California lawmakers continue to expand workplace protections, increase enforcement authority, and raise the stakes for noncompliance. As we turn the page on 2025, employers face a combination of new statutory obligations, expanded employee rights, and enhanced penalties, along with several laws that have already taken effect but now require immediate attention.
Below, we summarize the most significant developments, explain the policy goals behind them, and outline practical steps employers should take to reduce risk and stay compliant.
WAGE INCREASES & COMPENSATION THRESHOLDS
Statewide and Local Minimum Wage Increases
California’s minimum wage framework continues to reflect the Legislature’s focus on cost-of-living pressures and income equity. Effective January 1, 2026, the statewide minimum wage increases to $16.90 per hour, which automatically raises the minimum annual salary required for most exempt employees to $70,304.
At the same time, many local governments—particularly in major metropolitan areas—have adopted higher minimum wages to address regional housing and living costs. Employers must comply with the highest applicable wage based on where work is performed, not where the business is based. Importantly, some of these local jurisdictions implement minimum wage increases on a midyear schedule (often July 1), rather than January 1, requiring employers to monitor local updates throughout the year.
Notable local rates include:
- City of Los Angeles: $17.87/hour (general); $22.50/hour for hotel workers
- Los Angeles County (unincorporated): $17.81/hour
- Santa Monica: $17.81/hour (non-hotel); $22.50/hour (hotel)
- West Hollywood: $20.25 (nonhotel); $20.22/hour (hotel)
- San Francisco: $19.18/hour
- San Diego: $17.50/hour
Why this matters: Wage errors—especially in high-cost jurisdictions—remain one of the most common sources of class and representative litigation. Even small discrepancies can quickly compound across pay periods and employees.
What employers should do:
- Verify wage rates by employee work location
- Reassess exempt classifications tied to salary thresholds (as well as other requirements)
- Ensure payroll systems and budgets reflect local requirements
HOSPITALITY INDUSTRY: LOS ANGELES HOTEL WORKER ORDINANCE
Hotel Worker Training, Wage & Notice Requirements
After prolonged legal challenges, the City of Los Angeles’ Hotel Worker Training Ordinance is now fully in effect as of September 8, 2025. The ordinance reflects the City’s broader effort to regulate working conditions in the hospitality industry by mandating training standards, higher wages, benefit requirements, recordkeeping, and employee notices for covered hotels.
Unlike many employment laws that primarily require policy updates, this ordinance demands operational changes, particularly around training and staffing practices.
Why this matters: Enforcement is expected to be active, and noncompliance can trigger administrative penalties and litigation exposure.
What employers should do:
- Confirm whether your property is covered
- Implement required training and documentation
- Review notices, postings, and record-retention protocols
EMPLOYEE NOTICES, RECORDS & CONTRACTS
Workplace “Know Your Rights” Notice (SB 294)
SB 294 reflects California’s increasing emphasis on transparency and employee awareness of workplace rights. Beginning February 1, 2026, employers must provide a standalone written notice explaining certain workplace protections, including employee rights related to immigration enforcement, to all employees annually and to new hires at the time of hire.
The law also requires employers to allow employees to designate an emergency contact and—upon request—to notify that contact if the employee is arrested or detained in specified work-related circumstances.
Why this matters: Failure to provide required notices is a common (and easily avoidable) compliance issue that can support broader claims.
What employers should do:
- Distribute the Labor Commissioner’s updated model notice
- Update onboarding and personnel procedures
Expanded Access to Training & Education Records (SB 513)
SB 513 expands employee access to personnel records by requiring employers who maintain education or training records to produce them upon request, along with detailed information about providers, duration, competencies, and certifications earned.
Why this matters: Training records are increasingly used in wage-and-hour, discrimination, and misclassification disputes.
What employers should do:
- Review how training records are stored and maintained
- Ensure records can be produced promptly and accurately
WARN Act Notice Updates (SB 617)
California continues to enhance employee protections during mass layoffs and relocations. SB 617 expands the content required in WARN Act notices to ensure employees receive information about public benefits, workforce coordination, and how to contact the employer. Notices must now include information about coordination with local workforce development boards, CalFresh benefits, and a functioning employer email address and telephone number.
Why this matters: Deficient WARN notices can invalidate an otherwise compliant layoff process.
What employers should do:
- Update WARN templates before any workforce action
Restrictions on “Stay-Or-Pay” Agreements (AB 692)
AB 692 reflects legislative concern that repayment obligations tied to termination can unlawfully restrict employee mobility. Effective January 1, 2026, most provisions requiring employees to repay training costs, sign-on bonuses, relocation payments, or other amounts because they resign or are terminated are void and unenforceable, unless they fall within a narrow statutory exception or are set forth in a separately negotiated agreement that complies with AB 692’s requirements.
Why this matters: Common arrangements—particularly training reimbursement, relocation repayment provisions, and executive compensation agreements— now carry enforceability risk if not properly structured.
What employers should do:
- Review training, bonus, relocation, and executive agreements for repayment or clawback provisions
- Replace, revise, or restructure noncompliant provisions, including through separate agreements
PAY EQUITY, TRANSPARENCY & DATA REPORTING
Expanded Pay Transparency and Equal Pay Act Protections (SB 642)
SB 642 builds on California’s aggressive pay equity framework by requiring employers to post good-faith pay ranges in job postings and by broadening the scope of the Equal Pay Act. The law also expands what counts as “wages” to include bonuses, equity, benefits, and other forms of compensation. In addition, the statute of limitations has been extended, allowing claims to reach back up to six years in certain circumstances.
Why this matters: Pay equity claims increasingly rely on total compensation—not just base salary—and documentation is critical.
