Intro to California Labor Laws

California is enacting sweeping changes to its pay and labor laws which significantly increase employer obligations for pay data reporting, pay transparency, and pay equity. Beginning January 1, 2026, these new labor laws will require employers to allow employees to recover wages for up to six years for pay equity violations and require employers to disclose the expected wage range for a position at the time of hire. Additionally, starting in 2026, courts must impose civil penalties for failure to file pay data reports. Looking ahead to January 1, 2027, the law will further expand pay data reporting categories to align with new occupational classifications.. Employers are encouraged to review and update their recordkeeping systems, job classifications, compensation policies, and hiring processes to align with the new reporting categories, mandatory wage disclosures, and broadened pay equity protections.

Governor Gavin Newsom signed into law the Workplace Know Your Rights Act, requiring employers to provide a written notice of worker rights to all new hires and annually to current employees. In the notice, employees must be informed of their rights regarding workers’ compensation, immigration protections, union activity, and constitutional protections during workplace interactions with law enforcement. The Labor Commissioner will provide a template notice and related educational materials, which must be used starting February 1, 2026.

Governor Gavin Newsom signed bill AB 406 on October 1, 2025, expanding the reasons employees can take leave under California’s Healthy Workplaces Healthy Families Act (HWHFA), the statewide paid sick and safe time law, and under California Government Code section 12945.8, which provides job-protected unpaid leave for various reasons. The new bill allows employees to use leave if they or a family member are a victim of certain crimes and is attending judicial proceedings related to that crime. This includes, but is not limited to, any delinquency proceeding, a post-arrest release decision, plea, sentencing, post-conviction release decision, or any proceeding where a right of that person is an issue. Employers should review and update their workplace policies, including their sick and safe time procedures, to ensure they comply with the new changes.

California’s Senate Bill 513, effective January 1, 2026, expands the types of personnel records employers must allow employees to inspect. In addition to performance and grievance records, employees can now request records related to any education or training they received that are maintained by the employer. These records must include the employee’s name, training provider, dates and duration, core competencies (including skills with equipment or software), and any resulting certifications or qualifications. The law applies to both current and former employees. Employers should review and update their recordkeeping practices to make sure their training records meet the new content standards, and update policies and request procedures to comply before the law takes effect.

On October 8, 2025, the Pay Equity Enforcement Act was signed into law, significantly amending and expanding the state's Equal Pay Law and Pay Transparency Law. It amends job posting rules by requiring the pay scale to be the range the employer reasonably intends to pay "upon hire" and updates the definition of "wages" for equal pay claims to match federal law, covering all compensation, like salary, benefits, and bonuses. It also increased the statute of limitations for wage recovery civil actions to three years, allowing workers to sue for wage recovery after the last pay violation. Workers may be able to recover lost wages for the entire duration of the violation, up to a six-year maximum. Employers should review new definitions, update job postings with compliant pay scale information, and revise all employee handbooks and policies for compliance.

California has passed a new law that bans employers from requiring workers to repay costs or incur penalties when their employment ends. Specifically, the law prohibits agreements that require workers to pay back training costs or other debts, authorize debt collection upon termination, or impose fees such as retraining costs, replacement hire fees, immigration-related expenses, or liquidated damages tied to leaving employment. While these “stay-or-pay” arrangements are now banned, the law includes limited exceptions for tuition reimbursement and retention bonus agreements, provided employers follow strict new statutory conditions. The law applies to contracts entered on or after January 1, 2026, and workers can bring private lawsuits for violations. Employers should prepare by working with their legal counsel to make sure that any new contracts for tuition reimbursement or retention bonuses comply with the new law's requirements.