With 2026 now upon us, so is a slew of new laws and regulations that affect California businesses.
Every year, laws passed by the state Legislature and signed into law by the governor take effect, and 2025 was a busy legislative session in Sacramento. The end result is another wave of new legislation that California employers need to stay on top of. Here’s what California employers should be aware of.
1. Protected leave expanded
AB 406, which took effect Oct. 1, 2025, expands on revisions made in 2024 to the state’s paid sick and safe time and crime-victim leave laws, adding new categories of protected absences across multiple statutes and increasing the complexity of managing employee leave.
The law amends both the state’s paid sick leave law — the Healthy Workplaces, Healthy Families Act — and Government Code section 12945.8, which governs unpaid job-protected leave.
The new law added two reasons for which employees can take protected time off:
- To appear in court as a witness to comply with a subpoena or court order, including if the employee is a crime victim.
- To serve on an inquest jury or trial jury.
As of Jan. 1, 2026, the law also extends job-protected leave for employees or their family members who are victims of certain serious crimes (the law identifies 14 qualifying crimes).
Covered workers may now take protected leave to attend court or administrative proceedings related to those crimes, such as arraignments, pleas, sentencing hearings, parole hearings and other proceedings where victims’ rights are at issue.
Employers will have to revise their HR policies to ensure they comply with the new law. This law was followed up with clean-up legislation that moved parts of the law from the state Labor Code to the Government Code.
2. New AI-in-hiring rules
As of Oct. 1, 2025, any California employer that uses artificial intelligence and other automated tools in recruiting, hiring, promotion and related human resources decisions must ensure that the tools don’t discriminate against protected classes.
The new regulations, promulgated by California’s Civil Rights Department, cover any “automated decision system,” which the rules broadly define to include any computer-based process that makes or influences employment decisions, such as:
- Artificial intelligence,
- Machine learning,
- Algorithms,
- Statistics, and
- Other data-processing techniques.
If your firm uses AI or another data-driven system in hiring, you’ll want to beef up record-keeping and set testing procedures to ensure that the tools you use comply with the new regulations.
3. New notification requirements
The Workplace Know Your Rights Act adds a new notification requirement for California employers. The new law requires employers to distribute a new notification to workers on an annual basis that informs them about several topics:
- Workers’ compensation,
- Immigration inspection rights,
- The right to organize/unionize,
- Constitutional protections during law enforcement interactions at work, plus
- Other developments from the Labor Commissioner.
The notices must be in the same language that the employer normally uses to communicate with its employees and must be accessible to employees within a business day of transmission.
Employers have until Feb. 1, 2026, to distribute these new notices to their staff. After that it must be distributed annually.
The law includes a separate provision mandating that employers notify an employee’s emergency contact if they are arrested or detained at work. This only applies if the employee has pre-designated an emergency contact for this purpose and if the employer has knowledge of the arrest.
Employers must provide current employees with the opportunity to designate an emergency contact before March 30, 2026.
4. Labor relations board’s purview expands
AB 288 is California’s direct response to the National Labor Relations Board’s paralysis due to lack of a quorum under the Trump administration and the board’s retreat from its historical duties. The law expands the jurisdiction of the California Public Employment Relations Board, which enforces labor issues for the public sector, to private sector employer/employee labor relations.
The law states that employees covered by the National Labor Relations Act may petition the PERB if the NLRB has expressly or impliedly ceded jurisdiction.
PERB is authorized to:
- Hear unfair practices charges,
- Conduct union elections,
- Certify bargaining representatives, and
- Order certain remedies, among other things.
The NLRB has sued to stop the law from taking effect, arguing that the new law is preempted by the National Labor Relations Act.
5. Employment contract repayment provisions
A new law bars employers from including or requiring workers to sign employment-related contracts that impose financial penalties, repayment obligations or fees if the employment ends before a specific date.
AB 692 addresses issues that arise when employers provide signing bonuses, tuition assistance and other benefits and require employees to return the funds if their employment ends prematurely.
Stay tuned next week for the second part of this article covering laws six-ten.
