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Quick Look
- PERB will take action for employee rights when the NLRB does not.
- Leaves for crime victims and attending judicial proceedings are consolidated under the Civil Rights Division.
- Paid sick leave is formally amended to allow usage for jury duty, attend judicial proceedings, and address crime victim needs.
- Public works employers have 10 days to produce payroll records upon request, otherwise the DLSE may withhold penalties from the contract award.
- Stay-or-pay agreements are a prohibited restraint of trade, subject to limited exception.
- There will be statutorily mandated interagency cooperation for processing agricultural employee claims.
- The requirement to rehire displaced workers as a result of the COVID-19 pandemic has been extended another year through the end of 2026.
- There are changes to public works annualization of per diem wages to ensure proper calculation.
- The state Attorney General may bring a lawsuit against a contractor or deny a license application or renewal where the contractor has failed to properly pay its workers.
- The Division of Workers’ Compensation is required to develop templates for a medical evaluation request form and a qualified medical evaluator (QME) report form.
- Rideshare drivers will have the ability to organize while still being classified as independent contractors.
- Workers’ compensation parties must disclose a financial interest in an entity providing services.
- Manicurists and commercial fishers will continue to be exempt from using the “ABC” test to determine independent contractor status through 2029 and 2031, respectively.
- Large developers of artificial intelligence models must have whistleblower processes for their employees.
- Where an employer fails to pay a final judgment for unpaid wages within 180 days of the final judgment, they are subject to a civil penalty of up to three times the judgment amount plus attorneys’ fees and costs.
- By February 1, 2026, all employers must provide employees with a stand-alone written notice of rights. Employers must provide current employees the opportunity to name an emergency contact no later than March 30, 2026.
- Where an employee’s assessment, testing, admission, or acknowledgment of their own personal bias is made in good faith and solicited or required as part of a bias mitigation training does not constitute unlawful discrimination.
- Employers must retain collected demographic information separate from personnel files. Pay data reporting will change as of January 1, 2027 to include 13 more data points.
- There are clarifications on how the CRD manages received complaints under FEHA, including tolling deadlines.
- An employee’s right to review their personnel file related to their performance includes education and training records, which must identify specific information.
- Paid family leave benefits will be expanded to include caring for a designated person with a serious health condition.
- Contractor joint liability requirements and exceptions are clarified.
- A CalWARN notice of mass layoff, relocation, or termination must include new information.
- The pay transparency law amends the definition of “pay scale” to mean a good faith estimate of the salary or hourly wage range that the employer reasonably expects to pay for the position upon hire.
- The statute of limitations for violations of the equal pay law is extended to three years, regardless of whether a violation is considered willful. Other changes extend and clarify requirements.
- The Construction Trucking Employer Amnesty Program offers a settlement option to eliminate employer liability.
- Expense reimbursement requirements are identified for commercial drivers.
- The Division of Workers’ Compensation may obtain a lien on an uninsured employer’s real property transferred to hide the asset.
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Discussion
California’s legislative session has come to a close with the Governor signing a number of bills impacting employers and employees. As in previous years, the California Legislature has been active this season. Here is a summary of key updates employers should be aware of.
AB 288 | JAN 1, 2026 – PERB is California’s version of the NLRB. The Public Employment Relations Board (PERB), already existing to protect public employees, is expanded to protect all employees that otherwise would be protected by the terms of the National Labor Relations Act (NLRA), but are, by act or omission of the National Labor Relations Board (NLRB), not in fact protected. The bill seeks to ensure that all California workers maintain the freedom to engage in collective action, to organize, form, join, or assist labor organizations, and engage in collective bargaining. PERB will have similar authority to address collective bargaining and employee claims as exists for the NLRB.
There will be a phase in period for adjudicating unfair labor practice cases: the bill is effective January 1, 2026 for employers with 500 or more employees for refusal to bargain or acknowledge election certification or unilateral withdrawal of recognition of an employee representative by an employer of any size (Category 1 cases); July 1, 2026 for claims that an employer of any size refused to bargain, recognize, or give effect to an election certification (Category 1); January 1, 2027 for claims that an employer failed to bargain in good faith where engaged for bargaining for over six months without agreement (Category 2); January 1, 2027 for all other cases, which are organized within this category from priority 1 to 4 (Category 3). Priority of cases is designated in order of Category. Unfair practice violations may result in $1,000 civil penalties per worker per violation.
