Upcoming California Labor Laws Employers Should Understand
A new year brings the promise of fresh starts, new beginnings, and change. In 2026, there will be numerous updates to laws and regulations that California business owners need to be aware of. These changes will impact paid sick leave, labor laws, garnishments, discrimination, and more.
California business owners need to stay informed about these changing regulations to understand how they will affect their employees and business operations. Being aware of these upcoming legal changes ensures that your business remains compliant, safe, and employee-focused.
California Law Changes and Updates
While the list below doesn’t cover all new or updated laws and regulations, the following are essential for business owners to understand because they involve changes to employee labor laws, employer procedures, and compliance.
California Assembly Bill (AB) 288
Signed into law in September of this year, California AB 288 extends greater protection to employees if the National Labor Relations Board (NLRB) doesn’t act on an unfair labor practice case. An unfair labor practice is defined as any employer action that violates the rights of employees under federal labor law. Common unfair labor practices include threatening employees with job loss if they join a union, excluding employees from meetings, discrimination, and more.
If the NLRB doesn’t act on a case in six months, employees can petition the Public Employment Relations Board (PERB) to step in. PERB has the authority to manage union elections, investigate complaints, and enforce labor laws. Employers who break the rules can face fines of up to $1,000 per violation.
California AB 406
California Assembly Bill 406 significantly broadens employee leave protections for victims of crime and legal obligations related to a crime. Although enacted in October of 2025, this law is still relatively new and important for California employers to understand. Employees may use paid sick leave for jury duty or to testify as a witness under subpoena.
Beginning January 1st, 2026, the law establishes that employers provide unpaid leave for employees or their family members to attend judicial proceedings connected to certain crimes, including hearings on victim rights or sentencing. Covered crimes include violent and serious felonies, such as domestic violence, stalking, felony theft, embezzlement, and more. Employers are required to educate and notify their employees on their rights regarding AB 406.
California AB 692
Under this new law, California employers cannot include contract terms that require employees to pay penalties or reimburse costs incurred by the employer if the employee leaves the company, or if the employment ends before a specified time period. These contracts are commonly referred to as “pay or stay” contracts, and these are becoming increasingly frowned upon across all industries. Assembly Bill 692, with very few exceptions, says employers will not be able to recover these funds if they paid for the employees training, for a retention bonus, or other employment-related expenses.
For best practice, employers should review current employment contracts to ensure compliance with this new law. Carefully review your current policies and retention strategies to ensure they focus on employee health and wellness. This can be one way to retain your top talent, instead of relying on these contract clauses to keep your team and talent at your company.
California SB 261
California’s SB261 expands the authority of the Division of Labor Standards Enforcement concerning wage claims. A wage claim is a legal process that allows an employee to recover wages they believe their employer has illegally withheld. Common reasons for filing a wage claim include employee misclassification, unpaid overtime, and potential violations of minimum wage laws. This law requires that employers who fail to pay wage judgments within 180 days of the appeal period will face penalties of up to three times the outstanding amount.
Employers should prioritize prompt payments in all business areas, not only for wages or claims. This practice will help ensure you do not incur unnecessary costs and will safeguard your reputation as a compliant, employee-oriented company.
California SB 294
Beginning in February 2026, California will require employers to provide annual written notices of labor rights to both current and new employees. These notices must include information about immigration inspections, union rights, workers’ compensation benefits, and other relevant topics. Additionally, employers will need to give existing employees the chance to provide an emergency contact in the event of an accident or workplace injury.
Employers should send out company-wide written notices before or on February 1st, 2026. They should also make a note to contact their employees and ask them to name an emergency contact. This should be done by March 30th, 2026.
California Compliance with Group Management Services
Staying on top of state labor laws can be a challenge for California business owners. New or updated regulations are constantly signed into law, making it difficult for businesses to be compliant and act on new standards in a timely manner. Many businesses could benefit by partnering with a third-party company like Group Management Services (GMS) to ensure their compliance with local and state laws.
GMS’ team of human resources (HR) experts helps you stay on top of local and state laws and compliance requirements. They can help you provide necessary documentation, develop a communication plan to share law changes, and consult on best practices to ensure compliance and safety.
Learn how to stay compliant and discover how you can benefit from GMS’ services here!