New 2026 California Labor And Employment Laws That Residents Should Know

Overview of New 2026 California Employment Laws

In the last quarter of 2025, California Governor Gavin Newsom signed several bills into law set to take effect on January 1, 2026. In addition to the California statewide minimum wage increase from $16.50 to $16.90 per hour, the package of new 2026 California laws that took effect at the onset of the included a slew of important updates on labor rights, workplace safety, and environmental policy – from new wage equity guidance to expanded employee rights and employer requirements. Both employers and employees should be aware of the new wave of significant workplace changes so that employers understand their legal requirements and potential consequences for noncompliance with 2026 California laws and employees can be fully aware of new and extended legal protections.

SB 261: Penalties for Unsatisfied Wage Judgments

California Senate Bill 261 ("SB 261") makes satisfying final wage judgments a high-priority task for employers, as it enforces new and severe civil penalties of up to three times the unpaid wage judgment(s) that remain unsatisfied 180 days after the appeal period in addition to other potential fees.

SB 294: Workplace Know Your Rights Act

California Senate Bill 294 ("SB 294") enacts Labor Code §1550-1559, also known as the Workplace Know Your Rights Act, which requires that an employer provide an annual notice to their employees regarding specified workplace rights. The SB 294 stand‑alone written notice must be provided to each current employee by February 1, 2026, and annually thereafter. Additionally, the Workplace Know Your Rights Act mandates that by March 30, 2026, employers must also provide employees the opportunity to designate an emergency contact who would be notified if the employee were arrested or detained at work or during work hours when the employer has actual knowledge.

SB 617: Expanded Cal-WARN Act Notice Requirements

California Senate Bill 617 ("SB 617") expands the information employers are required to include in their California Worker Adjustment and Retraining Notification Act ("Cal-WARN Act") notices. The Cal-WARN Act requires employers to provide 60 days' notice to affected employees, the Employment Development Department, and other local officials and enforcement bodies ahead of mass terminations, relocations, or layoffs. SB 617 enacts CA Labor Code § 1401, effective January 1, 2026, which requires the written notice of mass layoff, relocation, or termination to further include a statement regarding whether the employer plans to coordinate services through the local workforce development board or a similar entity as a resource for employees affected. Such resources could include programs like CalFresh, the statewide food assistance program.

SB 642: Pay Equity Enforcement Act

California Senate Bill 642 ("SB 642"), known as the Pay Equity Enforcement Act, endeavors to establish pay transparency requirements for employers and increase pay equity across protected categories. These expansions include, but are not limited to:

Changes to Pay Transparency and Equal Pay Laws

Amending the definition of "pay scale" in California's Pay Transparency Law, California Labor Code § 432.2, to require employers to include in all job postings "a good faith estimate of the salary or hourly wage range that the employer reasonably expects to pay for a position upon hire," rather than the salary or wage range the employer "reasonably expects to pay for the position."

Amending the language of California's Equal Pay Act, California Labor Code § 1197.5, from prohibiting pay disparity between employees of the "opposite sex," to prohibiting pay disparity between employees of "another sex," in efforts to expand gender inclusion under the law's protections.

Expanded Time Limits for Equal Pay Claims

SB 642 permits individuals to bring civil action for violations of California's Equal Pay Act within three years after the last date that the cause of action or incident occurs – extending the statute of limitations one year. Even more, under SB 642, an employee is entitled to obtain relief for the entire period of time in which a violation exists or up to six years.

AB 692: Prohibition on "Stay-or-Pay" Employment Contracts

Another new 2026 California law prohibits employers from including employment contract provisions that require employees to incur a debt if their employment concludes before the contract end date. California Assembly Bill 692 ("AB 692") effectively extends the reach of California's ban on worker non-competes for contracts entered into on or after January 1, 2026. Under AB 692, "stay-or-pay" contract terms and other analogous provisions, i.e. provisions that require workers to reimburse or repay costs associated with certain relocation stipends, or costs or debts incurred upon termination would be prohibited.

Compliance Risks and Employer Penalties

While these are just a few of the new 2026 California laws that are reshaping the landscape of workplace provisions, employers should be aware of all relevant guidance signed into law to avoid significant penalties for noncompliance. For example, contract provisions that are noncompliant with SB 692 are at risk of costing employers statutory penalties of up to $5,000 per employee or actual damages, plus injunctive relief.

For California residents and employees, the new 2026 California laws play a vital role in ensuring fair compensation as well as expanding and safeguarding workers' rights. Identifying and addressing any violations of these new provisions can help employees encourage workplace integrity, financial security, and lean on new and old protections afforded by the law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.