Governor Newsom Signs New Bills Into Law Impacting California Employers
Earlier this week and, in some instances, earlier this past summer, California Governor Newsom signed into law several bills that will take effect on January 1, 2026. Following is a summary of some of the laws that will impact California employers.
Wage and Hour
Tips/Gratuities: Senate Bill 648, signed into law during the summer, amends Labor Code section 351. Existing law prohibits employers from taking employee tips/gratuities, deducting any amount from employees’ wages to account for tips/gratuities, and/or requiring employees to credit the amount of any tip/gratuity against their wages. This bill authorizes the Labor Commissioner to investigate and issue a citation or file a civil action for tips/gratuities taken or withheld in violation of these provisions.
Meal and Rest Periods: Assembly Bill 751 and Senate Bill 693, also signed into law during the summer, amend Labor Code sections 226.75 and 512. With regard to Assembly Bill 751, the requirement that employees be relieved of all duties during rest periods does not apply with respect to an employee holding a safety-sensitive position at a petroleum facility to the extent that the employee is required to carry and monitor a communication device and to respond to emergencies, or is required to remain on employer premises to monitor the premises and respond to emergencies. Assembly Bill 751 indefinitely extends this exemption, which was previously scheduled to expire on January 1, 2026. With regard to Senate Bill 693, existing law provides an exemption from meal period obligations for employees in specified occupations, including employees of an electrical corporation, a gas corporation, or a local publicly owned electric utility covered by a valid collective bargaining agreement meeting certain conditions. Senate Bill 693 extends that exemption to water corporations, defined—by reference to Public Utilities Code section 241—to include every corporation or person owning, controlling, operating, or managing any water system for compensation within California.
Independent Contractors; Reimbursement: Senate Bill 809 adds Labor Code sections 2750.9, 2775.5, and 2802.2, and provides that the mere ownership of a vehicle, including a personal vehicle or a commercial vehicle, used by a person in providing labor or services for remuneration does not in and of itself make that person an independent contractor. It also provides that an employer’s duty to indemnify employees for all necessary expenses or losses applies to the use of a vehicle owned by an employee and used by that employee in the discharge of their duties. With respect to construction trucking, a commercial motor vehicle driver who is an employee and who owns the truck, tractor, trailer, or other commercial vehicle that is used in the discharge of the driver’s duties would be entitled to reimbursement for the use, upkeep, and depreciation of that truck, tractor, trailer, or other commercial vehicle. Finally, the bill establishes the Construction Trucking Employer Amnesty Program administered by the Labor Commissioner and the Employment Development Department (EDD), which relieves eligible construction contractors of liability for statutory or civil penalties associated with the misclassification of construction drivers as independent contractors if they execute a settlement agreement with the Labor Commissioner prior to January 1, 2029, and agree to classify all drivers performing construction work as employees and agree to pay all wages, benefits and taxes owed, among other obligations.
Public Works: Assembly Bill 538 amends Labor Code section 1776. Existing law requires the Labor Commissioner to investigate allegations that a contractor or subcontractor violated the law regulating public works projects, including the payment of prevailing wages. Each contractor and subcontractor on a public works project must keep accurate payroll records, showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker, or other employee employed by the contractor or subcontractor in connection with the public work. Certified copies of records must be available upon request. Any contractor, subcontractor, agent, or representative who neglects to comply with the requirements to keep accurate payroll records is guilty of a misdemeanor. This bill requires that, if a request is made by the public through the awarding body and the awarding body is not in possession of the certified records, the awarding body must obtain the records from the contractor and make them available to the requesting entity. The Division of Labor Standards Enforcement may enforce certain penalties if a contractor fails to comply with the awarding body’s request within 10 days.
Wage Judgments: Senate Bill 261 amends Labor Code section 98.2 and adds Labor Code sections 238.05 and 238.10. Existing law provides for enforcement of a final judgment against an employer arising from the employer’s nonpayment of wages, including prohibiting the employer from conducting business in California, if a final judgment against the employer remains unsatisfied for 30 days. This bill additionally imposes a civil penalty not to exceed three times the outstanding judgment amount if a final judgment arising from the nonpayment of wages remains unsatisfied after a period of 180 days. It also provides for an award of reasonable attorneys’ fees and costs to a prevailing plaintiff in any action brought by a judgment creditor, the commissioner, or a public prosecutor to enforce a final judgment arising from the nonpayment of wages, penalties, or other amounts owed arising from work performed in California.
Benefits
Paid Family Leave: Senate Bill 590 amends, repeals, and adds Unemployment Insurance Code sections 3301, 3302, and 3303. Under existing law, the state’s Paid Family Leave program provides up to eight weeks of wage replacement benefits to employees when they take time off work for prescribed purposes, including to care for a seriously ill family member. Effective July 1, 2028, this bill expands eligibility for benefits under this program to include individuals who take time off work to care for a seriously ill “designated person,” defined to include any care recipient related by blood or whose association with the individual is the equivalent of a family relationship. Upon the first request, the employee will be required to identify the designated person and, under penalty of perjury, attest to how the individual is related by blood or how the individual’s association is the equivalent of a family relationship.
