California has enacted several new laws that impact employers. Here are some of the laws that may be relevant to your business.

Minimum Wage increase

California state minimum wage has increased to $16.90 per hour for all employers, regardless of size. This increase also means that employees who perform "exempt" type duties must earn an annual salary of $70,304 to qualify as “exempt” from overtime and meal periods. Some cities have different minimum wage rules that may impact your business. In addition, the City of Los Angeles Living Wage Ordinance now applies to more categories of individuals, including hotel workers.

Tip Theft

Employers are prohibited from taking gratuities that are owed to employees. A new law provides that the Labor Commissioner can issue a citation or file a civil action if an employer improperly withholds or takes gratuities.

Penalties for failing to timely pay a wage judgment

If an employer fails to pay a wage judgment within 180 days after the judgment has issued, the employer can face a penalty of three times the amount of the judgment owed.

Paid Sick Leave

Employees are entitled to use paid leave for appearing in court as a witness in response to a subpoena, serving on a jury, or if they or their family member is a victim of certain crimes. In addition, an employer is prohibited from firing or discriminating against an employee who is a victim, or a family member of a victim of a violent crime, if the employee needs to take time off from work to attend a hearing related to the crime. Employers are required to deliver a notice annually to all employees that describes the employee's rights.

Training Records must be maintained

The definition of “personnel” records has been expanded to include education or training records. These records must be maintained in the employees’ personnel file and must include details of the training, including the resulting certification or qualification. The records must be retained for at least three years and produced when requested by an employee.

“Workplace Know Your Rights Act”

All employers must provide their employees with a written notice of the employees’ rights relating to workers’ compensation, immigration protections, the right to engage in concerted activity and constitutional rights when interacting with law enforcement. This document must be provided by no later than February 1, 2026 to all new hires, and annually to all employees. The California Labor Commissioner has released a template that can be used for this purpose in both English and Spanish.

Extension of Statute of Limitations for Sexual Assault Claims

Sexual assault claims that may have been barred by the statute of limitations can be filed during a two-year eligibility period starting January 1, 2026. There are various requirements for an individual to revive their claim, such as showing that there was an effort to cover up the conduct of the alleged perpetrator.

Preventing “Stay or Pay” provisions

Employers can no longer include provisions that require employees to return payment if they do not stay employed for a certain period of time. For example, the employer cannot require an employee to repay training costs or a retention bonus. There are some exceptions, such as the payment of certain types of tuition, and if a discretionary bonus is not tied to the employees’ job performance. These valid repayment agreements must be in writing and must contain very specific language to be enforceable. Employers who do not comply with this new law can be subject to damages, including penalties and attorneys’ fees.

Equal Pay Laws

When an employer provides pay-scale information to a prospective employee, or in a job posting, the “scale” must be a “good faith estimate” of the salary or wage that the employer expects to pay. Pay scale information must be provided to all applicants and employees upon request. Employers with 15 or more employees must post pay scale information in any job posting.

Current law prohibits employers from paying a different wage based on the sex of the worker. Any wage difference must be based on legitimate business reasons, such as the experience and education of the individual. The equal pay law now applies to non-binary individuals. In addition, the total compensation must be reviewed to determine of there is any disparity in wages, including bonuses, stock options, car allowances, etc. 

Conclusion

Make sure your company's policies and practices incorporate these new rules. Please reach out to our office if you need any assistance in implementing these laws.