California lawmakers spent 2025 rewriting a lot of the rules employers thought were settled. Starting January 1, 2026, a wave of statutes — from limits on “stay‑or‑pay” clauses to expanded pay transparency, new notice requirements, and heightened AI whistleblower protections — will reshape hiring, benefits, personnel records and workplace safety. For businesses operating in the state, the changes are practical, immediate, and in some cases punitive if ignored.
A new bar for repayment and clawbacks
One of the loudest changes is Assembly Bill 692, which clamps down on the common practice of requiring employees to repay sign‑on bonuses, training costs or relocation expenses if they leave. In plain terms: many repayment or “stay‑or‑pay” contract terms executed on or after January 1, 2026, will be void unless they meet narrow statutory exceptions.
That matters because AB 692 creates a private right of action and minimum statutory damages (at least $5,000 per affected worker), plus injunctions and attorney fees. Employers who use clawbacks should review every offer letter, bonus agreement and tuition‑repayment contract now. Some exceptions remain — separate standalone agreements for limited signing bonuses, government loan forgiveness programs, apprenticeship contracts and carefully drafted tuition repayment agreements — but those exceptions carry strict notice, timing and prorating rules.
Notices, emergency contacts and new paperwork burdens
SB 294 requires employers to hand every California worker a new “Know Your Rights” notice by February 1, 2026, and to repeat that notice annually. By March 30, 2026, employers must give employees the chance to designate an emergency contact and to say whether that contact should be notified in the event of an arrest or detention of the employee (on or off the job). Penalties for noncompliance can reach hundreds of dollars per employee and per day.
These are not paper‑shuffling niceties. HR teams need to build distribution and tracking into onboarding and annual processes now: which version of the notice you used, who signed, and where the emergency contact data is stored.
Pay transparency, reporting and equal pay enforcement
California tightened pay transparency and equal pay rules with SB 642 and related measures. Employers with 15+ staff must include a “good‑faith” wage range in job postings and be prepared to treat every form of compensation — salary, bonuses, equity, benefits and more — as part of “wages” for equal pay comparisons.
On top of that, SB 464 increases pay data reporting requirements and will expand job categories employers must report on beginning in 2027. The new law adds civil penalties for failure to file when required. Employers should start organizing demographic and pay data separately from personnel files and plan for broader reporting cycles.
Personnel files, training records and discovery risks
SB 513 expands what employees can inspect: education and training records related to performance now fall within the personnel‑file inspection right. If you keep training histories, certificates or third‑party course records, make sure those files meet the new content requirements and are accessible on request.
Leaves, victim protections and recall rights
Several laws tweak leave and recall rules: AB 406 expands allowable uses of paid sick leave (including certain judicial proceedings and victim protections), SB 590 will broaden Paid Family Leave eligibility (starting in 2028) to include care for a “designated person” who stands in for a family member, and AB 858 extends COVID‑era recall rights for certain hospitality and building‑services workers through January 1, 2027.
Bigger penalties for unpaid wage judgments
SB 261 raises the stakes for employers who ignore final wage judgments — courts may impose civil penalties of up to three times the outstanding award if a judgment isn’t satisfied within 180 days after appeal periods lapse. That’s an incentive to clear outstanding awards quickly or face multiplier penalties plus attorney fees.
Workplace safety and Cal/OSHA — enforcement won’t slow
California’s Cal/OSHA program is among the most active in the country. New regulations and enforcement priorities are expected in 2026; employers should monitor rulemaking and consider joining webinars and trainings focused on Cal/OSHA’s evolving standards. If you run operations with isolated workers, healthcare staffing, or smoke exposure risks (e.g., wildfire smoke tracking), update your safety plans and monitoring systems accordingly. Conn Maciel Carey and other practitioner groups are already scheduling deep dives into these topics for employers preparing for 2026 inspections and appeals.
AI and whistleblower protections: a surprising new frontier
The state’s approach to artificial intelligence is becoming an employment issue. California’s Transparency in Frontier Artificial Intelligence Act includes whistleblower protections for employees of large “frontier” AI developers, shielding workers who report conduct that could cause catastrophic public harm. Employers that touch frontier models must build internal reporting and anti‑retaliation systems.
At the same time, employers should watch how AI is used for hiring, performance management and surveillance. National and state rules are proliferating; pairing internal policies with audit trails will help defend decisions and comply with transparency obligations. The tech landscape is moving fast — for a flavor of where model development is headed, see recent industry moves like Microsoft’s new text‑to‑image model and Google’s expanding AI mode in Chrome, which show how quickly capabilities diffuse into products and workflows (Microsoft MAI image model, Google AI mode features).
What to do this month (practical checklist)
- Inventory: locate every agreement that contains repayment, clawback, relocation or tuition terms. Tag those dated Jan 1, 2026 or later for revision.
- Notices and onboarding: prepare the SB 294 notice distribution plan and update onboarding to capture emergency contacts and consent choices.
- Job posts: ensure all open positions display a good‑faith wage range.
- Records and reporting: separate demographic pay data, catalog training records, and map reporting responsibilities for forthcoming SB 464 changes.
- Compliance calendar: mark key deadlines (Feb 1 notice distribution, March 30 emergency contact window, Jan 1 effective dates) and schedule HR/legal reviews.
- Legal posture: run privileged pay‑equity audits if you haven’t recently — expanded remedies make this a higher‑risk area.
Change is costly when it’s reactive. For employers with California footprints, the practical work is straightforward but time‑consuming: contract rewrites, notice campaigns, updated posting templates, and better data hygiene. Start now and involve legal counsel where statutes create private‑right‑of‑action exposure or enhanced penalties.
Employment law in California rarely stands still. That’s why the careful employer treats this as a program — not a one‑off — and builds processes that keep policy, payroll and people aligned as statutes continue to evolve.