California Enacts New Employment Laws for 2026

California Governor Gavin Newsom recently signed a number of bills into law that alter and expand employer obligations under California’s employment laws, including measures regarding pay transparency and pay reporting, expanded rights for employees to inspect personnel files, new notice requirements, and limitations on worker stay-or-pay arrangements. This Legal Update provides an overview of the most significant workplace laws that will be taking effect in the new year.

Expansion of Job Posting and Equal Pay Requirements

California Senate Bill (SB) 642, known as the Pay Equity Enforcement Act, expands California’s equal pay and pay transparency requirements for employers, as of January 1, 2026.

Amendments to California’s Pay Transparency Law, Labor Code § 432.3

California’s Pay Transparency Law (California Labor Code section 432.2) requires employers with 15 or more employees to include “pay scale” information in all job postings. SB 642 amends the definition of “pay scale” in the law to require employers to include in all job postings “a good faith estimate of the salary or hourly wage range that the employer reasonably expects to pay for a position upon hire,” rather than the salary or wage range the employer “reasonably expects to pay for the position.” 

Amendments to California’s Equal Pay Act, Labor Code § 1197.5

California’s Equal Pay Act prohibits employers from paying employees at wage rates less than the wage rates paid to employees of another sex, race, or ethnicity for substantially similar work, except under specified circumstances. SB 642 amends the law, which previously prohibited pay disparity between employees of the “opposite sex,” to prohibit pay disparity between employees of “another sex” – thereby including non-binary genders in the law’s protections. 

The amendment also expands the statute of limitations to bring a civil action for violations of California’s Equal Pay act from two to three years after the last date the cause of action occurs, and further provides that an employee is entitled to obtain relief for the entire period of time in which a violation exists, up to six years.

The amendment clarifies that a cause of action under the statute occurs when:

• An alleged discriminatory compensation decision or practice is adopted;
• An individual becomes subject to an alleged unlawful compensation decision or other practice; or
• An individual is affected by the application of an unlawful compensation decision or practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from the decision or other practice.

In addition, the amendment defines an employee’s “wages” or “wage rates,” for purposes of the Equal Pay statute only, very broadly to include “all forms of pay,” including but not limited to, “salary, overtime pay, bonuses, stock, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, cleaning or gasoline allowances, hotel accommodations, reimbursement for travel expenses, and benefits.” 

New Cal-WARN Act’s Notice Requirements

California’s Worker Adjustment and Retraining Act (the “Cal-WARN Act,” Labor Code § 1400, et seq.) requires employers to provide employees, the California Employment Development Department (EDD), and local agencies with 60-days’ prior notice of certain mass layoffs, relocations, or terminations at covered establishments.

As of January 1, 2026, California Senate Bill (SB) 617 expands the information employers are required to include in their Cal-WARN Act notices to include the following additional information:

• Whether the employer plans to coordinate services through the local workforce development board or another entity;
• Information about the statewide food assistance program (CalFresh);
• A functioning email and telephone number of the local workforce development board;
• A description of rapid response activities offered by the local workforce development board;
• A functioning email and telephone number of the employer for contact; and
• The following description: “Local Workforce Development Boards and their partners help laid off workers find new jobs. Visit an America’s Job Center of California location near you. You can get help with your resume, practice interviewing, search for jobs, and more. You can also learn about training programs to help start a new career.”

In addition, the amendment provides that, if an employer chooses to coordinate services with the local workforce development board or another entity, they must arrange for such services within 30 days from the date of the notice.

These new requirements constitute an additional difference between the requirements of the federal WARN Act and the Cal-WARN Act, as notices under the federal WARN Act do not require the inclusion of this information.

The amendment further specifies that employers are not required to provide a Cal-WARN Act notice if a mass layoff, relocation, or termination is “necessitated by a physical calamity or act of war.”

Implementation of New Mandatory “Workplace Know Your Rights Act” Notice

California Senate Bill (SB) 294, known as the “Workplace Know Your Rights Act” and codified at Labor Code § 1553, requires employers to provide employees with a stand-alone written notice about their workplace and constitutional rights, and establishes notification requirements for emergency contacts in the event of an employee’s arrest or detention. 

New Know Your Rights Notice

The Labor Commissioner will develop a template notice that employers may use to comply with the notice requirement, which will be posted on its internet website on or before January 1, 2026. The Labor Commissioner is required to post an updated template notice annually, and will make the notice available in English, Spanish, Chinese, Tagalog, Vietnamese, Korean, Hindi, Urdu and Punjabi.

The notice must contain a description of workers’ rights in the following areas:

• The right to workers’ compensation benefits, including disability pay and medical care for work-related injuries or illness, as well as the contact information for the Division of Workers’ Compensation;
• The right to notice of inspection by immigration agencies pursuant to subdivision Section 90.2(a);
• Protection against unfair immigration-related practices against a person exercising protected rights;
• The right to organize a union or engage in concerted activity in the workplace;
• Constitutional rights when interacting with law enforcement at the workplace, including an employee’s right under the Fourth Amendment to the United States Constitution to be free from unreasonable searches and seizures and rights under the Fifth Amendment to the United States Constitution to due process and against self-incrimination; and
• Any new legal developments pertaining to laws enforced by the Labor and Workforce Development Agency that the Labor Commissioner includes in the template.

Employers are required to provide such notices (a) to each new employee upon hire; (b) to current employees on or before February 1, 2026; and (c) annually to the employee’s “authorized representative” (i.e., exclusive bargaining representative), if any, by electronic or regular mail.

