policies should clarify that employees may use paid sick leave and protected unpaid leave when they or qualifying family members are victims of certain crimes and must participate in related court or legal proceedings. Covered proceedings include juvenile court hearings, arraignments, sentencing, and release decisions. The definition of “victim” is broadly interpreted.
- Court & Jury Duty Leave (Labor Code §230)
The prior requirement that employees provide “reasonable notice” before taking leave for jury duty has been eliminated. However, standard notice rules still apply if the employee uses paid sick leave or other protected time off for this purpose.
- Paid Family Leave Expansion (Effective July 1, 2028)
While not yet effective, employers should begin planning for the expansion of Paid Family Leave benefits. Employees will be permitted to care for a “designated person,” defined as an individual with a family-like relationship, even without a biological or legal connection.
Mandatory Notices & Workplace Postings
Under the Workplace Transparency Act (SB 294), California employers will soon be required to provide separate written notices to all employees summarizing their rights related to:
- Workers’ compensation
- Workplace inspections by immigration agencies
- Government enforcement actions
The California Labor Commissioner will publish official notice templates by January 1, 2026, and employers should prepare now to integrate these into onboarding and HR systems.
Recordkeeping & Documentation Requirements
Strong record management remains essential for compliance. SB 513 expands the scope of Labor Code §1198.5 and requires employers to include detailed training records in employee personnel files, including:
- Employee name
- Training provider
- Training date and duration
- Core competencies covered
- Any certifications or qualifications earned
Employers should ensure that HR systems are properly configured to track and retain these records.
Wage & Hour Compliance Review
Wage-and-hour compliance continues to be one of the highest-risk areas for California employers. A year-end review should include:
Minimum Wage Adjustments
Effective January 1, 2026, California’s statewide minimum wage will increase to $16.90 per hour. Correspondingly, the minimum salary threshold for exempt employees will rise to:
- $70,304 annually (or $5,858.67 per month)
Employers should also review local city and county ordinances, which may impose higher minimum wage standards.
Regular Rate of Pay Calculations
Confirm proper inclusion of all legally required compensation in the “regular rate” used to calculate overtime, paid sick leave, and meal/rest break premiums.
Employee Classification Review
Reassess worker classifications, including:
- Employee vs. independent contractor
- Exempt vs. non-exempt status
Misclassification remains a leading source of liability and enforcement actions.
Repayment & Claw-Back Provisions (AB 692 – Effective Jan. 1, 2026)
The new law restricts most post-employment repayment or forfeiture provisions, except in certain limited circumstances such as tuition assistance or signing bonuses, and only under strict statutory standards. Employers should review agreements now and remove prohibited terms.
Pay Equity Compliance
California’s Equal Pay Act requires equal compensation for “substantially similar work.” Employers are encouraged to conduct internal pay equity reviews and prepare for potential pay data reporting obligations.
Mandatory Employee Training Requirements
Employers must ensure that all required training programs are delivered within applicable timelines and properly documented:
- Sexual Harassment Prevention Training - Required every two years for employers with five or more employees.
- Workplace Violence Prevention Training (SB 553) - Must align with the organization’s written Workplace Violence Prevention Plan and be conducted annually or when the plan is updated.
- Injury & Illness Prevention Program (IIPP) Training - All employers must maintain a written IIPP and provide training on hazard communication, risk assessment, and incident response.
Recommended Employer Action Steps
Attorney Paul Cheng emphasizes that “a compliance checklist only creates value when it leads to action.” Employers should take the following proactive steps as they prepare for 2026:
- Update employee handbooks and workplace policies to reflect new legal requirements
- Schedule all required compliance training and implement updated training records
- Integrate new notice and posting obligations into HR onboarding workflows
- Review and revise employment agreements to remove prohibited repayment provisions under AB 692
- Conduct an internal pay-equity and wage-classification audit
We Are Here to Help
The Law Offices of Paul P. Cheng will continue to monitor developments in California employment law and publish updates to help employers stay informed and compliant. If you have questions about how these requirements apply to your organization, or if you would like assistance conducting a year-end compliance review, our legal team is ready to help.
Disclaimer
This article is provided for general informational purposes only and does not constitute legal advice. Every workplace situation is unique. Employers are encouraged to consult with an attorney regarding their specific circumstances.