EMPLOYMENT LAW UPDATE

2026 NEW LAWS AND REGULATIONS

By Cynthia Elkins

Governor Newsom has signed several bills which amend, add, modify, or revise the laws impacting the workplace. Below is a summary of some of the more significant pieces of legislation that have been signed into law. Unless noted otherwise, the new legislation became effective January 1, 2026.

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WORKPLACE “KNOW YOUR RIGHTS ACT” NOTICE

The “Workplace Know Your Rights Act” requires California employers to provide written notice to each employee advising them of their worker’s compensation rights and their rights when interacting with law enforcement and immigration agency inspections at the workplace. (SB 294)

• The Labor Commissioner posted a notice in early January 2026, and will develop videos advising employees and employers of their rights.
• The notice must be in the language the employer normally uses to communicate employment-related information to the employee, and which the employee understands.
• If the Labor Commissioner’s template notice is not made available in the specific language that the employee understands, the notice may be provided in English.
• Employers are required to keep records of compliance with the notice requirement for three years, including the date each notice was provided or sent.
• In addition, employers will be required to notify an employee’s “designated person,” at the employee’s request, if the employee is arrested or detained at work.
• If the arrest or detention occurs during work hours or when the employee is performing their job duties, but not at the worksite, the employer is only required to notify the emergency contact if the employer has actual knowledge of the arrest or detention of the employee.
• This obligation commences on or before February 1, 2026, and continues annually thereafter.
• Employers must provide existing employees with the opportunity to name an emergency contact on or before March 30, 2026, and do the same for new hires after March 30, 2026.
• The bill also includes an anti-retaliation provision and will be enforced by the Labor Commissioner with a penalty of $500 per employee per violation, except that the penalty for a violation of the emergency contact provision will be an amount up to $500 per employee for each day the violation occurs, up to a maximum of $10,000.00 per employee.

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NEW WAGE AND HOUR LAWS STAY OR PAY – EMPLOYMENT REPAYMENT CONTRACTS PROHIBITED

Many employers provide costly on the job training to employees and to ensure that the cost of the training was for the benefit of the employer, some employers require employees enter into “repayment” agreement which provide for the repayment of the cost of the training IF the employee’s employment ends prematurely.

However, under new legislation this will no longer be permitted (AB 692). The new bill (adding Business & Professions Code Section 16608 and Labor Code Section 926) makes it unlawful for contracts entered into on or after January 1, 2026, to require the worker to repay an employer if the employee leaves their employment. These contracts have been interpreted to place restrictions on employees preventing them from freely engaging in a lawful profession, trade, or business and now, under AB 692, are deemed void and contrary to public policy, similar to “non-compete” agreements.

Specifically, employers are prohibited from either including in an employment contract or requiring a worker to execute as a condition of employment, the following types of contract terms:

• That require a worker to pay an employer, training provider, or debt collector for a debt if the employment or other work relationship terminates.
• That authorize the employer, training provider, or debt collector to resume or initiate collection or end forbearance on a debt if the work relationship terminates.
• That impose any penalty, fee, or cost on a worker if the work relationship terminates.

A “debt” includes money, personal property, or their equivalent that is due or owing, such as for employment- or education-related costs or a consumer financial product or service, even if incurred voluntarily. “Penalty, fee, or cost” includes a replacement hire fee, retraining fee, replacement fee, quit fee, reimbursement for immigration or visa-related costs, liquidated damages, lost goodwill, and lost profit. “Worker” includes an employee or prospective employee and does not appear to include independent contractors.

The law does exempt certain repayment agreements – for example, the law permits tuition reimbursement contracts for a transferable credential, so long as the contract:

• Is separate from the employment contract.
• Does not require obtaining the credential as an employment condition.
• Specifies the repayment amount in advance and the amount does not exceed the cost to the employer.
• Provides for prorated repayment proportional to the total repayment amount and length of the required employment period.
• Does not require an accelerated payment schedule upon separation from employment.
• Does not require repayment if the worker is terminated unless it is for misconduct.

