Hunton Employment & Labor Perspectives

Every January, new California employment laws take effect and 2026 is no different, bringing changes to employment contracts, pay data reporting, paid family leave, and other employment-related topics. The following list highlights five new California employment laws for employers to be aware of in the year ahead.

Changes to Annual Pay Data Reporting (SB 464)

Senate Bill (SB) 464 brings changes to annual pay data reporting for 2026 and 2027. Previous pay data reporting laws required covered employers, to submit annual pay data reports to the California Civil Rights Department (CRD) for a “snapshot” period. The reports covered employee counts by race, ethnicity, and sex across 10 job categories; employee earnings by pay bands (including hours worked); and the mean and median hourly pay rates by race, ethnicity, and sex. Noncompliance carried discretionary penalties of $100 per employee, with an increase to $200 per employee for repeat violations.

Starting in 2026, penalties for noncompliance will become mandatory upon CRD request. Therefore, a covered employer that fails to file could face $50,000 to $100,000 in fines. If a violation is due to a labor contractor failing to provide the required data, courts may shift part of the penalty to the contractor. Additionally, employers will be required to store demographic data separately from personnel records, which may create challenges for employers who keep records electronically. For 2026, reports to the CRD are due by May 13 (the second Wednesday in May).

Starting January 1, 2027, the job categories for employers to report employee counts by race, ethnicity, and sex expands from 10 to 23. The 23 job categories correlate with Standard Occupation Classification (SOC) groups instead of the 10 EEO-1 categories. Some groups can be directly mapped from EEO-1 categories, but not all.

Overall, the changes implemented through SB 464 increase compliance complexity and enforcement risk. Employers should begin planning to remap roles to the new 23 categories for the 2027 reporting cycle. It will be important for employers to coordinate with labor contractors to ensure timely and accurate data submission. Additionally, employers should seek to implement systems to segregate demographic data from personnel files.

The California Civil Rights Department has issued “preliminary” FAQs and templates for the 2025 reporting period, with further resources set for release in February 2026.

Prohibition on Repayment Requirements in Employment Contracts (AB 692)

Assembly Bill (AB) 692 prohibits repayment requirements in certain employment contracts as an unlawful restraint on employment in violation of public policy. For employment contracts entered into on or after January 1, 2026, employers may not require a worker—as a condition of employment or a work relationship­—to execute a contract that contains certain repayment requirements, except in limited situations.  This new law may impact relocation reimbursement agreements, sign-on bonuses and tuition reimbursement, among other common repayment arrangements.  Contracts with repayment requirements that do not meet the statutory requirements or that are prohibited by the new law will be considered void and against public policy. Workers, or their representatives, may sue for either actual damages or $5,000 per worker (whichever amount is greater), plus injunctive relief and attorney’s fees.

Companies in California should review their employment agreements and policies to ensure compliance with this new law.

Expanded Eligibility For Paid Family Leave (SB 590)

Senate Bill (SB) 590 expands the definition of “family member” to include “designated person.” Starting July 1, 2028, California’s Paid Family Leave program will allow employees to take paid leave to care for a “designated person.” A “designated person” is defined as any care recipient related by blood or whose association with the individual is the equivalent of a family relationship. When requesting leave for a “designated person,” the employee must (1) identify the designated person and (2) attest under penalty of perjury how the care recipient meets the definition of designated person. Employers may limit employees to one designated person per 12-month period.

Expanded Personnel Record Requirements (SB 513)

Senate Bill (SB) 513 expands personnel record requirements for employers. This bill amends current requirements and expands the scope of personnel documents an employee may inspect to include education and training records. Such records must include the employee’s name, the name of the training provider, the duration and date of the training, core competencies of the training (including skills in equipment or software), and any resulting certification or qualification from the education or training. Employers must maintain a copy of each employee’s personnel records for at least three years after termination of employment.

The Workplace Know Your Rights Act (SB 294)

Senate Bill (SB) 294 imposes a new annual notice requirement for employers to notify their employees of their rights as workers. On or before February 1, 2026, and annually thereafter, employers are required to provide a stand-alone written notice to each of their current employees (and provide to new employees upon hire).

The notice to employees must include a description of workers’ rights to:

• workers’ compensation (including disability pay and medical care for work-related injuries),
• notice of inspections by immigration agencies,
• protection against unfair immigration-related practices,
• organize, join a union, or engage in concerted activity, and
• constitutional rights when interacting with law enforcement at the workplace (Fourth and Fifth Amendment rights).

Additionally, the notice must include updates on new legal developments regarding laws the Labor and Workforce Development Agency enforces and a list of relevant enforcement agencies. A template notice, developed by the Labor Commissioner for employers to comply with these requirements is available in English and in Spanish.   An employer who violates the notice requirement may be subject to a penalty of up to $500 per employee.

In addition, by March 30, 2026, an employer must provide employees the opportunity to name an emergency contact and to indicate whether the emergency contact should be notified if the employee is arrested or detained. SB 294 requires that, if an employee has asked an employer to notify a designated emergency contact, then the employer must notify the designated contact if the employee is arrested or detained on the worksite or, when the employer has actual knowledge, if the employee is arrested or detained during work hours but not on the worksite. An employer who violates these requirements may be subject to a penalty of up to $500 per day per employee, with a maximum penalty of $10,000 per employee.

Additional Developments And Reminders For California Employers

S.B. 642, the Pay Equity Enforcement Act, also brings significant changes to California’s pay transparency and pay discrimination laws.  You can read our prior blog article on these developments here.

Employers also are reminded that the California statewide minimum wage increased to $16.90 on January 1, 2026. There also may be higher minimum wages for certain healthcare or fast-food industry employees or in certain localities pursuant to a local ordinance.

The Labor Commissioner’s Office has updated its paid sick leave poster in English and various other languages and its paid sick leave FAQs to reflect recent legislative changes.