Hiring/Rehiring/Personnel Records/Notices
Job Postings; Equal Pay: Senate Bill 642 amends Labor Code sections 432.3 and 1197.5. Existing law imposes requirements upon employers to share the pay scale for a position with a job applicant or in a job posting and defines “pay scale” as the salary or hourly wage range that the employer reasonably expects to pay for the position. It also prohibits employers from paying employees at wage rates less than the rates paid to employees of the opposite sex or another race or ethnicity for substantially similar work, except under specified circumstances, and requires a civil action to recover wages for a violation of those provisions to be commenced within two years after the cause of action occurs or, if the cause of action arises out of a willful violation, within three years after the cause of action occurs. This bill: (1) revises 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; (2) defines “wages” and “wage rates” for purposes of these provisions to 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; (3) prohibits employers from paying employees at wage rates less than the rates paid to employees of another sex (amended from opposite sex); (4) extends the statute of limitations for these claims to three years after the last date the cause of action occurs regardless of the degree of intent; (5) provides that employees are entitled to obtain relief for the entire period of time in which a violation exists not to exceed six years; and (6) clarifies that a cause of action occurs when any of the following occur: (a) an alleged unlawful compensation decision or other practice is adopted; (b) an individual becomes subject to an alleged unlawful compensation decision or other practice; or (c) when an individual is affected by application of an alleged unlawful compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from the decision or other practice.
Pay Data Reporting: Senate Bill 464 amends, repeals, and adds Government Code section 12999. Existing law requires private employers with 100 or more employees to submit an annual pay data report to the California Civil Rights Department (CRD), which includes data regarding race, ethnicity, and sex in 10 specified job categories. If the CRD does not receive the pay data report from an employer, the CRD may seek an order requiring the employer to comply with its obligations and, upon the request of the CRD, a court may impose a civil penalty upon the employer for failure to file the required report. This bill modifies these provisions by: (1) requiring employers to collect and store this data separately from employees’ personnel records; (2) requiring courts to impose a civil penalty against employers that fail to file the report if requested to do so by the CRD; and (3) increasing the number of job categories from 10 to 23 beginning January 1, 2027.
Personnel Records: Senate Bill 513 amends Labor Code section 1198.5. Existing law permits current and former employees, or their representatives, to inspect and receive a copy of personnel records maintained by their employers relating to an employee’s performance or to any grievance concerning the employee. This bill requires that personnel records relating to an employee’s performance include education and training records. It further requires that employers who maintain education or training records must ensure the records include all of the following information: the name of the employee; the name of the training provider; the duration and date of the training; the core competencies of a training, including skills in equipment or software; and the resulting certification or qualification.
Employment Agreements: Assembly Bill 692 adds Business and Professions Code section 16608 and Labor Code section 926. Existing law voids contracts that restrain engagement in a lawful profession, trade, or business, with limited exceptions. For contracts entered into on or after January 1, 2026, and under the premise that such contractual provisions would restrain such activity, this bill makes it unlawful to include in an employment contract, or to require a worker to execute as a condition of employment or a work relationship, language that does any of the following: (1) requires the worker to pay an employer, training provider, or debt collector for a debt if the worker’s employment or work relationship with a specific employer terminates; (2) authorizes the employer, training provider, or debt collector to resume or initiate collection of or end forbearance on a debt if the worker’s employment or work relationship with a specific employer terminates; or (c) imposes any penalty, fee, or cost on a worker if the worker’s employment or work relationship with a specific employer terminates. This prohibition does not apply to certain specified contracts, including contracts entered into under any loan repayment assistance program or loan forgiveness program provided by a federal, state, or local governmental agency; contracts related to the repayment of the cost of tuition for a transferable credential that meets that meet specified requirements; contracts related to enrollment in an apprenticeship program approved by the Division of Apprenticeship Standards; contracts for the receipt of a discretionary or unearned monetary payment, including a financial bonus, at the outset of employment that is not tied to specific job performance, provided that specified conditions are satisfied; and contracts related to the lease financing, or purchase of residential property.