AB 406 | OCT 1, 2025 – Reinstates Protections Against Qualifying Acts of Violence for Violations Prior to December 31, 2024; Moves Leave to Attend Judicial Proceedings to the Government Code; Expands Paid Sick Leave. As of January 1, 2025, protections including leave for victims of qualifying acts of violence was moved from the Labor Code to the Government Code to provide the Civil Rights Division (CRD) authority over alleged violations. This bill reinstates the provisions existing under the Labor Code on or before December 31, 2024 to apply only to alleged actions or inactions occurring on or before that date. The previous protections are reinstated until 2035.
The bill also transfers enforcement authority for discrimination prohibitions relating to crime victims, including when the victims are employees’ family members, taking leave to attend judicial proceedings from the Division of Labor Standards Enforcement (DLSE) to the Civil Rights Department as of January 1, 2026, by transferring laws from the Labor Code to the Government Code. The current Labor Code sections will apply to violations occurring on or before December 31, 2025, and those laws will sunset as of 2035.
Finally, the paid sick leave law has been amended to specifically allow for leave to be taken (1) to attend judicial proceedings relating to crime victims as was stated in the Labor Code prior to 2025; (2) for purposes of jury duty, appearing as a witness in a judicial proceeding, and to obtain certain crime victim relief as of January 1, 2025; and (3) for crime victims to attend judicial proceedings as of January 1, 2026. These changes reflect reconciliation of provisions among the moving parts of these laws to be consistent across code sections and expand on what already existed.
AB 538 | JAN 1, 2026 – Public works access to payroll records. Contractors and subcontractors must currently maintain payroll records for employees on public works projects. When the request for records is made through the project-awarding public agency, and the agency does not have a certified copy of the records, this bill requires the agency to obtain the payroll records from the contractor. Once the contractor receives the request from the awarding agency, the contractor has 10 days to comply. If the contractor fails to comply, the DLSE is notified and may seek to withhold penalties from the contract award.
AB 692 | JAN 1, 2026 – “Stay-or-Pay” Agreements are a Restraint of Trade. This bill prohibits employers from entering into agreements that require payment of debts, debt collection or ending forbearance, or imposes any penalty, fee, or cost on a worker if their work relationship terminates. Provided that certain requirements are met, this restriction does not apply to tuition repayment costs for a transferable credential, enrollment in an approved apprenticeship program, or repayment of a hiring bonus that is not tied to specific job performance. These prohibitions apply to contracts entered into on or after January 1, 2026. Victims or worker representatives may bring civil lawsuits for violations of the law, which may result in a minimum of a $5,000 penalty per worker, plus injunctive relief and attorneys’ fees. The Governor encouraged further legislation in 2026 to preclude “stay-or-pay” agreements in collective bargaining.
AB 845 | [Upon Legislative Appropriation] – Agricultural Employee Claims. This bill requires any agency within the Labor and Workforce Development Agency to route complaints received from agricultural employees to the proper state agencies with jurisdiction over the complaints, and prohibits the transmitting entity from disclosing the identity and personal information of the complainant to the extent prohibited by law without their consent.
AB 858 | JAN 1, 2026 – Extension for Rehiring Displaced Workers. This bill extends Labor Code § 2810.8 through January 1, 2027. Previously expiring at the end of 2025, former employers in the hospitality and business service provider industries must offer re-employment to those who were laid off for qualifying reasons during the COVID-19 pandemic when positions are available for which they qualify, in addition to other notice and recordkeeping requirements.
AB 889 | JAN 1, 2026 – Changes to Public Works Annualization of Per Diem Wages. Employers use annualization to calculate fringe benefit credits that may be applied to prevailing rate wages on public work projects. This bill removes existing exceptions for employers to pay the general prevailing rate of per diem wages for public works projects and revokes annualization exemptions authorized before January 1, 2026. Employers are authorized to take full credit for the hourly amounts contributed to defined contribution pension plans that provide for both immediate participation and essentially immediate vesting even if the employer contributes at a lower rate or does not make contributions to private construction. The employer has the burden to prove that the credit for employer payments was calculated properly. Employers are required to produce records of employee hours and employer payments on private construction sufficient for the Labor Commissioner to verify that the credit for employer payments was properly calculated on an annualized basis; the Labor Commissioner may deny the employer credit for employment payments if the employer does not produce the requested records.
AB 1002 | JAN 1, 2026 – Contractor Penalties for Wage and Hour Violations. The state Attorney General may bring a lawsuit against a contractor or deny a license application or renewal where the contractor has failed to pay its workers the full amount of wages that the workers are entitled to under state law, has not fulfilled a wage judgment, or is in violation of an injunction or court order regarding the payment of wages to its workers. A good faith mistake regarding which wage rate applies to a particular category of work will not be considered a violation of the law.
