Which new California employment laws take effect January 1, 2026 and who do they impact?
Executive summary
California will enact a sweeping package of employment changes effective January 1, 2026 that affect wages, pay transparency, labor-relations jurisdiction, notice and recordkeeping duties, and contract terms. Key numbers: minimum wage rises to $16.90/hr (exempt salary threshold $70,304) [1] [2]; SB 642 (Pay Equity Enforcement Act) broadens “wages,” extends limitations, and tightens pay-scale rules [3] [4]; AB 288 gives PERB new authority over certain private‑sector NLRA matters [3] [5].
1. Minimum wage and exempt salary — a direct pay impact for virtually every employer
The state minimum wage increases to $16.90 per hour on January 1, 2026, and the minimum annual salary for many exempt employees rises to at least $70,304, forcing employers to recalculate pay classifications and payroll budgets across industries [1] [2].
2. Pay equity and pay transparency — broader definitions, longer exposure to claims
SB 642 expands the Equal Pay Act by redefining “wages” to include virtually all compensation forms (bonuses, stock, benefits, reimbursements) and imposes stricter pay-scale disclosure requirements in job postings and internal communications; it also extends statutes of limitations and remedies for pay-equity violations, increasing employer exposure and compliance complexity [3] [4] [6].
3. Pay data reporting and privacy — more granular reporting, mandatory penalties
California’s pay data reporting regime tightens: demographic data collected under Section 12999 must be stored separately from personnel records; civil penalties for failing to file become mandatory at the CRD’s request (e.g., $100 per employee initially, $200 for repeat failures); and reporting will expand to 23 job categories beginning in 2027 — employers should inventory HR systems now [7] [8].
4. Labor-relations authority shift — PERB moves into gaps left by the NLRB
AB 288 authorizes the California Public Employment Relations Board to adjudicate certain private‑sector unfair labor practices, oversee union elections, and issue remedies when the National Labor Relations Board has “expressly or impliedly ceded jurisdiction,” creating a parallel state enforcement path for some private‑sector labor disputes [3] [5] [9].
5. Worker notices, emergency contacts and personnel records — new administrative duties
The Workplace Know Your Rights Act (SB 294) requires employers to provide a standalone written notice to current employees by February 1, 2026 and annually thereafter; employers must also offer employees the chance to name emergency contacts by March 30, 2026 and expand personnel-record disclosure to include education and training records under reforms like SB 513 [7] [5] [10].
6. Contract restrictions — expanding prohibitions on onerous terms
AB 692 expands California’s ban on non-competes and, starting January 1, 2026, makes “stay-or-pay” contract terms unlawful for agreements entered on or after that date; employers must audit new and revised contract templates to avoid prohibited repayment and penalty clauses [11] [10] [12].
7. Cal‑WARN and mass layoff notices — added content for impacted employees
SB 617 expands Cal‑WARN notice content effective January 1, 2026: employers facing mass layoffs, relocations, or closures must include more information in notices, such as CalFresh resources and workforce‑development coordination, raising the logistical bar for plant‑closure communications [4] [3].
8. Enforcement and penalties — heavier consequences for unpaid judgments and noncompliance
New penalties increase pressure on employers to resolve wage judgments and reporting failures: SB 261 authorizes civil penalties (up to three times unpaid judgments) if unpaid after 180 days, and pay‑data reporting penalties become mandatory upon CRD request — a compliance failure can carry substantial financial consequences [13] [9] [8].
9. Who is affected — employers, employees, and specific sectors
The laws broadly affect almost all California employers and workers: minimum‑wage and exempt‑salary changes touch most payrolls [1]; SB 642 and pay‑data reporting affect employers with 15+ employees and those already subject to reporting [8]; AB 288 and related PERB changes primarily concern private‑sector employers in unionized or organizing contexts [3] [9]; AB 692 affects employers using training‑reimbursement or stay‑or‑pay clauses [11].
Limitations and alternative viewpoints: reporting and advisory sources emphasize employer preparation (policy updates, HR systems, audits) as the practical response [7] [8]. Available sources do not mention state implementation guidance timelines beyond templates promised by agencies (for example, Labor Commissioner template by Jan. 1, 2026 is referenced, but detailed agency rules or enforcement protocols are not provided in current reporting) [7] [5].
Bottom line: January 1, 2026 is a compliance inflection point for California employers — anticipate higher wages, expanded pay‑equity and reporting obligations, new notice and records duties, stronger enforcement tools, and limits on certain contract terms; employers should audit payroll, HR systems, job postings, contracts, and WARN templates immediately to reduce legal and financial risk [1] [4] [8].