Employee Notices: Senate Bill 294 adds Labor Code sections 1550 through 1559, known as the Workplace Know Your Rights Act. Among other things, this bill requires employers to provide a stand-alone written notice to employees setting forth specified workers’ rights, including, the right to workers’ compensation benefits; the right to notice of inspection by immigration agencies; protection against unfair immigration-related practices against a person exercising protected rights; the right to organize a union or engage in concerted activity in the workplace; and constitutional rights when interacting with law enforcement at the workplace. The notice must also include a description of new legal developments pertaining to laws enforced by the Labor and Workforce Development Agency and a list of the enforcement agencies that may enforce these rights. The notice must be provided to current employees on or before February 1, 2026, to new employees upon hire, and to all employees and their authorized representative annually. On or before January 1, 2026, the Labor Commissioner is required to develop and post a template notice for employers to use with updated templates posted annually thereafter. On or before July 1, 2026, the Labor Commissioner is required to develop videos for employees and employers advising them of employee rights. The bill also requires employers to notify an employee’s designated emergency contact if an employee is arrested or detained on their worksite or, if the arrest/detention occurs off the worksite but during work hours/during the employee’s performance of job duties, where the employer has actual knowledge of the arrest or detention. Existing employees must be provided an opportunity to name a designated emergency contact on or before March 30, 2026; thereafter, employees must be provided this opportunity at the time of hire. Finally, the bill prohibits employers from discharging, threatening to discharge, demoting, suspending, or in any manner discriminating or retaliating against an employee for exercising or attempting to exercise their rights under the Act. Employers who violate the Act may be subject to a penalty of up to $500 per employee for each violation, except that the penalty for a violation of the provisions relating to emergency contacts would be an amount up to $500 per employee for each day the violation occurs, up to a maximum of $10,000 per employee.
Layoffs/Recalls
Pandemic-Protection Extension: Assembly Bill 858 amends Labor Code section 2810.8. As a result of the COVID-19 pandemic, certain employers have been required to offer certain laid-off employees information about job positions that become available for which the laid-off employees are qualified, and to offer positions to those laid-off employees based on a preference system, in accordance with specified timelines and procedures. Those obligations were set to expire on December 31, 2025. This bill extends those obligations until January 1, 2027.
Cal WARN: Senate Bill 617 amends Labor Code section 1401. Along with the federal Worker Adjustment and Retraining Act (WARN), which governs certain layoffs and plant closings, California has its own WARN Act that governs specified mass layoffs, relocations, and terminations. Existing law prohibits an employer, with certain exceptions, from ordering a mass layoff, relocation, or termination at a covered establishment without giving prescribed written notice to the employees, the Employment Development Department, and other local agencies. This bill requires employers to include in the notice whether the employer plans to coordinate services through the local workforce development board or another entity, as specified, and information regarding the statewide food assistance program known as CalFresh, as specified.
Technology
Artificial Intelligence: Senate Bill 53 adds Business and Professions Code section 22757.10 et seq., Government Code section 11546.8, and Labor Code section 1107 et seq., known as the Transparency in Frontier Artificial Intelligence Act (TFAIA). Among other things, the Act requires large frontier developers to publicly publish a framework on their websites describing how they have incorporated national standards, international standards, and industry-consensus best practices to their frontier Artificial Intelligence (AI) framework; establishes a consortium within the Government Operations Agency called CalCompute to develop a framework for creating a public computing cluster; creates a mechanism for frontier AI companies and the public to report potential critical safety incidents to California’s Office of Emergency Services; protects whistleblowers who disclose significant health and safety risks posed by frontier models, and creates a civil penalty for noncompliance, enforceable by the Attorney General’s office; and directs the California Department of Technology to annually recommend appropriate updates to the law based on multistakeholder input, technological developments, and international standards. The Governor’s signing message is located here.
Data Breaches: Senate Bill 446 amends Civil Code Section 1798.82. Existing law requires an individual or a business that conducts business in California, and that owns or licenses computerized data that includes personal information, to disclose a breach of the security of the system following discovery or notification of the breach in the security of the data to a resident of California whose unencrypted personal information was compromised, as specified, and requires that disclosure to be made in the most expedient time possible and without unreasonable delay, consistent with the legitimate needs of law enforcement, or any measures necessary to determine the scope of the breach and restore the reasonable integrity of the data system. Existing law also requires an individual or business that is required to issue the security breach notification to more than 500 California residents as a result of a single breach of the security system to electronically submit a single sample copy of that security breach notification, excluding any personally identifiable information, to the Attorney General. This bill requires that data breach disclosure to be made within 30 calendar days of discovery or notification of the data breach but authorizes an individual or business to delay the disclosure to accommodate the legitimate needs of law enforcement, as specified, or as necessary to determine the scope of the breach and restore the reasonable integrity of the data system. It also requires that submission to the Attorney General to be made within 15 calendar days of notifying affected consumers.
Other
Senate Bill 578 adds and repeals Labor Code section 11000 et seq. Until January 1, 2031, this bill requires the Department of Industrial Relations to establish and maintain the California Workplace Outreach Program to promote awareness of, and compliance with, workplace protections that affect workers.
This legal update and any use of its information does not create an attorney-client relationship. Nothing contained on this website should be considered legal advice for any specific employer or employment situation. Consult legal counsel before taking any action as a result of information contained herein.
