California lawmakers continue to expand employee protections while increasing compliance obligations for employers. A series of new statutes and regulatory updates taking effect in 2026 and beyond will significantly impact employee mobility, pay equity, personnel records, privacy compliance, and other employment requirements. Employers should begin reviewing policies, agreements, and internal practices now to mitigate risk and ensure compliance.
California Bans “Stay-or-Pay” Agreements: AB 692
Effective January 1, 2026, AB 692 significantly restricts so-called “stay-or-pay” arrangements as part of California’s ongoing effort to protect employee mobility. Some employers offer to pay for tuition, training, or other benefits on the condition that the employee remains employed for a certain period of time. Under such arrangements, employees who leave the company before the promised period may have been historically required to repay the employer’s costs. The new law broadly prohibits employers from requiring employees, as a condition of employment, to repay employment-related debts if their employment ends.
Under AB 692, employers may not require contractual provisions that:
- Require repayment of employment-related, education-related, or consumer debts if employment ends;
- Allow debt collection or termination of forbearance upon separation of employment; or
- Impose penalties, fees, or costs tied to the end of employment.
Limited Exceptions. The new law only impacts new agreements entered on or after January 1, 2026. The law permits certain repayment agreements under narrow circumstances, including a loan repayment assistance program or loan forgiveness program provided by a federal, state, or local government agency, repayment of tuition for a transferable credential, agreements related to certain approved apprenticeship programs, and upfront discretionary payments such as sign-on bonuses or relocation assistance.
The exceptions regarding a contract for discretionary or unearned monetary payments are subject to strict requirements, and employers should consult with legal counsel before drafting and entering into such agreements with employees.
Penalties for Non-Compliance. AB 692 creates a private right of action allowing employees to recover the greater of actual damages or $5,000, along with injunctive relief and attorneys’ fees.
Extension of Statute of Limitations for Sexual Assault Claims: AB 250
Beginning January 1, 2026, AB 250 creates a two-year revival window allowing certain adult sexual assault claims to be filed between January 1, 2026, and December 31, 2027, even if they were previously time-barred. The statute applies only to private entities and requires plaintiffs to allege that an employer or responsible entity engaged in a “cover up,” defined as a concerted effort to hide evidence that incentivized silence regarding prior sexual assault allegations. Public entities are expressly excluded.
This amendment to the Code of Civil Procedure section 340.16 applies to claims that occurred on or after a plaintiff’s 18th birthday.
Expanded Pay Equity and Pay Transparency Obligations
Effective October 8, 2025, SB 642 (Pay Equity Enforcement Act) expanded the definitions of “pay scale,” “sex,” and “wages,” extended the statute of limitations for Equal Pay Act claims, and broadened recoverable compensation to include bonuses, stock options, allowances, hotel accommodations, and reimbursements. This law applies to employers with 15 or more employees, and employers must make a “good faith estimate” of the salary or wage range upon hire.
Effective January 1, 2026, SB 464 requires that employers maintain demographic pay data separately from personnel files. Effective January 1, 2027, SB 464 also expands pay data reporting requirements for employers with 100 or more employees, increases demographic categories from ten to twenty-three different categories, and authorizes mandatory civil penalties for noncompliance.
Other Wage/Hour and Record Keeping Developments
- Effective January 1, 2026, the state minimum wage for all employers has increased to $16.90 per hour. The minimum salary for exempt classifications must be at least $70,304 per year (or $5,858.67 per month).
- SB 513 expands personnel file inspection requirements to include detailed education and training records. An employer who maintains education or training records shall ensure the records include: (1) the name of the employee, (2) the name of the training provider, (3) the duration and date of the training, (4) the core competencies of the training, and (5) the resulting certification or qualification.
- SB 648 amends the Labor Code to allow additional methods of recovery under California’s anti-gratuity theft laws. The Labor Commissioner now has authority to investigate gratuity theft and issue citations or file civil actions.
- SB 809 amends the Labor Code to state that mere ownership of a vehicle, including a commercial vehicle, used by a person providing labor or services for remuneration, does not automatically make that person an independent contractor under California’s independent contractor ABC test. SB 809 also codifies existing law that reimbursement is required for employee use of a personal or commercial vehicle if used in the discharge of their job duties.
Privacy and Technology Compliance
- New California Privacy Rights Act (“CPRA”) regulations impose cybersecurity audit and privacy risk assessment obligations starting in 2026, with reporting obligations extending into 2028 and beyond.
- Starting January 1, 2026 new regulations require companies subject to the CPRA to conduct risk assessments if they process personal information that presents a “significant risk to consumer privacy.” First reports are due April 1, 2028, evaluating the period between January 1, 2026 to January 1, 2028. The reports must cover nine (or more) different categories required under the new regulations and must be signed by the company’s executive management team under penalty of perjury.
- Beginning January 1, 2027, regulations governing automated decision-making technology will require pre-use notice, opt-out rights, and transparency for employment-related decision tools.
- Certain companies are required to begin conducting cybersecurity audits starting January 1, 2026. Audits must cover 18 different components of a company’s cybersecurity program and must be conducted by a neutral and qualified auditor. Deadlines to submit reports and evaluation periods depend on annual gross revenues of the company.
Re-Hiring and Layoff Developments
- AB 858 extends current recall and retention provisions under Labor Code section 810.8. It expands rehiring rights for displaced hospitality workers through January 1, 2027, but this law only applies to hotels with 50 or more rooms, event centers, airport hospitality, building contractors, and private clubs. These employers must continue to offer open positions to qualified laid-off employees before hiring new workers and must follow certain notice and re-hire procedures.
- SB 617 amended the California WARN Act notice requirements for workers subject to plant closings and mass layoffs.
Other California Laws Employers Should Track this Year
- “Workplace Know Your Rights Act” requires employers to notify an employee’s emergency contact if they are arrested or detained while at work or during working hours and requires employers to provide new workplace rights notices to each existing employee and new employee annually (SB 294);
- Expanded paid sick leave and crime-victim protections (AB 406);
- Bias mitigation training does not, by itself, constitute unlawful discrimination under the California Fair Employment and Housing Act (“FEHA”) (SB 303);
- Tolling adjustments for FEHA claims that are pending California Civil Rights Department administrative review (SB 477);
- New PERB authority over certain private-sector labor disputes that are filed while the National Labor Relations Board (“NLRB”) lacks a quorum, while the NLRB has lost its independence, or where a case has been unresolved for more than 6 months (AB 288); and
- Industry-wide collective bargaining rights for gig economy drivers while maintaining their status as independent contractors (AB 1340).