California businesses are entering 2027 with another round of employment laws that will change how companies pay workers, manage personnel, use artificial intelligence, protect employee information, and respond to workplace disputes.
For employers, these changes carry financial and operational consequences. A compensation structure that complied with the law in 2026 may require adjustment in January. Employment agreements may need revisions, and technology already used in the workplace could create new legal exposure.
Employees will also see changes to their rights, including expanded bereavement leave protections, restrictions on automated disciplinary decisions, and stronger safeguards involving workplace monitoring.
Law Offices of Paul P. Cheng & Associates (PPRCLaw) encourages California businesses and workers to understand these developments before the new requirements take effect.
1. California Minimum Wage Increases to $17.40 in 2027
Effective January 1, 2027
California's statewide minimum wage will increase from $16.90 to $17.40 per hour.
The increase also raises the minimum annual salary required for employees classified under most executive, administrative, and professional overtime exemptions to $72,384, or $6,032 per month.
Employers should remember that meeting the salary threshold is only one requirement for exempt status. An employee's actual job duties must also satisfy the applicable legal standards.
What employers should know
Businesses should review hourly compensation, exempt employee classifications, payroll procedures, and overtime practices before January 1. Employers operating in cities with higher local minimum wages must comply with the applicable local requirements.
Misclassifying an employee as exempt can expose a business to claims involving unpaid overtime, meal and rest periods, wage statements, and other statutory remedies.
What employees should know
Employees who believe they are improperly classified as exempt or paid below the applicable minimum wage may have grounds to seek unpaid wages and other available remedies.
2. California Restricts AI-Based Employee Discipline and Termination
SB 947 — No Robo Bosses Act
Effective July 1, 2027
Artificial intelligence is becoming part of everyday business operations. Employers increasingly use automated systems to evaluate productivity, identify performance issues, and support personnel decisions.
Under SB 947, California employers will be prohibited from relying solely on an automated decision system to discipline or terminate an employee.
When an employer primarily relies on an automated system for such a decision, the law requires independent human corroboration and a notice to the affected employee when the decision is communicated.
The legislation also restricts certain uses of automated systems that interfere with workplace rights or discriminate against protected employees.
What employers should know
Businesses using AI-powered HR software, employee performance scoring, productivity monitoring, or automated personnel recommendations should examine how those systems influence disciplinary decisions.
Simply having a manager approve an automated recommendation may not satisfy the requirement for independent review.
What employees should know
Employees facing disciplinary action or termination influenced by automated technology may have additional protections concerning how those decisions are reached.
3. New Restrictions on Workplace Surveillance and Employee Monitoring
AB 1883 and AB 1331
Effective January 1, 2027
California is placing new limitations on how employers monitor workers.
AB 1883 restricts workplace surveillance technologies used to recognize, infer, or predict employees' emotional states or collect neural data, subject to statutory limitations and exceptions.
AB 1331 generally prohibits employers from using workplace surveillance tools to monitor employees in workplace bathrooms, except as specifically authorized by law.
What employers should know
Businesses should evaluate security systems, employee monitoring software, biometric technologies, and third-party workplace applications.
Employers should also understand what information their technology vendors collect and how that information is used.
What employees should know
Workers have legal protections against certain intrusive workplace monitoring practices. An employer's interest in productivity or security does not automatically authorize every form of surveillance.
4. Bereavement Leave Expands to Designated Persons
SB 1149
Effective January 1, 2027
California's bereavement leave protections will expand beyond the existing statutory definition of family members.
Eligible employees will be able to take protected bereavement leave following the death of a designated person whose relationship to the employee is based on blood or is equivalent to a family relationship.
The law permits employers to limit an employee to one designated person during a 12-month period.
California's existing bereavement leave framework generally applies to employers with five or more employees and provides eligible employees with up to five days of protected leave, subject to statutory requirements.
What employers should know
Employee handbooks, leave request procedures, and manager training should be reviewed to account for the expanded definition.
Employers should avoid automatically denying requests because the deceased individual does not fall within a traditional family category.
What employees should know
An employee may qualify for protected bereavement leave based on a qualifying family-like relationship even without a conventional legal or biological family connection.
5. California Tightens Restrictions on Employment Repayment Agreements
AB 1697 and AB 692
Applicable to covered agreements entered into on or after January 1, 2027
Some employment agreements require employees to repay training expenses, bonuses, educational assistance, or other financial benefits if they leave their jobs before completing a specified period of service.
Commonly called stay-or-pay agreements, these arrangements face additional restrictions under California law.
AB 1697 adjusts the implementation of the restrictions established under AB 692 and revises certain exceptions.
What employers should know
Employers should review offer letters, retention bonus arrangements, tuition assistance agreements, and employment contracts containing repayment provisions.
An agreement that appears commercially reasonable may still be unenforceable if it does not satisfy California's statutory requirements.
What employees should know
Employees asked to repay certain employment-related costs after resigning or being terminated should not assume every repayment demand is legally enforceable.
The validity of the provision depends on the agreement, its date, and the applicable statutory exceptions.
6. Expanded Protections Against Immigration-Related Workplace Retaliation
AB 2495
Effective January 1, 2027
California continues to strengthen protections against immigration-related threats or coercion connected to employment.
AB 2495 expands protections addressing immigration-related retaliation, including circumstances involving job applicants and former employees.
What employers should know
Employers should ensure that managers and supervisors do not use immigration status, documentation, or threats involving immigration authorities to discourage employees from exercising protected workplace rights.
