California: New Laws For The New Year

By Swerdlow Florence Sanchez Swerdlow & Wimmer

December 31, 2025

Beginning in 2026, there are several new laws impacting California employers and employees.  Unless stated otherwise in the summaries below, these bills go into effect January 1, 2026.

SB 294 – Workplace Know Your Rights Act: This law requires employers to give employees a written notice that summarizes certain employee rights annually and upon hire.  This notice must provide information about workers’ compensation, protections against unfair immigration practices, and constitutional rights when dealing with law enforcement.  In addition to this notice, employers must allow employees to designate emergency contact(s), whom the employer must contact if the employee is arrested or detained at work.

Key dates:

- The Labor Commissioner is expected to post a template notice for employers’ use by January 1, 2026.
- The first notice must be given to each existing employee by February 1, 2026.
- Employees must be given the opportunity to designate an emergency contact by March 30, 2026.
- The Labor Commissioner will post a video for employees and a video for employers outlining these rights by July 1, 2026.

AB 692 – Employment: Contracts in Restraint of Trade: This law prohibits employers from using most “stay-or-pay” contracts, which are agreements that require an employee to pay back their employer if the employee leaves their job or is fired.  For example, a contract that requires an employee to repay their employer for the cost of an employer-paid training if the employee leaves would be unlawful.  There are, however, narrow exemptions for tuition reimbursements and retention bonuses.  This bill applies to contracts entered on or after January 1, 2026, and allows employees (or even prospective employees) to seek $5,000 or more in economic damages, potential non-economic damages, and attorneys’ fees for contracts that are unlawfully stay-or-pay. 

SB 590 – Paid Family Leave: Eligibility: Care For Designated Persons: California currently allows employees to receive paid-by-the-state family leave benefits to care for seriously ill relatives.  Starting July 1, 2028, employees also will be able to receive paid-by-the-state family leave benefits to care for a seriously ill, non-relative, designated person.  When requesting these benefits for the first time related to a non-relative designated person, an employee must first identify the designated person and, under penalty of perjury, attest that the employee’s association with the designated person is the equivalent of a family relationship.

SB 617 – California Worker Adjustment and Retraining Notice Act: Existing state law (“Cal-WARN”) requires employers to give notices to employees and certain agencies in the event of mass layoffs, relocations, and terminations.  These Cal-WARN notice requirements are being expanded to require employers to provide employees with details of the CalFresh program and a functioning email and phone number of the employer for employees to contact with any questions.    

SB 261 – Division of Labor Standards Enforcement: orders, decisions, and awards: The California Labor Commissioner, upon final judgment stemming from a hearing to recover wages, penalties, and other demands for compensation, will have authority to order 3x penalties, mandatory attorneys’ fees, and enhanced enforcement powers over unpaid wage violations after a final judgment.

SB 642 – Employment: Payment of Wages: Current California law requires that all job posts include a pay scale; however, there was some confusion regarding how broad the pay scale should be.  This bill clears up that confusion by redefining “pay scale” to mean a good faith estimate of the salary or hourly wage range that the employer reasonably expects to pay upon hire.

The bill also makes changes to a few other sections of the California Labor Code.  Individuals will now also have up to three years (previously one) to file a wage-discrimination claim based on sex, race, or ethnicity.  An individual can also recover wages for up to six years (previously three) for wage discrimination based on sex, race, or ethnicity.

AB 288 – Employment: Labor Organization and Unfair Practices:  This law expands the reach of California’s Public Employment Relations Board’s (“PERB”) authority, by expressly authorizing it to handle unfair labor practice (“ULP”) cases in the private sector when those workers lose federal National Labor Relations Act (“NLRA”) coverage.  PERB can decide those appropriately filed ULP cases and order appropriate relief, including civil penalties.  All supporting documentation and evidence will be held confidential by PERB and is exempt from the California Public Records Act.  The National Labor Relations Board (“NLRB”) has already filed suit in federal court to argue that PERB’s powers provided under this law are preempted by the NLRA.  Numerous interested parties have filed amicus briefs in support of or in opposition to the law.  A similar New York state law was challenged by the NLRB, and its enforcement was enjoined by a federal court.   

SB 53 – Transparency in Frontier Artificial Intelligence Act: This law requires safety and transparency reporting for powerful AI systems.  While this law has much broader implications for the actual development of AI, employers in this sector should be aware that Labor Code Section 1107.1 specifically protects employees who are responsible for assessing, managing or addressing AI risks from retaliation if they report safety concerns either internally or externally to regulators.

SB 464 – Pay-Data Reporting Penalties: California law currently requires private employers with 100 or more employees to file annual pay-data reports with the California Civil Rights Department for 10 different job categories.  Effective January 1, 2027, the number of job categories will increase to 23, and employers will have to collect and store this data separately from their employees’ personnel files.  SB 464 also makes civil penalties for pay-data reporting failures mandatory rather than discretionary.

AB 858 – Employment: Rehiring And Retention: Displaced Workers: California Labor Code Section 2810.8 currently provides pandemic-related rehire protections for hospitality workers laid off for COVID-19 reasons, including public health directives, government shutdowns, and lack of business.  While the law was written to automatically be repealed on December 31, 2025, this bill extends Labor Code Section 2810.8 through January 1, 2027.

Employers with California employees should familiarize themselves with these new laws and should update company policies and practices in response.

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