Important California Employment Law Updates for 2026

As the new year quickly approaches, below are some of the most significant California employment laws that will go into effect in 2026.

Assembly Bill 692 (AB 692) - Eliminates Employee Repayment Requirements

• Prohibits, with certain exceptions, employment contracts that require a worker to repay the employer, a training provider, or debt collector for a debt when the employment relationship or work ends (so-called “stay-or-pay” or “exit fee” provisions). The law will apply to contracts entered into on or after Jan 1, 2026.

• Key takeaway: Requires employers to review existing and new employee agreements that include repayment provisions (training reimbursement, relocation, sign-on bonuses with clawback terms). If they impose broad debt-repayment obligations when an employee leaves, they may become unenforceable (unless they meet specific limited carve-outs).

Senate Bill 294 (SB 294) - Notice Requirements

• Requires that employers provide a stand-alone written notice of labor/work rights to each new hire and annually to current employees.

• Also requires notifying an employee’s emergency contact if the employee is arrested or detained on the employer’s worksite.

• Key takeaway: Requires employers to prepare updated notices (for both new hires and annual distribution) and adjust onboarding and HR-compliance systems to handle the emergency‐contact notification requirement.

Senate Bill 642 (SB 642) - Pay Transparency & Look-Back Periods

• Revises the definition of “pay scale” under California’s Pay Transparency law and extends the statute of limitations to allow for up to six years of back pay recovery, aligning it with other anti-discrimination statutes and providing a longer period to address disparities that may not be immediately apparent. 

• Key takeaway: Requires employers to update job postings and internal pay-scale policies, ensure transparency in compensation practices, and audit prior wage practices in light of longer look-back periods.

Senate Bill 513 (SB 513) - Personnel File Expansion

• Expands the scope of personnel records that employees may inspect to include education and training records.

• Key takeaway: Requires employers to identify and categorize education/training records, ensure they are available for inspection as required, and update HR policies accordingly.

Senate Bill 261 (SB 261) - Wage Payment Judgments

• Final judgments for unpaid wages which are unsatisfied for 180 days may trigger triple penalties.

• Key takeaway: Requires employers who have a judgment against them for unpaid wages to pay the judgment amount within 180 days or face penalties amounting to three times the judgment amount.