So long, Santa, so long, holidays! Hello, 2026, and hello to the same old California! California will be rolling out several new laws this month as the new year welcomes us in (as this great state always does). Many of the new laws going into effect this month are related to labor and employment. Since this topic impacts all our clients in one way or another, here is a (non-exhaustive) list of California’s newest labor laws and rules for review and implementation in businesses. Nobody wants their policies and procedures to be put on the “non-compliant” list by Santa next December, or any time before then!

New Labor and Employment Laws

Labor Law Changes

• State minimum wage hits $16.90/hour;[i]
• Exempt salaries must meet $70,304/year;[ii]
• Cal-WARN notices get more detailed;[iii] and
• New rights for gig/transportation drivers.[iv]

Bias Mitigation Training

S.B. 303 seeks to protect employer-provided bias mitigation training by saying this: “an employee’s assessment, testing, admission, or acknowledgment of their own personal bias that was made in good faith and solicited or required as part of a bias mitigation training does not, by itself, constitute unlawful discrimination.”[v] The statute defines the term “bias mitigation training” as “training, education, and activities provided by an employer for the purpose of educating employees on understanding, recognizing, or acknowledging the influence of conscious and unconscious thought processes and their associated impacts.”[vi]

“Stay-Or-Pay” Clauses

Beginning January 1, 2026, employers generally may not include clauses commonly known as “stay-or-pay” contract provisions in employment contracts.[vii] A.B. 692 expressly prohibits any contract term that requires a worker to pay a “debt” or imposes a “penalty, fee, or cost” upon termination of employment.[viii] These terms are broadly defined to include employment-related costs and penalties, such as replacement or retraining fees, immigration-related costs, liquidated damages, and lost goodwill or profit.[ix] The law also carves out several exceptions, such as retention bonuses or tuition repayments.[x]

Cal-Warn Act Takes Effect

The California Worker Adjustment and Retraining Act (Cal-WARN Act) requires employers to provide more thorough notices when it comes to mass layoffs, relocations, and terminations.[xi] Starting January 1, 2026, S.B. 617 expands the content requirements for layoff, relocation, or termination notices to include the following (in addition to current requirements):

• Employer contact information including email and telephone number;[xii]
• A statement about whether the employer will coordinate services related to the layoff, relocation, or termination (like rapid response orientations) through the local workforce development board or another designated entity;[xiii]
• CalFresh information, including benefits helpline and website link;[xiv] and
• The local workforce development board’s contact information, including email and telephone number, and rapid response activities offered.[xv]

Leave for Crime Victims

Starting on January 1, 2026, employees may take time off if they or a family member is a victim of a specified crime “to attend judicial proceedings related to that crime, including, but not limited to, any delinquency proceeding, a postarrest release decision, plea, sentencing, postconviction release decision, or any proceeding” where the person’s rights are at issue.[xvi] A.B. 406 expands the reasons eligible employees can take job-protected leave under California’s Healthy Workplaces Healthy Families Act (HWHFA), which incorporates the unpaid leave requirements for victims of certain crimes (including a long list of crimes from stalking to domestic violence to hit-and-run, among many others) under Cal. Gov’t Code § 12945.8[xvii] [xviii]

Personnel Records

Also starting on the first of the month, employers who maintain personnel records must ensure they include the name of the employee and training provider, training date, duration and core competencies, and any certification or qualification obtained within their personnel files. California employers must also permit current and former employees to inspect and receive copies of their personnel records, and S.B. 513 broadens the definition of “personnel records” to include “education or training records” related to the employee’s performance.[xix]

Other Non-Labor-Related Key Updates Effective January 1, 2026

• Housing
  • Landlords must provide working stoves and refrigerators in units to all tenants.[xx]
• Consumer
  • Thick plastic bags have been banned at grocery stores (and are to be replaced by paper/recycled bags);[xxi] and
  • Used car buyers now get a three-day return window.[xxii]
• Education
  • School phone use limits;[xxiii] and
  • The phasing out of ultra-processed foods begins in schools across the state.[xxiv]

Remember, best practice is to be on the lookout for any new labor materials sent by the state or by organizations within your field and to look for articles like this one to ensure your business stays confidently compliant with new laws every January. Whether you are a business owner, an employee, or anything in between, it is good to know the new rules and regulations California has put in place to keep everyone safe and keep labor practices fair so we can all stay on the “good” list this year.

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Sources

[i] California Department of Industrial Relations, Minimum Wage Order.

[ii] California Labor Code, Section 515.

[iii] California Labor Code, Section 1400 et seq.

[iv] California Assembly Bill 5 (Stats. 2019, ch. 296).

[v] CA LEGIS 216 (2025), 2025 Cal. Legis. Serv. Ch. 216 (S.B. 303) (WEST).

[vi] CA LEGIS 216 (2025), 2025 Cal. Legis. Serv. Ch. 216 (S.B. 303) (WEST).

[vii] CA LEGIS 703 (2025), 2025 Cal. Legis. Serv. Ch. 703 (A.B. 692) (WEST).

[viii] 2025 Cal. Legis. Serv. Ch. 703 (A.B. 692).

[ix] 2025 Cal. Legis. Serv. Ch. 703 (A.B. 692).

[x] 2025 Cal. Legis. Serv. Ch. 703 (A.B. 692).

[xi] 2025 Cal. Legis. Serv. Ch. 229 (S.B. 617).

[xii] 2025 Cal. Legis. Serv. Ch. 229 (S.B. 617).

[xiii] 2025 Cal. Legis. Serv. Ch. 229 (S.B. 617).

[xiv] 2025 Cal. Legis. Serv. Ch. 229 (S.B. 617).

[xv] 2025 Cal. Legis. Serv. Ch. 229 (S.B. 617).

[xvi] 2025 Cal. Legis. Serv. Ch. 148 (A.B. 406).

[xvii] CA LEGIS 148 (2025), 2025 Cal. Legis. Serv. Ch. 148 (A.B. 406) (WEST).

[xviii] Cal. Gov’t Code § 12945.8.

[xix] CA LEGIS 654 (2025), 2025 Cal. Legis. Serv. Ch. 654 (S.B. 513) (WEST).

[xx] California Civil Code, Section 1941.1.

[xxi] California Public Resources Code, Section 42281.

[xxii] SB 766, the CARS Act.

[xxiii]Assembly Bill No. 3216

[xxiv] 2025 Cal. Legis. Serv. Ch. 703 (A.B. 692)