New Labor Laws for California Employers
Following is a summary of changes that will have an impact on employers through a number of different bills (courtesy of Cooley):
California has a general ban on “training repayment agreement provisions (TRAPs)”: Such plans may not require an employee to repay tuition for a course if their employment/work relationship terminates, with only two exceptions:
Repayment of the cost for a transferrable credential may be required if five (5) contractual conditions are met (not enumerated here); or
The payment of a “discretionary monetary bonus” that is paid at the outset of employment and is not tied to job performance is reimbursable if five (5) conditions are met (not enumerated here).
The state minimum wage will increase to $16.90/hour (an increase of $0.40); and the minimum annual salary for exempt employees will increase from $68,640 to $70,304 (at least twice the annual minimum wage). This applies to full-time and part-time employees. Local minimums may be higher, as well.
Employees may use paid sick leave for unpaid leave, including crime victim leave (not all types), and related judicial proceedings, jury duty and court appearances.
Notice requirements under the “CA Worker Adjustment and Retraining and Notification Act” (Cal-WARN) (4 provisions)
Expansion of the Pay Transparency Law to include all types of pay and benefits, to forbid gender discrimination (“opposite sex” has been replaced, for instance), and to extend the statute of limitations to 3 years from the “last date the cause of action occurs” – regardless of what that cause may be.
Expanded the types of personnel records that can be inspected by employees.
Developed a new notice of worker rights that must be distributed to employees upon hire and then annually, effective February 1, 2026. The notice is be developed by the state and posted on its own website by January 1, 2026. A new “wrinkle” is that by March30, 2026, current employees and subsequent new hires must be given opportunity to provide the name and contact information of a contact to be notified if they are arrested or detained at work during working hours … if the employer knows about it.
Formally gives the state “Public Employment Relations Board” (PERB) authority to decide unfair labor practices in cases in which the NLRB has ceded authority. (This provision has been challenged in court by the NLRB.)
Increased penalties on employers who do not abide by wage judgements.
Absolved an employee of guilt if they admit personal bias “in good faith” as part of bias mitigation training.
Clarified that simply owning a vehicle used for work does not make that worker an independent contractor. Also reinforced that employers must reimburse workers for use of personal vehicles for work.
Allowed “transportation network company” (“TNC,” e.g., Uber) drivers to unionize and formalized reporting requirements.
Imposed new transparency and reporting requirements on developers of advanced “frontier” AI models.
Expanded the Fair Employment & Housing Act (FEHA) to include any complaint alleging a pattern of unlawful conduct, along with modifications of deadlines.
Expanded California’s pay data reporting requirements. Effective January 1, 2027, private employers with 100 or more employees must report demographic data by race, ethnicity and sex across 23 job categories – up from the previous 10 – now aligned with the federal Standard Occupational Classification (SOC) system. New categories include “business and financial operations occupations” and “computer and mathematical occupations.” Financial penalties are to be imposed for failure to report.
Extended statute of limitations for sexual assault cases that would otherwise have expired before 1/1/26. Expanded liability of organizations for assaults committed or covered up by high-level personnel.
Expanded California’s Paid Family Leave (PFL) program to provide benefits to employees who take time off to care for a “designated person” who must be either a family member or someone with whom the employee has a “family-like relationship.” This must be attested-to under penalty of perjury.
California Employers are advised to make the following preparations:
Review and update all policies, handbooks and employment agreements to reflect changes in minimum wage, pay transparency, leave entitlements and personnel recordkeeping.
Assess and revise any training repayment, bonus or retention agreements (including offer letters and any programs or policies governing employee retention and incentive benefits programs, tuition assistance and employee relocation programs) to ensure compliance with new restrictions and requirements.
Review hiring practices to ensure job postings comply with the updated pay scale definition and pay practices comply with the revised definitions under the California Equal Pay Act.
Update Cal-WARN notices to incorporate new notice content.
Begin preparing for new reporting and recordkeeping requirements for pay data reporting, including evaluating job titles and their categorization into the 23 SOC job categories and ensuring demographic data is separate from personnel records.
Prepare to implement new employee notices, including those required by the Workplace Know Your Rights Act. Be on the lookout for the state’s form notice to be published prior to January 1, 2026.
Establish (or confirm) processes for collecting and maintaining emergency contact information.
Ensure compliance with new requirements for personnel records, including education and training documentation.
Educate managers and HR staff on all new legal obligations, including bias mitigation training protections and expanded leave rights.
Track litigation challenging various NLRB trigger bills, including in New York. Multijurisdictional employers should also note that other states, such as Massachusetts, are considering similar bills.