AB 1293 | JAN 1, 2026 – Workers’ Compensation Qualified Medical Evaluators Report Form Template. This bill requires the Division of Workers’ Compensation to develop templates for a medical evaluation request form and a qualified medical evaluator (QME) report form. The Division is required to adopt regulations to implement this bill by January 1, 2027.
AB 1340 | JAN 1, 2026 – Transportation Network Company Drivers Labor Relations Act. This bill requires that transportation network company (TNC) drivers, providing prearranged passenger transportation services, have the right to form, join, and participate in the activities of TNC driver organizations, to bargain through representatives of their own choosing, to engage in concerted activities for the purpose of bargaining or other mutual aid or protection, and to refrain from such activities. This essentially gives rideshare drivers the ability to organize while still being classified as independent contractors. The PERB is required to enforce these rules.
AB 1398 | JAN 1, 2026 – Workers’ Compensation Disclosure Requirements. All interested parties in a workers’ compensation case must disclose to a third-party payer, or other entity to whom a claim for payment is presented for services furnished pursuant to a referral, a financial interest in an entity providing services. The disclosure must be made in writing, at the time the claim for payment is presented for services furnished pursuant to a referral.
AB 1514 | JAN 1, 2026 – Extended Independent Contractor “ABC” Exemption for Licensed Manicurists and Commercial Fishers. Under Labor Code § 2778, manicurists and commercial fishers are exempt from using the “ABC” test to determine independent contractor status. Those exemptions were set to sunset and now have been extended until 2029 and 2031, respectively.
SB 53 | JAN 1, 2026 – Transparency in Frontier Artificial Intelligence Act (TFAIA). Large developers of artificial intelligence models are required to follow specified standards when creating frontier models and to publish information about their models on their websites. For employers, it creates whistleblower protections for those working with foundation models and prohibits a frontier developer from preventing, or retaliating against, a covered employee from or for disclosing information to the Attorney General, a federal authority, the employee’s superior, or an employee who has authority to investigate, discover, or correct the reported issue, if the covered employee has reasonable cause to believe that the information discloses that the frontier developer’s activities pose a specific and substantial danger to the public health or safety resulting from a catastrophic risk or that the frontier developer has violated the TFAIA. It also requires frontier developers to have specified internal reporting procedures for this purpose. This bill preempts any similar local laws enacted on or after January 1, 2025.
SB 261 | JAN 1, 2026 – DLSE Enforcement of and Penalties for Wage Theft. Where an employer fails to pay a final judgment for unpaid wages within 180 days of the final judgment, they are subject to a civil penalty of up to three times the judgment amount. Penalties are distributed 50/50 between employees and the DLSE. The Labor Commissioner or public prosecutor must be awarded court costs and reasonable attorneys’ fees for successful judgment enforcement.
SB 294 | FEB 1, 2026 – Workplace Know Your Rights Act. By February 1, 2026, all employers must provide employees with a stand-alone written notice of rights to each current employee through personal service, email, or text message, or other method if it can reasonably be expected to be received by the employee within one business day of sending. The written notice must also be provided to each new employee upon hire and annually to existing employees. The Labor Commissioner is expected to provide a template notice by January 1, 2026. The notice must describe employee rights to workers’ compensation benefits, notice of inspection by immigration agencies, organize a union or engage in concerted activity, and when interacting with law enforcement at the workplace, as well as other information deemed necessary by the Labor Commissioner. Employers must keep records of compliance for three years, including the date that each written notice is provided or sent.
If an employee has notified their employer that they would like their designated emergency contact to be notified in the event they are arrested or detained, the employer must notify the designated emergency contact if the employee is arrested or detained on their worksite or if the employer is otherwise aware of arrest or detention away from the worksite during work hours. Employers must provide current employees the opportunity to name an emergency contact no later than March 30, 2026, and at the time of hire for new employees hired after March 30, 2026. The employer must also allow employees to provide updated emergency contact information through their duration of employment.
SB 303 | JAN 1, 2026 – Admissions During Bias Mitigation Training Do Not Trigger FEHA Protections. Where an employee’s assessment, testing, admission, or acknowledgment of their own personal bias is made in good faith and solicited or required as part of a bias mitigation training does not constitute unlawful discrimination under the Fair Employment and Housing Act (FEHA). This measure is enacted in part to encourage employers to conduct bias mitigation training.
SB 447 | JAN 1, 2026 – Workers’ Compensation Firefighter and Peace Officer Death Benefits Extended. When a local firefighter or peace officer dies as a result of an accident or injury caused by external violence or physical force while performing their duty, workers’ compensation rules require the employer to continue providing health benefits to the deceased employee’s minor dependents under the benefits extended to the surviving spouse, or if there is no surviving spouse, until the minor dependent reaches a certain age. This bill extends that age from 21 to 26 years old.
