New California Employment Laws for 2026

Happy Holidays from the California Legislature!  Below is a brief overview of some of the more important changes in employment laws that Governor Newsom signed into law that will take effect in 2026 and beyond.  This is not an exhaustive list, and is intended to highlight some of the more important changes that will impact most employers.

Mandatory Cal-Savers Retirement Plan Participation Registration Deadline

• The Cal-Savers Retirement Savings Trust Act was enacted to address the growing retirement savings gap.
• Which employers must comply? Employers who do not sponsor a retirement plan and have 1 or more California employees who are 18 years old and over, regardless of how many hours the employee works.
• Requirements: Impacted employers must register their company with Cal Savers by December 31, 2025 at https://employer.calsavers.com/.  Employees will then have 30 days to decide whether to participate or opt-out.  Employees will be automatically enrolled if they do not make a selection.
• What? Registered employers will then need to facilitate payroll deductions each payroll period for participating employees where funds will be added to the employee’s account at Cal-Savers.
• Consequences? Employers who required to register, but fail to do so before the deadline will face financial penalties.
• Gray Area: It is unclear whether this mandate applies to employers who offer full-time employees retirement benefits, but do not offer those same retirement benefits for part-time employees.  Based on the language of the statute, it seems that such employers are exempt from the Cal-Savers requirement.  However, this may be an area that employers may wish to clarify with their benefits administrator or broker.
• Disclaimer:  We do not advise on employment benefits matters.  This note is intended to alert you to a new state requirement that affects many employers.  Should you have questions regarding whether this new law applies to your organization, please contact your benefits or payroll administrator.

Minimum Wage and Salary Thresholds

• Effective January 1, 2026, the statewide minimum wage will increase to $16.90/hour (up from $16.50/hour) for all employers regardless of size. Local cities and counties may adopt higher minimum wages which take precedence over the state minimum wage.
  • Note:  Local cities and counties may adopt higher minimum wages.  Some key city minimum wage changes are set to go into effect on 1/1/2026 as set forth below:
    • San Francisco: $19.90/hour
    • San Jose: $18.45/hour
    • Novato: $17.73/hour for very large businesses (100+ employees), $17.46 for large businesses (26-99 employees), and $16.90 for small businesses (1-25 employees)
    • Mountain View: $19.70/hour
    • San Mateo: $18.60/hour
    • Santa Rosa: $18.21/hour
    • Palo Alto: $18.70/hour
• Exempt Employees Minimum Salary: With the increase in minimum wage, exempt employees must be paid a minimum salary of at least $ 70,304 (or $5,858.67/month) in addition to meeting the exempt duties test.
• Minimum salaries for exempt employees are higher in cities where the minimum wage is higher.

New Cal-WARN Act Notice Requirements

• Employers who intend to implement mass layoffs, terminations, or relocations are required to send Cal-WARN Act notices to affected employees, the Employment Development Department (“EDD”), and other local agencies.   The Cal-WARN notices must include elements required by the federal Worker Adjustment and Retraining Notification (WARN) Act as well as Cal-WARN specific components.

• Effective January 1, 2026, affected employers must also include in their Cal-WARN Notices the following:
  • Whether the employer plans to coordinate services through a local workforce development board or another entity, and if so, include contact information and description of services
    • If an employer chooses to coordinate these services, employer must arrange such services within 30-days of the written notice.
  • Provide information for a “functioning email and telephone number” of the local workforce development board
  • Provide this description for rapid response activities for local workforce development boards:
    • “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”
  • A description of CalFresh, the statewide food assistance program, the CalFresh benefits helpline, and a link to the CalFresh internet website.

Ban on “Stay-or-Pay” Training Repayment Agreements

• Under AB 692, employers may no longer require an employee to remain employed for a certain period under the threat of having to repay training costs. There are some exceptions related to tuition reimbursement agreements and retention bonus repayment clauses.

Pay Equity Enforcement Act

• Clarifies employer pay-scale obligations under California’s Pay Transparency Law by requiring employers with 15 or more employees to include a “good faith estimate” of the salary or wage range in every job posting, rather than the range the employer might be expected to pay “for the position” generally.  
• The law also updates key provisions of the Equal Pay Act: Terminology:
  • Expands the prohibition on wage discrimination from “employees of the opposite sex” to “employees of another sex.”
  • Definition: Broadens the definition of “wages” to include all forms of compensation, such as bonuses, stock options, per diems, and other non-salary payments.
  • Scope: Clarifies that a violation may occur each time: (1) an unlawful compensation decision or practice is adopted; (2) an individual becomes subject to it; or (3) an individual is affected by its application, including every instance wages or benefits are paid.
  • Limitations Period: Extends the time to bring a claim to three years from the date of the violation and allows recovery of up to six years of back pay.

Failure to Pay Wage Judgments – Increased Enforcement and Penalties

• Effective January 1, 2026, employers who fail to pay wage-related judgments within 180 days will face mandatory court costs and attorneys’ fees, penalties up to triple the outstanding judgment amount, and enforcement by public prosecutors.

New Pay Data Reporting Requirements and Mandatory Penalties

• Effective January 1, 2027, employers with 100 or more employees and are required to submit annual demographic pay data reports to the Civil Rights Department (CRD) will not have to do so for 23 job categories – up from 10 categories.
• Penalties for failure to comply with pay data reporting will be mandatory upon request from the CRD.

The information contained in this summary is very abbreviated and is not a substitute for legal advice.  If you have any questions regarding any of the upcoming developments and how they may impact your organization, please do not hesitate to let me know.