Key California Employment Law Changes to Monitor in 2026 and Beyond 

Wage and Hour Developments 

AB 692 – Restrictions on Employment Repayment Agreements 

Beginning January 1, 2026, Assembly Bill 692 will apply to employment agreements created on or after that date and will cover all California employers. The law generally prohibits contract terms that require employees to reimburse employers for expenses, fees, or penalties if the employment relationship ends. 

Certain limited exceptions remain permissible, including agreements tied to tuition assistance, bonuses, apprenticeship participation, or housing-related financing or leasing arrangements. These exceptions are narrowly defined, so careful review is essential. 

Failure to comply can lead to significant consequences, such as statutory damages starting at $5,000 per impacted employee, court-ordered relief, and payment of attorneys’ fees. Employers should review and revise current employment, training, and incentive agreement templates to ensure compliance. 

SB 294 – Workplace “Know Your Rights” Requirements 

Under Senate Bill 294, effective February 1, 2026, employers must provide workers with written notice of certain rights, including: 

• Workers’ compensation coverage 

• Procedures during immigration agency inspections 

• Protection against unfair immigration-related actions 

• Constitutional rights when dealing with law enforcement 

The Labor Commissioner will release a model notice by January 1, 2026. Employers must distribute the notice annually by February 1 and also provide it to new hires at onboarding, using standard communication methods. 

Additionally, if an employee requests it, employers must notify a designated emergency contact if the employee is arrested or detained. This obligation applies when the employer is aware of such an event occurring either at the workplace or during work hours. 

The law includes anti-retaliation protections and penalties of $500 per employee per violation. For failures related to emergency contact notification, penalties may accrue daily—up to $500 per day, capped at $10,000 per employee. 

Anti-Discrimination and Harassment Updates 

SB 642 – Changes to Equal Pay Standards 

Effective January 1, 2026, Senate Bill 642 updates California’s Equal Pay Act. It redefines “pay scale” as a good-faith estimate of the wage range the employer expects to offer at the time of hire. 

The law also makes it unlawful to pay employees less than workers of any other sex for comparable work. Compensation is broadly defined to include all forms of pay and benefits, such as salary, bonuses, equity, paid leave, insurance, and other financial incentives. 

The statute of limitations for pay equity claims is extended to three years, and employees may recover lost pay for up to six years. 

Best Practice: Maintain pay records for at least three years for compliance purposes and up to six years to support legal defenses. 

SB 464 – Expanded Pay Data Reporting 

Senate Bill 464 expands California’s pay data reporting obligations. Employers must store demographic information used for reporting separately from personnel records. 

Starting January 1, 2027, reporting requirements will broaden from 10 to 23 job categories. 

Penalties include: 

• Up to $100 per employee for an initial violation 

• Up to $200 per employee for subsequent violations 

Courts are required to impose penalties upon request from the Civil Rights Department. 

Because the term “separate” storage is not yet clearly defined, employers should take a cautious approach. This could mean limiting access to sensitive data and keeping it logically or physically distinct from general personnel files. Access should be restricted to those responsible for compliance reporting. 

SB 617 – Updates to Cal WARN Notices 

Effective January 1, 2026, Senate Bill 617 introduces additional content requirements for WARN notices. Employers must now include: 

• Information about rapid-response services and coordinating agencies 

• Contact details for local workforce development boards 

• Standardized language regarding job placement and retraining 

• Details about CalFresh benefits 

• Employer contact information 

Existing requirements—such as the 60-day notice period and employer coverage thresholds—remain unchanged. 

Failure to comply can result in liability for up to 60 days of wages and benefits for each affected employee. 

Recommendation: Update WARN notice templates and internal procedures before the end of 2025. 

Recordkeeping Requirements 

SB 513 – Expanded Personnel File Contents 

Beginning January 1, 2026, Senate Bill 513 expands what must be included in employee personnel files. In addition to performance-related and grievance records, training and education documentation must now be maintained. 

Each training record must include: 

• Employee name 

• Training provider 

• Dates and duration 

• Key skills or competencies covered 

• Any certifications or credentials earned 

Leave Law Changes 

SB 590 – Paid Family Leave Expansion 

Effective July 1, 2028, Senate Bill 590 broadens Paid Family Leave benefits to allow employees to care for a “designated person.” This can include individuals related by blood or someone whose relationship is equivalent to that of a family member. 

Employees must identify the designated person when submitting their initial claim and confirm the nature of the relationship under penalty of perjury. This definition aligns with the California Family Rights Act (CFRA).