What employers should do:
- Review job postings for compliant pay ranges
- Conduct holistic compensation audits across all pay elements
Expanded Pay Data Reporting Requirements (SB 464)
California has strengthened enforcement of its pay data reporting regime by mandating penalties for noncompliance and requiring demographic data to be stored separately from personnel files. Beginning January 1, 2027, reporting categories will more than double.
Why this matters: Reporting errors now carry automatic penalties, and preparation time is shrinking.
What employers should do:
- Review HRIS and data storage practices now
- Begin planning for expanded 2027 reporting, which will first be due on May 10, 2028
EXPANDED LEAVE & WORKER PROTECTIONS
Crime Victim & Court-Related Leave (AB 406)
AB 406 reflects the Legislature’s continued expansion of protected leave rights. Employees may now take protected time off for a broader range of court proceedings, including those involving family members. Covered proceedings include hearings related to arrest, plea, sentencing, or post-conviction matters, and apply to a wide range of serious offenses, including violent felonies, DUI with injury, stalking, and similar crimes. The law also expands permissible uses of paid sick leave, allowing employees to use sick leave to appear in court as a witness under subpoena or court order, or to serve on a jury.
Why this matters: Leave laws are frequently implicated in retaliation and interference claims.
What employers should do:
- Update leave policies and handbooks
- Train managers on expanded protections
WAGE ENFORCEMENT & CLASSIFICATION RISK
Enhanced Penalties for Unpaid Wage Judgments (SB 261)
To deter nonpayment of wage judgments, SB 261 authorizes courts to impose civil penalties of up to three times the unpaid judgment amount, including post-judgment interest, and to award attorneys’ fees and costs if a final wage judgment remains unpaid more than 180 days after the appeal period expires, absent a showing of good cause.
Why this matters: Delayed payment can now exponentially increase liability.
What employers should do:
- Confirm all wage judgments are promptly satisfied
Strengthened Gratuity Enforcement (SB 648)
SB 648 empowers the Labor Commissioner to independently investigate gratuity violations, signaling increased scrutiny of tip pooling and service-charge practices.
What employers should do:
- Audit gratuity and service-charge policies
Transportation, Trucking Amnesty & Reimbursement Rules (SB 809)
SB 809 provides limited relief for construction trucking employers with potential past misclassification exposure, while also clarifying driver classification standards and reinforcing reimbursement obligations. The law creates an amnesty program allowing eligible construction trucking contractors to avoid penalties for prior misclassification if they enter into a settlement agreement with the Labor Commissioner by January 1, 2029, and agree to properly classify drivers going forward.
Separately, SB 809 clarifies that ownership of a vehicle alone does not establish independent contractor status and reinforces that Labor Code section 2802 requires reimbursement for the business use of personal or commercial vehicles, regardless of who owns the vehicle. These provisions apply broadly to construction and transportation employers and underscore continued scrutiny of driver classification and expense reimbursement practices.
What employers should do:
- Review driver classification and reimbursement policies
- Evaluate potential eligibility for the amnesty program and plan for compliant classification going forward
LABOR RELATIONS, AI & EMERGING ISSUES
Several new laws expand state labor board authority, regulate emerging technologies, strengthen civil rights enforcement, and extend industry-specific worker protections. While some measures apply only to particular sectors, each reflects California’s continued shift toward broader regulatory oversight, expanded agency jurisdiction, and heightened enforcement risk.
Expanded Labor Relations & Collective Bargaining Authority
AB 288 expands the jurisdiction of the California Public Employment Relations Board (PERB) to hear representation and unfair labor practice claims involving certain private sector workers if federal jurisdiction under the NLRA is repealed, limited, not enforced, or effectively ceded by the NLRB, including where a case has been pending before the NLRB for more than 12 months. The law also clarifies that the Agricultural Labor Relations Board is not required to follow NLRB precedent. AB 288 is currently the subject of a federal preemption challenge that may affect enforcement.
Separately, AB 1340 grants collective bargaining rights to Transportation Network Company (TNC) drivers, including the right to organize and engage in protected concerted activity, and assigns PERB authority over representation proceedings and new reporting requirements. Companies operating in or adjacent to the gig economy should assess whether their worker relationships fall within this framework.
Artificial Intelligence, Bias Training & Civil Rights Enforcement
SB 53 imposes new governance and reporting obligations on developers of large “frontier” AI models operating in California. Covered entities must publish AI framework reports addressing safety and risk mitigation, report certain AI-related incidents, and maintain internal whistleblower reporting mechanisms. While not employment-specific, the law has implications for employers developing or heavily relying on advanced AI systems.
SB 303 supports the use of bias mitigation training by clarifying that an employee’s good-faith acknowledgment of bias during such training does not, by itself, constitute unlawful discrimination. The law is intended to encourage voluntary or mandatory bias training without increasing litigation risk.
SB 477 expands the California Civil Rights Department’s enforcement authority by clarifying group and class complaint procedures and extending tolling of the statute of limitations during CRD investigations, internal appeals, and written extensions. Once a right-to-sue notice issues, the complainant retains one year to file suit.
Hospitality & Contractor Compliance Updates
AB 858 extends COVID-19 recall and reinstatement obligations through January 1, 2027 for certain hospitality, airport, event center, and commercial property service employers. Covered employers must continue offering qualified laid-off employees available positions in order of seniority.
SB 291 increases penalties for licensed contractors operating without workers’ compensation coverage, with maximum fines ranging from $10,000 to $30,000 depending on entity type and repeat violations. The law underscores the importance of maintaining continuous coverage and verifying compliance by subcontractors.
IN CLOSING
California employment law continues to evolve rapidly, with enforcement agencies armed with greater authority and penalties. Employers who take a proactive, strategic approach—rather than a reactive one—are best positioned to manage risk.
This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.