The notices must be provided to employees “in a manner the employer normally uses to communicate employment-related information,” including via personal service, email or text message, “if it can reasonably be anticipated to be received by the employee within one business day of sending.” The notice must also be provided to employees in the language the employer normally uses to communicate employment-related information to the employee and which the employee understands if the template notice is available in that language on the Labor Commissioner’s internet website.

The Labor Commissioner will also develop and post a video for employees and employers regarding their rights and obligations, respectively, under this new law by July 1, 2026.

Employers are required to keep records of compliance with these requirements for three years, including the date each written notice is provided or sent to employees.

Employee Emergency Contacts

In addition, SB 294 requires employers to provide employees with the opportunity to designate an emergency contact if the employee is arrested or detained at their worksite by March 30, 2026, for existing employees and at time of hire for new employees after March 30, 2026. Employers are also required to notify an employee’s designated emergency contacts if that employee is arrested or detained at their worksite or during work hours. The employer must also allow the employee to provide updated emergency contract information through the duration of employment.

Employers are prohibited from discharging, threatening, demoting, suspending, or discriminating against employees for exercising rights under this law, filing complaints, or cooperating in investigations.

SB617 also permits the Labor Commission or a public prosecutor to enforce the provisions of the statute, and provides for statutory penalties of up to $500 per employee per violation, except that the penalty for violations of the emergency contact provisions are up to $500 per employee for each day the violation occurs, up to a maximum of $10,000 per employee.

Ban on Worker Stay-or-Pay Contract Terms (Labor Code § 926 & Business and Professions Code § 16608)

California Assembly Bill (AB) 692 expands the reach of California’s ban on worker non-competes to encompass “stay-or-pay” contract terms that require workers to reimburse or repay costs associated with certain work-related training programs (such as a job or skills training program), relocation stipends, or other costs or debts upon termination. The law applies to contracts entered into on or after January 1, 2026, and prohibits employers from including in any employment contract, or requiring a worker to execute as a condition of employment or of a work relationship, a contract term that:

• Requires a worker to pay an employer, training provider, or debt collector for a debt if a worker’s employment or work relationship terminates;
• Authorizes an employer, training provider, or debt collector to resume or initiate collection of or end forbearance of a debt (e.g., for employment-related costs, education-related costs, or consumer financial products or services), if the worker’s employment or work relationship terminates; or
• Imposes any penalty, fee, or cost on a worker if the worker’s employment or work relationship terminates, including “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” is defined broadly to include any “person who is permitted to work for or on behalf of an employer or business entity, or who is permitted to participate in any other work relationship, job training program, or skills training program, and includes employees and prospective employees.”

Exceptions

The following contract terms are not subject to the law’s prohibitions:

• Contracts entered into under any loan repayment or loan forgiveness program provided by government agencies;
• Contracts to repay the cost of tuition for certain transferable credentials meeting specific requirements;
• Contracts related to enrollment in an apprenticeship program approved by Division of Apprenticeship Standards;
• Signing or retention bonuses or other contracts for discretionary or unearned monetary payments, including a financial bonus, at the outset of employment that is not tied to meeting specific job performance requirements; and
• Contracts related to residential property leases or purchases.

Contracts violating these provisions are void as contrary to public policy and considered unlawful restraints on engaging in lawful profession, trade, or business under California’s non-compete ban (Business and Professions Code Section 16600, et seq.).

Workers subjected to prohibited conduct or their representatives may bring civil actions for the greater of actual damages or civil penalties of up to $5,000 per worker, as well as injunctive relief and attorneys’ fees. The rights and remedies are cumulative and do not supersede other laws.

Expanded Personnel Record Requirements

Under Labor Code § 1198.5, employers are required to permit employees to inspect and receive a copy of personnel records maintained by the employer relating to the employee’s performance or to any grievance concerning the employee upon request. California Senate Bill (SB) 513 expands the definition of “personnel records” under section 1198.5 to include records about employee education and training. Specifically, employers must maintain the following information regarding employee education or training:

• Employee name;
• Training provider name;
• Duration and date of training;
• Core competencies covered, including skills in equipment or software; and
• Any resulting certification or qualification.

New Employer Pay Data Disclosures

California Senate Bill (SB) 464 introduced substantial changes to California’s annual pay data reporting requirements set forth in Government Code § 12999. Existing law requires private employers and labor contractors with 100 or more employees in the U.S. to submit annual pay data reports to the California’s Civil Rights Department (CRD). The reports include information about employee demographics, broken down by race, ethnicity, and sex across 10 job categories, pay band distribution, and median/mean hourly rates.

Beginning on January 1, 2027, employers will be required to classify employees in one of 23 job categories from the Standard Occupations Classification (SOC) system, rather than the ten federal EEO-1 job categories previously used. In addition, employers are required to collect and store the demographic data used for pay data reporting separately from personnel records. 

Under the amended statute, courts are required to impose civil penalties against employers that fail to file a pay data report of $100 per employee for the first failure and $200 per employee for any subsequent failure to file pay data reports. Such penalties were previously discretionary.

Impact

As the 2025 calendar year is coming to a close, employers should analyze their current practices in light of these new laws so that they can comply with the new requirements. Mayer Brown’s Employment Litigation and Counseling Group will continue to monitor developments, including any guidance from government agencies, and will provide updates.