SB 464 | JAN 1, 2026 – Pay Data Reporting Update. Employers with 100 or more employees have been required to provide pay data reporting to the State. This bill amends those requirements. First, this bill requires employers to retain collected demographic information separate from personnel files. Second, it makes civil penalties mandatory, rather than optional, for failure to report, which are $100 per employee for a first violation and $200 per employee for subsequent violations. Finally, pay data reporting will change as of January 1, 2027 to include 13 more data points, for a total of 23 data points reported. Employers will need to start collecting the required data in 2026 to prepare for reporting in 2027.
SB 477 | JAN 1, 2026 – CRD Procedural Updates Under FEHA. There is a set process for how the CRD manages received complaints under FEHA. This bill makes some clarifications and expands the reasons for tolling certain timed procedures. The bill clarifies the definition of “group or class complaint” to mean any complaint alleging a pattern or practice. Where a group or class complaint would otherwise cover another complaint made, the department will issue a right-to-sue notice for that complaint on request or at the conclusion of the group or class complaint. Additionally, the time for a complainant to file a civil action under certain identified statutes is tolled until one year after the department issues either a written notice that it has closed its investigation without electing to file a civil action for the alleged violation, or written notice that the complaint has remained closed following an appeal to the department if a timely appeal is made to the original closure. The time for the CRD to bring certain claims against an employer or issue right-to-sue letters may be tolled during a dispute resolution proceeding (e.g., mediation), based on mutual written agreement by the parties, during the time the CRD’s investigation is extended due to a pending petition to compel, or during a timely appeal for closing the complaint.
SB 487 | JAN 1, 2026 – Workers’ Compensation Benefits and Obligations for Firefighters and Peace Officers. This bill says that an employer is entitled to receive no more than 1/3 of the third-party defendant’s liability insurance policy limit for an injured peace office or firefighter, if the employee establishes that their total damages exceed the net recovery after satisfaction of the employer’s claim and that the total liability insurance limits available are insufficient to fully compensate the employer and employee’s proven damages. The bill limits an employer’s right to reimbursement, subrogation, or lien to the maximum recovery threshold. Employers are prohibited from asserting any recovery by an injured employee as a credit or offset against future workers’ compensation benefits and must have a settlement or release to limit the employer’s claim for reimbursement to the portion of the settlement not allocated to the employee under this bill.
SB 513 | JAN 1, 2026 – Personnel Records Clarified. An employee’s right to review their personnel file related to their performance includes education and training records. Education and training records must include the name of the employee, the name of the training provider, the duration and date of the training, the core competencies of the training (including skills in equipment or software), and the resulting certification or qualification.
SB 590 | JUL 1, 2028 – Paid Family Leave to Care for Designated Persons. Paid family leave benefits will be expanded to include caring for a designated person with a serious health condition. “Designated person” means any care recipient related by blood or whose association with the individual is the equivalent of a family relationship. This is consistent with the definition of designated person under the California Family Rights Act (CFRA), which differs from the definition under the state paid sick leave law. Upon request to the EDD for wage replacement benefits for leave to care for a designated person, the employee must identify the designated person, and attest under penalty of perjury how that person is related by blood or is the equivalent of a family relationship.
SB 597 | JAN 1, 2026 – Contractor Joint Liability Clarified. Contractors are currently liable for wages of subcontractor employees. This bill limits the direct contractor’s liability to payments for labor required by the subcontractor’s agreement with the laborer or the subcontractor’s collective bargaining agreement. Additionally, liability of direct contractors will not be based on the employer’s misclassification of the craft of a worker. The statutory remedies are deemed to be cumulative of any other available remedies. Further, a direct contractor is not otherwise liable for fringe or other benefit contributions if it pays outstanding fringe and other benefit contributions owed to the worker through a joint check made payable to the subcontractor and the labor trust fund. The definition of “direct contractor” was revised to mean a contractor that has a direct contractual relationship with an owner or any other person or entity engaging contractors or subcontractors for the erection, construction, alteration, or repair of a building, structure, or other private work on behalf of the owner.
SB 617 | JAN 1, 2026 – CalWARN Notice Revision. A CalWARN notice of mass layoff, relocation, or termination must include (1) whether the employer plans to coordinate services, such as a rapid response orientation, through the local workforce development board, the employer plans to coordinate services through a different entity, or the employer does not plan to coordinate services with any entity; (2) the email and phone number of the local workforce development board and a scripted description of the board; (3) a description of the statewide food assistance program known as CalFresh, the CalFresh benefits helpline, and a link to the CalFresh internet website; and (4) a functioning email and telephone number of the employer for contact. When coordinating services with a local workforce development board, an employer must do so within 30 days from the date of the notice.
