2026 Employment & Labor Law Update for California Employers

The Allen Matkins Employment & Labor Practice provides annual updates to California law on worker rights and employer obligations.

Pay Equity Enforcement Act

Senate Bill (SB) 642 amends California’s Equal Pay and Pay Transparency laws to clarify that the “pay scale” that employers must disclose to an employment applicant in a job posting means a “good faith estimate of the salary or hourly wage range that the employer reasonably expects to pay for the position upon hire." It also amends the Equal Pay Act to generally prohibit paying employees of “another sex” (existing law says “opposite sex”) lower wage rates for substantially similar work, subject to the existing statutory exceptions. SB 642 also defines “wages” and “wages rates” to include all forms of pay, including salary, overtime, bonuses, stock, stock options, profit sharing, life insurance, vacation and holiday pay, cleaning or gasoline allowances, hotel accommodations, reimbursement for travel expenses, and benefits.

SB 642 extends the statute of limitations to no later than three years after the last date the cause of action occurs, and increases potential liability to up to six years of back wages and benefits.

Covered employers should ensure compliance with these amendments for job postings and pay practices.

Employee Education and Training Records: Mandated Access and Recordkeeping

Senate Bill 513 amends Labor Code 1198.5 to expand personnel record access to include education or training records and imposes additional recordkeeping requirements.

Most employers maintain education and training records as a best practice. Beginning on January 1, 2026, this new law mandates that any such records must include the following specific information: (1) name of the employee, (2) name of the provider, (3) duration of the training, (4) date of the training, (5) core competencies of a training, including skills in equipment or software, and (6) resulting certification or qualification.

Under existing law, current and former employees or their representative have the right to timely inspect and receive a copy of personnel records relating to the employee’s performance or to any grievance concerning the employee. This bill expands this right to explicitly include education or training records. Section 1198.5 continues to require that employers maintain personnel records for at least three years after termination. Violations of 1198.5 continue to subject employers to penalties, including criminal liability.

California employers should evaluate their recordkeeping systems to ensure the statutorily required categories are being recorded prior to January 1, 2026.

Prospective Meal Period Waivers

A California Court of Appeal recently held that revocable, prospective meal period waivers for work shifts between five and six hours are valid and enforceable under California law in Bradsbery v. Vicar Operating, Inc. California Labor Code section 512 requires that employers provide a 30-minute, off-duty meal period after five work hours, but also provides that the meal period may be waived by mutual consent of the employer and the employee if the work period is no more than six hours. In Bradsbery, former employees of a veterinary hospital operator argued that the prospective meal waivers they had signed permitted their employer to circumvent statutory meal break requirements and denied them a meaningful opportunity to exercise their rights. The Court of Appeal disagreed, reasoning that the waivers in this circumstance — where the employees’ shifts were only six hours, and they had knowingly signed the waivers — accord with the text and purpose of the Labor Code and Wage Orders and are consistent with the welfare of employees.

Employers with nonexempt employees who do not have prospective meal period waivers in place should evaluate whether to implement them.

Employment Agreement Restrictions on Repayment Terms

Assembly Bill (AB) 692 makes it generally illegal for employment agreements entered into on or after January 1, 2026, to require workers to repay debts if the relationship ends. It adds new sections to the California Business and Professions and Labor Codes that void contracts that impose “any penalty, fee, or cost on a worker if the worker’s employment or work relationship with a specific employer terminates,” or that require “the worker to pay an employer, training provider, or debt collector for a debt if the worker’s employment or work relationship with a specific employer terminates.”

There are specific exceptions that permit repayment terms for certain contracts related to:

• government loan repayment assistance or loan forgiveness programs;
• tuition repayment programs;
• apprenticeship programs;
• unearned discretionary bonus programs; and
• the lease, financing, or purchase of residential property.

Potential liability under these new laws includes minimum damages of $5,000 per affected worker as well as attorneys’ fees and costs. California employers are encouraged to consult with employment counsel with respect to any repayment terms in contracts with workers on or after January 1, 2026.

Expanded Worker Rights and PERB Authority

The Public Employment Relations Board (PERB) has existing authority over labor relations for public sector employees in California. AB 288 expands that jurisdiction by authorizing private sector workers in California to petition the PERB to enforce rights historically granted under the federal National Labor Relations Act (NLRA). These rights include freedom of association, self-organization, the designation of representatives of one’s own choosing, and protection from retaliation. Unlike the National Labor Relations Board (NLRB), PERB can impose civil penalties of up to $1,000 per worker per violation.

This bill is already being challenged as being preempted by the NLRA. Regardless of whether it goes into effect on January 1, 2026, private employers should review their existing policies to ensure compliance with the NLRA and potential new California PERB enforcement powers.

New Workplace Know Your Rights Act

SB 294 establishes the Workplace Know Your Rights Act, which requires employers in California to provide a stand-alone written notice of certain workers’ rights to every employee upon hire and annually to all employees. The notice must include information about workers’ compensation benefits, the right to a notice of inspection by immigration agencies, protection against unfair immigration-related practices, the right to organize a union or engage in concerted activity, and constitutional rights when interacting with law enforcement in the workplace.

A template notice will be available by January 1, 2026, and employers have until February 1, 2026, to provide the notice to their employees. Employers must maintain records of compliance, including the date that each written notice is provided or sent. By March 30, 2026, employers must also permit employees to designate an emergency contact to be notified if the employer has actual knowledge that the employee is arrested or detained at work or during work hours.

Expansion of CalWarn Requirements

SB 617 expands the information that California employers are required to include in notices to affected employees and other parties under the California Worker Adjustment and Retraining Notification Act (CalWARN). CalWARN requires covered employers to provide 60-days’ notice to employees and state and local representatives before a mass layoff, relocation, or plant closure. CalWARN (which is generally broader and stricter than its federal WARN counterpart), applies to all California employers with at least 75 employees (including part-time employees).

Starting January 1, 2026, the additional information that employers will be required to include in their WARN notices includes: (1) contact information for the local workforce development board (LWDB), (2) a description of the LWDB’s services, (3) whether the employer intends to coordinate services for affected employees through the LWDB or another entity (if at all), and (4) information regarding the statewide food assistance program known as CalFresh.

Employers who fail to comply with CalWARN requirements risk civil actions that can result in significant monetary rewards, including daily penalties, employee backpay, and attorneys’ fees.

California employers are encouraged to consult with Allen Matkins employment attorneys to ensure compliance with these new and amended laws.

Employer Guidance on Interactions with ICE and Related Agencies

In 2025, ICE began conducting extensive audits and raids in coordination with other federal and state agencies. We previously published ICE Inspections in the Workplace: What Employers Need to Know. Employers continue to be affected by the activity based on audits and raids directed at their employees, as well as agency activities involving independent contractors, vendors, and tenants with whom employers maintain ongoing transactional and other business relationships.

2026 is expected to continue to be active for federal and state agency investigations regarding undocumented individuals. Employers should remember that should ICE representatives or representatives from other agencies seek access to an employer’s property or worksite, employers should follow uniform protocols to ensure compliance with federal and state laws, while ensuring that the employer’s rights and employees are protected, to the extent permitted by law.

Should ICE or a related agency seek access to your worksite or present you with a warrant or notice of inspection you should contact counsel immediately for guidance.