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(323) 652-9451 - LAStarting January 1, 2026, Senate Bill (SB) 642 tightens California’s pay-equity and transparency rules. Employers must include a genuine, good-faith salary range in every job posting, not a placeholder or open-ended figure.
The law also expands the Equal Pay Act by adding “another sex” as a protected category and broadening “wages” to include bonuses, benefits, stock options, and allowances. It lengthens the statute of limitations for pay-equity claims, increasing long-term exposure for employers and the need for careful compensation audits.
The compliance deadline for compliance with new California mandatory workplace “Know Your Rights” notice requirement is February 1, 2026.
More specifically, the new law requires giving a standalone written notice to all employees and new hires at hire. The notice addresses wage-hour, discrimination, retaliation and other issues. Penalties can reach $10,000 per violation, making advance planning critical.
Good news: compliance is not difficult! The Department of Industrial Relations (DIR) has issued a template you can download and distribute to employees. A Spanish translation is also available. Both are available at the DIR website, https://www.dir.ca.gov/dlse/Know-Your-Rights-Notice/Know-Your-Rights-Notice-English.pdf
Employers sometimes ask how to provide a comprehensive Employee Handbook to employees across multiple states, where the laws differ dramatically from California.
This is an easy fix and we do it all the time: provide an addendum to the California Handbook identifying the “exceptions” to the California Handbook for every state in which an employee performs work. Since California has a very comprehensive body of employment law, the exceptions for other states tend to be minimal.
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Starting January 1, 2026, California’s statewide minimum wage will rise from $16.50 to $16.90/hour for all employers. That increase also bumps the minimum exempt-employee salary to $70,304/year. Recall certain exempt-employee categories, such as the Executive, Administrative and Professional exemptions require the exempt employee earn a monthly salary that is no less than twice the state minimum wage for full-time employment (defined as 40 hours/week). Importantly, many cities (e.g., Los Angeles, San Francisco, Emeryville) maintain higher local minimum wages, sometimes well above the statewide minimum. Be sure to confirm you are meeting the new wage requirement for your specific location. |
Starting February 1, 2026, California’s SB 294, the Workplace Know Your Rights Act, will require employers to give every new and current employee a standalone notice explaining their key workplace rights.
The notice must cover workers’ compensation, immigration protections, union activity, and constitutional rights when law enforcement visits the workplace. It must also include a summary of new legal developments under laws enforced by the California Labor & Workforce Development Agency, as identified by the Department of Industrial Relations as “material and necessary.”
The state will provide a model notice that must be shared in the employee’s language and sent to any union representative. Employers must also notify an employee’s emergency contact if the employee is arrested at work. Penalties are steep, up to $10,000.
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Effective January 1, 2026, Assembly Bill 692 bans most “stay-or-pay” agreements. These agreements require employees to repay training, relocation, or similar advanced costs after leaving a job before a designated time. The California legislature sees these clauses as unfair limits on job mobility. Only true loans or legitimate retention bonuses are exempt. Employers should review offer letters, training and relocation agreements, and any repayment terms now. If repayment depends on staying employed, it’s probably unlawful. Replace claw-backs with retention bonuses or tiered incentives that reward commitment instead of penalizing departures. |
Pay equity refers to the idea that people doing essentially the same work should be paid the same, regardless of their sex, race, or ethnicity.
Governor Newsom has signed SB 642, the “Pay Equity Enforcement Act,” expanding California’s Equal Pay Act and related disclosure rules. Labor Code § 1197.5 already bars pay differences based on sex, race, or ethnicity for substantially similar work unless justified by seniority, merit, productivity, or another bona fide factor.
California continues tightening its focus on transparency and pay equity. This new law strengthens enforcement and ties those duties to California’s pay-scale disclosure law (Labor Code § 432.3), requiring employers with 15 or more employees to list pay ranges in all job postings and provide pay information on request.
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In Iloff v. LaPaille (Aug. 2025), the California Supreme Court clarified two key issues. First, liquidated (double) damages for minimum wage violations are not automatic: employers may avoid them only by showing a documented, reasonable effort to comply with wage laws. Mere ignorance is insufficient. Second, employees cannot sue directly under the Healthy Workplaces, Healthy Families Act, but may pursue claims through the Labor Commissioner, the Unfair Competition Law, or PAGA. For employers, the message is clear—classify carefully, document compliance efforts, and preserve records to demonstrate good faith if wage or paid leave disputes arise. |
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On August 4, 2025, the California Court of Appeal, in Hirdman v. Charter Communications, held that outside salespeople qualify as “exempt” under the Labor Code, meaning employers may calculate their paid sick leave at the same rate used for vacation or paid time off. The court rejected the Labor Commissioner’s narrower view that only executive, administrative, and professional employees were “exempt,” emphasizing that “exempt” is a statutory term of art covering all overtime-exempt categories. This published decision provides employers a clearer, more practical method of determining sick-leave pay rates for overtime-exempt employees, reducing compliance uncertainty under California’s paid sick leave law. |
Governor Newsom signed Senate Bill (SB) 648, closing a longstanding enforcement gap in California’s wage and hour law. While the Labor Code already prohibits employers from taking or withholding employee tips, the Labor Commissioner previously lacked authority to issue citations for violations.
Effective January 1, 2026, SB 648 authorizes the Commissioner to investigate complaints of tip theft and pursue civil penalties or legal actions directly against offending employers. This new enforcement tool underscores California’s continued focus on wage integrity and creates additional liability exposure for restaurants, hospitality employers, and any business where gratuities are part of compensation.