This law also does not apply to agreements involving discretionary bonuses or relocation payments, provided they meet set criteria, including:

• Repayment terms must be in a separate agreement from the primary employment contract.
• The worker must be advised of the right to consult an attorney and given at least 5 business days to do so before signing.
• Any repayment obligation for early separation must be prorated based on the remaining retention period (up to 2 years) and cannot accrue interest.
• The worker must have the option to defer receipt of the payment until the end of the retention period without repayment obligation.
• Repayment may only apply if the employee leaves voluntarily or is terminated for misconduct.

SB 692 also provides employees with a private right of action and can recover damages of $5,000 per worker, as well as injunctive relief and attorney’s fees and costs.

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LABOR COMMISSIONER ENFORCEMENT OF WAGE CLAIM JUDGMENTS

New legislation grants the Labor Commissioner with authority to seek civil penalties of up to 3x the outstanding judgment against an employer who, after 180 days, fails to pay a final judgment arising from the employer’s nonpayment of wages for work performed in California. (SB 261)

Any Court-assessed civil penalty would be distributed 50% to the employee and 50% to the Division of Labor Standards Enforcement (“DLSE”) for enforcement of labor laws. The Court can also assess interest and reasonable attorney’s fees and costs for the party seeking enforcement of the judgment. An employer can seek to avoid the penalties by proving clear and convincing evidence that “good cause” exists to reduce the amount of the penalty.

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WAGE THEFT TIP ENFORCEMENT

California law (Labor Code Section 351) has long prohibited employers from taking any portion of any gratuity (tip) that a patron has left or given to an employee or from deducting any portion of the tip from the employee’s wage – including credit card processing fees. Tips and gratuities are the “sole” property of the employee. Current law also prohibits employer from taking a tip credit against employees wages.

While the Labor Commissioner has had the authority under current law to investigate and prosecute violations of Labor Code Section 351, the Labor Commissioner did not have express authority to seek enforcement of such wage theft violations through court action. Now, the Labor Commissioner is authorized to seek enforcement through a civil action or through the issuance of a citation. (SB 648)

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PAID FAMILY LEAVE – DESIGNATED PERSON

The California Paid Family Leave (PFL) program provides income replacement to employees for up to eight weeks when they take time off for qualifying reasons under the State’s PFL program. The California Unemployment Insurance Code has been revised to permit an eligible covered worker to apply for PFL benefits when they take time off for a “designated person” beginning July 1, 2028 (SB 590).

The “designated person” definition aligns with the California Family Rights Act (CFRA) “designated person” definition, which includes any individual related by blood or whose association with the employee is the equivalent of a family relationship. The employee must identify the designated person the first time they file a claim for family temporary disability insurance benefits to care for a designated person, and is required to state under penalty of perjury, how they are associated with that person by blood or the equivalent of a family relationship.

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LEAVE RIGHTS FOR JUDICIAL PROCEEDINGS AND JURY DUTY COVERED BY PAID SICK LEAVE

New legislation has granted employees with additional rights to take job protected paid sick leave and safe time leave, and job protected unpaid leave. (AB 406) .

Last year, the Healthy Workplaces Healthy Families Act was amended to expand the reasons that an employee can take “safe” time to include crime victim leave and allowed leave to be used when not just an employee but also a family member was a victim of domestic violence, sexual assault, stalking (and crime). This year’s amendments allow employees to use leave if they or a family member are a victim of certain crimes and are attending judicial proceedings related to that crime, including, but 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.

The law defines “victim” as a person against whom a violent felony, serious felony, and/or felony theft or embezzlement is committed. Additionally, victim includes a person who suffers direct or threatened physical, psychological, or financial harm due to the commission or attempted commission of the following crimes or delinquent acts:

• Vehicular manslaughter while intoxicated.
• Felony child abuse likely to produce great bodily harm or a death.
• Assault resulting in the death of a child under eight years old.
• Felony domestic violence.
• Felony physical abuse of an elder or dependent adult.
• Felony stalking.
• Solicitation for murder.
• A serious felony.
• Hit-and-run causing death or injury.
• Felony driving under the influence causing injury.
• Sexual assault.

