California’s 2026 Employment Law Shake-Up: What Employers Need to Know

Starting in 2026, California employers face sweeping changes that redefine workplace compliance. From expanded employee rights and pay transparency to stricter rules on repayment agreements and gratuity enforcement, these new laws require immediate attention. We’ve compiled a detailed list of the key updates and deadlines so you can prepare now and avoid costly missteps.

Senate Bill 294

Effective January 1, 2026, SB 294 establishes the Workplace Know Your Rights Act. Under this law, employers are required to provide an annual stand-alone written notice to each current employee or newly hired employee which explains:

•  Employees’ protections and rights against unfair immigration-related practices,
• The right to workers’ compensation benefits (i.e., disability pay and medical care for workplace injuries), 
• The right to organize a union or engage in concerted activity in the workplace and
• Their constitutional rights regarding interactions with law enforcement in the workplace.

The bill requires the Labor Commissioner to develop a template notice and to publish educational videos that explain the rights and obligations covered by the written notice by January 1, 2026. Employers must provide the written notice in the language normally used to communicate employment information to employees, otherwise, the notice must be in English. SB 294 requires companies to provide this written notice to its employees by February 1, 2026.

Furthermore, this law also requires employers to notify an employee’s designated emergency contact if the employee is arrested or detained at work. Employers must give employees the opportunity to designate their emergency contact by March 30, 2026.

Assembly Bill 692

AB 692 amends the Business and Professions Code Section 16608 and Labor Code Section 926 banning certain employment-related repayment agreements commonly referred to as “pay or stay” contracts or training repayment agreement provisions. In the past, employers have offered to pay for employee training expenses, relocation costs, immigration/visa-related costs or other hiring-related costs contingent upon the employee remaining employed for an agreed upon period of time. Under this contractual framework, employees may have been contractually obligated to repay the employer’s hiring-related costs if the employee resigned or was terminated prior to the specified period. Now, under this new law, contracts that require an employee to repay hiring-related costs, limit employee mobility or authorize debt collection will be considered void.

Notably, AB 692 does not completely dispose of all repayment agreements as the law carves out several exceptions for contracts relating to government loan programs, approved apprentice programs and residential property agreements. In addition, certain repayment contracts for tuition assistance payments and discretionary monetary payments or bonuses at hire will still be permissible with strict conditions. AB 692 becomes effective on January 1, 2026.

Senate Bill 464

California continues to expand its pay transparency and pay equity framework through Senate Bill 464, which amends Government Code section 12999 to require private employers with 100 or more employees to include additional demographic and compensation information in their annual pay-data reports to the California Civil Rights Department (CRD). Beginning with the 2026 reporting cycle (covering 2025 data), employers must report employees’ sexual orientation and gender identity, along with expanded job categories. The bill also extends reporting obligations to public employers starting in 2027. Employers are required to maintain demographic information separately from personnel records to protect privacy.

Employers should review their HR and payroll systems to ensure they can capture and report this additional demographic data and update internal privacy and data-handling procedures accordingly.

Senate Bill 648

Senate Bill 648, which amends Labor Code Section 351, enhances the state’s existing gratuity protections by expanding the Labor Commissioner’s authority to enforce California’s gratuity laws. The bill reaffirms that tips and gratuities are the sole property of the employee who earned them, prohibiting employers from deducting, retaining or crediting any portion of a gratuity against wages owed.

Effective January 1, 2026, the Division of Labor Standards Enforcement (DLSE) is authorized to investigate gratuity violations, issue citations and file civil actions to recover unlawfully withheld tips—authority that previously rested largely with private litigants. This marks a significant shift toward active administrative enforcement of tip-theft claims.

Employers in the hospitality, restaurant and service industries should review their tip-pooling policies and service-charge practices to ensure compliance. Businesses should also train managers on the updated enforcement provisions and document tip distribution procedures to avoid potential disputes.

Assembly Bill 406

California has again expanded employees’ rights under AB 406 by providing further protections and paid sick leave options for employees who take time off due to certain legal proceedings. Most notably, as of October 1, 2025, California employees may now use paid sick leave for jury duty and providing witness testimony pursuant to a subpoena.  Prior to this amendment, employees’ leave for these qualifying reasons was protected but not paid. 

Further, starting January 1, 2026, AB 406 amends Government Code Section 12945.8 to allow unpaid leave if the employee or a covered family member is a victim of certain crimes and needs to attend judicial proceedings related to these crimes.  Covered proceedings include, but are not limited to:

• Delinquency hearings,
• Bail or release determinations,
• Plea or sentencing hearings,
• Postconviction proceedings and
• Any hearing where the victim’s rights are at stake.