SB 642 | JAN 1, 2026 – Pay Transparency and Equal Pay Updates. Currently, employers must disclose the pay scale of a position in job postings and upon request. This bill revises “pay scale” to mean a good faith estimate of the salary or hourly wage range that the employer reasonably expects to pay for the position upon hire. Additionally, the statute of limitations for violations of the equal pay law is extended to three years, regardless of whether a violation is considered willful. There is also a six-year lookback period for obtaining remedies. The bill states that a cause of action under the equal pay law arises when an alleged unlawful compensation decision or practice is adopted, an individual becomes subjected to an unlawful compensation decision or practice, or an individual is affected by application of an unlawful compensation decision or practice, including each time wages, benefits, or other compensation is paid. For purposes of equal pay, “sex” has the same definition as is used under FEHA and equal pay must be provided as compared to those of “another” sex rather than the current standard of the “opposite” sex; and “wages” and “wage rates” include all forms of pay, including, but not limited to, salary, overtime pay, bonuses, stock, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, cleaning or gasoline allowances, hotel accommodations, reimbursement for travel expenses, and benefits.
SB 809 | JAN 1, 2026 – Misclassification of Construction Drivers; Vehicle Expenses. Currently, the Motor Carrier Employer Amnesty Program allows a motor carrier performing drayage services to be relieved of liability for statutory or civil penalties associated with the misclassification of commercial drivers as independent contractors if the motor carrier enters into a settlement agreement with the commissioner. This bill creates a similar program, known as the Construction Trucking Employer Amnesty Program, allowing an eligible construction contractor to be relieved of liability for certain statutory or civil penalties associated with the misclassification of construction drivers as independent contractors, if the eligible construction contractor executes a settlement agreement negotiated with, or approved by, the Labor Commissioner prior to January 1, 2029. Additionally, the Labor Code will state that mere ownership of a vehicle used by a person in providing labor or services for remuneration does not determine whether that person is an independent contractor; the statutory “ABC” test determines independent contractor status.
Currently, employees are required to be reimbursed for necessary expenditures incurred in the discharge of their duties. This bill expressly requires reimbursement for expenses related to use of a personal or commercial vehicle while performing their job duties. With respect to construction trucking, a commercial motor vehicle driver who owns the truck, tractor, trailer, or other commercial vehicle that they use in performing their job duties is entitled to reimbursement for the use, upkeep, and depreciation of that vehicle, regardless of whether the vehicle is owned by the driver as an individual or through a corporate entity. This addition to the Labor Code is “declarative of existing law.” The amount to be reimbursed for the use of the truck, tractor, or trailer must be negotiated either by the driver (or their representative) and the employer. The amount negotiated must be either a flat rate reimbursement or a per-mile reimbursement, but must at least be the actual amount expended by the driver for a flat rate reimbursement or the standard mileage reimbursement rate set by the IRS. This expense reimbursement may be paid directly to the driver in the driver’s name or to a corporate entity owned and controlled by the driver if the vehicle is owned by the corporate entity.
SB 847| JAN 1, 2026 – Workers’ Compensation Lien on Real Property. This bill allows the Division of Workers’ Compensation to obtain a lien on an uninsured employer’s real property transferred after an employee’s injury, where the transfer indicates that it was made as a gift with no transfer tax paid or was intended to hide the asset.
Action Items
- Have appropriate personnel trained on compliance with the National Labor Relations Act.
- Update leave policies for compliance.
- Have legal counsel review and update employee contracts in 2026.
- Maintain processes to rehire displaced workers as a result of the COVID-19 pandemic.
- Review public works annualization of per diem wages to ensure proper calculation.
- Conduct a wage and hour audit to confirm appropriate pay is provided to employees.
- Have legal counsel review independent contractor classifications for compliance.
- By February 1, 2026, provide employees with a stand-alone written notice of rights.
- By March 30, 20206, provide current employees the opportunity to name an emergency contact.
- Retain collected demographic information separate from personnel files.
- Prepare to expand pay data collection in 2026.
- Ensure education and training records identify required information.
- Update CalWARN notices with newly required information for 2026.
- Evaluate pay scale measurements for disclosure in compliance with pay transparency requirements.
- Have an equal pay audit conducted to evaluate compliance.
- Update expense reimbursement procedures for personal and commercial drivers.
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2025 ManagEase