Paid Sick Leave Use Expanded

In addition to new reasons for leave, effective on October 1, 2025, paid sick leave can now be used when:

• An employee (including one who is a victim of any crime) is appearing in court as a witness to comply with a subpoena or other court order (California Government Code section 12945.8(a)(2)).
• An employee is serving on an inquest jury or trial jury (California Government Code section 12945.8(a)(1)).

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MISCELLANEOUS NEW LAWS EDUCATION & TRAINING RECORDS – PERSONNEL RECORDS

Existing California law provides employees with the right to “inspect and receive” a copy of their personnel records regarding their performance or any grievance concerning the employee. Additionally, employers must provide employees, upon request, a copy of their “personnel file” or personnel records; however, there is no specific definition of what constitutes a “personnel file”.

Labor Code Section 1198.5 now requires an employee’s personnel record include records relating to the employee’s performance, education, and training (SB 513). The amended Labor Code also now requires the employer ensure records contain the following information are provided to the employee upon request: employee name, training provider name, the duration and date of the training, core competencies of a training – including skills in equipment or software – and the resulting certification or qualification.

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CALIFORNIA WARN ACT REVISED

California has enacted legislation that significantly expands the information employers must include in their WARN notices and expands employer obligations under the California Worker Adjustment and Retraining Notification Act (“CalWARN”).

It remains important to note that the requirements under CalWARN are different and more expansive than those required under the Federal WARN Act (FedWARN) which applies to employers with 100 or more employees, whereas CalWARN applies to employers with 75 or more employees.

CalWARN vs. FedWARN

• CalWARN triggers notice obligations for a wider range of events: it requires 60 days’ advance notice for any plant closures, layoffs of 50 or more employees, regardless of workforce percentage, and relocations of at least 100 miles affecting any number of employees.
• In contrast, FedWARN only applies to plant closings or mass layoffs involving 50 or more employees and, in some cases, only if they constitute at least 33% of the workforce at a site of employment.
• Additionally, CalWARN mandates notice to more local entities, including the LWDB and city and county officials, whereas FedWARN requires notice to employees, their representatives, the state dislocated worker unit, and the chief local elected government official.
• The exceptions available under CalWARN are also more limited than those available under FedWARN.

Employers should review both FedWARN and CalWARN to determine their compliance obligations when a triggering event is planned to occur.

Notice Obligations

CalWARN applies to all employers in California that operate a California “covered establishment,” which is defined as “any industrial or commercial facility or part thereof that employs, or has employed within the preceding 12 months, 75 or more persons”.

The CalWARN 60-day notice obligations are triggered if an employer suffers a “mass layoff,” a “termination,” or a “relocation” at a covered establishment. If one of these events is planned, the employer must provide at least 60 days’ notice before the effective date of the separation to the affected employees, the California Employment Development Department, the local workforce investment board, the chief elected county official and the chief elected city official for the worksite where the mass layoff, termination or relocation is scheduled to occur.

CalWARN prior to amendment adopted FedWARN Act elements for the content of the CalWARN notice. Starting January 1, 2026, employers can no longer simply include the federal WARN Act notice content in their CalWARN notices.

Expansion of CalWARN’s Notice Obligations

The CalWARN Notice now requires extensive additional language (SB 617).

• Employers are now required to state whether they plan to coordinate services for affected employees through the local workforce development board (LWDB), another entity, or not at all.
• Regardless of their choice, employers must provide the LWDB’s contact information and a description of its services in the notice.
• In addition, if the employer decides that it is going to coordinate services with the local workforce development board or other entity, SB 617 requires the employer to arrange these services within 30 days from the date of the issuance of the CalWARN notice.

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