AB 406 creates a different definition of “victim,” which includes individuals harmed physically, psychologically or financially as a result of violent felonies, serious felonies or felony theft and embezzlement, whether actual or attempted.

Importantly, AB 406 does not itself require paid leave. Employees may elect to use accrued vacation, personal leave, paid sick leave or compensatory time off available under employer policy or law.  Further, California paid sick leave may be used for covered purposes, including certain court proceedings. 

Senate Bill 497

Effective immediately, this bill enhances employee privacy protections related to gender-affirming care. The law prohibits employers from requiring or disclosing information about an employee’s or their family member’s gender-affirming healthcare, except as specifically required by law. This law also bars retaliation or discrimination against employees who exercise these rights. Employers should review their data collection, recordkeeping and accommodation practices to ensure compliance and safeguard sensitive health information.

Senate Bill 477

Senate Bill 477 clarifies the deadlines for a litigant to file a civil lawsuit after exhausting their administrative remedies under the FEHA.  Under existing law, employees may only bring a claim under the Fair Employment and Housing Act (FEHA) after exhausting their administrative remedies with the California Civil Rights Department (CRD).  An employee seeking to vindicate their rights under the FEHA must file a complaint with the CRD and may request an immediate right-to-sue from the CRD and file a lawsuit in the proper jurisdiction.  If the employee does not request an immediate right-to-sue, the CRD must investigate the allegations.  Under existing law, if the CRD provides written notice that it has closed its investigation, an employee has one year to file a civil action in a court of competent jurisdiction. 

As of January 1, 2026, SB 477 will toll the time for an employee to file a civil action if the employee timely appeals the closure of their complaint to the CRD until one year after the CRD issues written notice that the case will remain closed following a notice of appeal. 

Further, SB 477 adds a definition of "group or class complaint" to FEHA as "any complaint alleging a pattern or practice." 

Senate Bill 513

This Senate Bill modifies Labor Code section 1198.5 which provides current and former employees the right to receive a copy of personnel records maintained by the employer. Starting January 1, 2026, the definition of “personnel records” will be expanded to specifically include an employee’s training and education records if those records are maintained by the employer. An employer who maintains education or training records shall also ensure those records include:

• The name of the employee,
• The name of the trainer,
• The duration and date of the training,
• The core competencies of training (including skills in equipment or software) and
• The resulting certification or qualification.

Senate Bill 590

Senate Bill 590 modifies the Unemployment Insurance Code by expanding eligibility for benefits under the paid family leave program, otherwise known as temporary disability insurance. Under the expansion, starting July 1, 2028, employees will be able to claim temporary disability benefits when caregiving for a “designated person.” “Designated person” is defined “as any individual related by blood or whose association with the employee is the equivalent of a family relationship.”  The purpose of the modification is to align with the California Family Rights Act (CFRA), which, since 2023 has allowed employees to take leave to care for a “designated person.” 

Assembly Bill 288

Since its inception, the Public Employment Relations Board (PERB) has administered and enforced public sector labor relations statutes, exclusively handling matters involving employees of state and local government entities. Under Assembly Bill 288, PERB’s jurisdiction will be significantly expanded to permit certain private-sector workers to bring representation petitions and unfair labor practice (ULP) charges to PERB, but only under strictly defined conditions, including a requirement that the worker’s position is covered by the NLRA as of January 1, 2025 and the NLRB has “expressly or impliedly ceded jurisdiction.”  This can mean an application has been pending for more than six months, the NLRB lacks quorum, or the delay is in excess of 12 months. 

The bill will give PERB the power to decide ULP cases if all criteria are met, certify bargaining representatives in appropriate units, impose civil penalties for practice violations, order binding arbitration and other additional powers.

The statute sets varying effective dates for different case categories.

Importantly, shortly after the bill was signed into law, the NLRB filed a lawsuit against the state to block enforcement arguing the bill is preempted by the NLRA which grants the NLRB exclusive jurisdiction over private sector labor relations.  Thus, implementation of AB 288 is questionable as the legal challenge works its way through the court system.

Senate Bill 303

Effective January 1, 2026, this bill provides that an employee’s assessment, testing, admission or acknowledgment of their own personal bias made in good faith and solicited or required as part of a bias mitigation training does not, by itself, constitute unlawful discrimination. Employers should ensure their training programs and policies align with the new law’s protections and limitations.

As these new California employment statutes take effect, it’s more important than ever for employers to stay proactive and ensure their policies, practices, and training are fully compliant.  If you have questions about how these laws may impact your company, or if you need guidance updating your policies, Dinsmore is here to help.  Contact us to ensure your organization is prepared, compliant, and protected moving into the year ahead.