Businesses should review complaint-handling procedures and provide appropriate supervisory training.
What employees should know
Workers who experience immigration-related threats or coercion in connection with protected employment activities may have legal remedies. Protections can extend beyond current employees.
7. California Expands Its Definition of Sex Discrimination
AB 2563
Effective January 1, 2027
California's Fair Employment and Housing Act will expressly recognize additional circumstances within its definition of sex discrimination, including sex stereotypes, variations in sex characteristics, and certain reproductive healthcare decisions.
What employers should know
Employers should review equal employment opportunity policies, hiring procedures, employee complaint protocols, and anti-discrimination training.
Employment decisions should be based on legitimate business considerations rather than assumptions involving protected characteristics.
What employees should know
Employees who experience adverse employment treatment involving protected sex-related characteristics may have rights under California's anti-discrimination laws.
8. AI-Related Mass Layoffs Trigger Additional Notice Requirements
SB 951
Effective January 1, 2027
Businesses adopting automation or artificial intelligence to restructure their workforce must pay attention to California's mass layoff notice requirements.
SB 951 adds disclosure obligations when AI or automation substantially contributes to layoffs covered by California's WARN Act.
What employers should know
Companies considering workforce reductions tied to AI implementation should assess whether Cal-WARN applies before announcing layoffs or restructuring plans.
Employers should document the reasons for workforce reductions and review the content and timing of required notices.
What employees should know
Employees affected by covered mass layoffs may be entitled to advance notice and additional information concerning the role of automation in the employment decision.
Not every reduction in force triggers Cal-WARN, and the specific statutory coverage requirements remain important.
9. California Employment Arbitration Agreements Face Additional Scrutiny
AB 2155
Effective January 1, 2027
California is modifying the treatment of certain arbitration agreements under state law.
AB 2155 incorporates specified federal arbitration exemptions into the California Arbitration Act, affecting the enforceability of certain employment arbitration provisions.
What employers should know
Businesses should not assume that every signed arbitration agreement will be enforceable.
Existing templates and new agreements should be reviewed in light of federal and state law, including the nature of the claims involved.
What employees should know
An arbitration provision does not necessarily prevent an employee from pursuing a claim in court. Enforceability depends on the governing law and the circumstances of the dispute.
10. New Privacy and Pay Data Compliance Requirements
SB 923, SB 1237, and SB 464
Beginning in 2027, subject to applicable provisions and reporting deadlines
California is also expanding certain privacy and workforce reporting obligations.
SB 923 broadens aspects of consumers' rights to request deletion of personal information under the California Consumer Privacy Act.
SB 1237 increases penalties for subsequent failures to submit required pay data reports. SB 464 expands reporting classifications for covered employers.
What employers should know
Businesses subject to California privacy law should evaluate their data retention and deletion procedures, including practices involving applicants and employees.
Employers subject to pay data reporting should review reporting systems, employee classifications, and submission requirements.
Not every California business is subject to these reporting obligations. Coverage depends on statutory thresholds and other requirements.
What employees should know
Covered employees and applicants may have privacy rights regarding personal information collected and maintained by their employers.
What California Businesses Should Do Before January 1, 2027
The most effective way to reduce employment litigation risk is to identify compliance problems before they become disputes.
Employers should consider reviewing:
- Wages and payroll: Minimum wages, overtime classifications, payroll records, and compensation policies.
- Employment agreements: Arbitration provisions, bonus repayment terms, offer letters, and separation agreements.
- Employee handbooks: Leave policies, discrimination protections, and reporting procedures.
- Workplace technology: AI-assisted personnel decisions, employee monitoring, and data privacy practices.
- Management practices: Disciplinary documentation, retaliation prevention, and complaint investigations.
- Business operations: Applicable reporting obligations, workplace notices, and record keeping requirements.
A compliance review is particularly important for growing businesses that may have adopted informal employment practices when they had fewer employees.
What Employees Should Do If They Believe Their Rights Have Been Violated
Employees who suspect wage violations, unlawful retaliation, discrimination, or improper termination should preserve relevant employment records.
Depending on the circumstances, useful documents may include pay statements, time records, employment agreements, written communications, performance evaluations, and termination notices.
Employees should avoid taking confidential or privileged company information they are not authorized to retain.
Because employment claims may be subject to administrative filing requirements and legal deadlines, obtaining advice early can help preserve available rights.
California Employment Law Compliance: Preparation Matters
California's 2027 employment law changes reflect increasing scrutiny of workplace technology, employee protections, and business compliance.
For employers, these laws raise important questions about how personnel decisions are documented, how workplace policies are enforced, and whether existing business practices remain legally compliant.
For employees, understanding these developments can help identify potential violations and protect statutory rights.
Law Offices of Paul P. Cheng & Associates (PPRCLaw) provides legal services involving employment disputes, workplace compliance, and business-related legal matters.
Whether your business needs assistance reviewing employment policies or you are an employee seeking guidance about a workplace dispute, understanding your legal position is an important first step.
Contact PPRCLaw
Law Offices of Paul P. Cheng & Associates
Pasadena, California | Serving clients throughout California, subject to the firm's engagement policies and applicable representation requirements.
Request an Employment Law or Business Compliance Consultation: 626.356.8880 or info@pprclaw.com
Disclaimer: This publication provides general legal information as of October 2026 and does not constitute legal advice or create an attorney-client relationship. Legal obligations depend on the applicable statute, employer coverage, employment circumstances, and subsequent legal developments. Readers should consult qualified legal counsel regarding their specific circumstances.