California HR & Employment Law Updates You Need to Know for 2026
California employers, take note! Several important employment law changes are coming in 2026 that will affect your policies, onboarding, and compliance practices. From banning stay-or-pay agreements to new pay transparency requirements. Here’s what you need to know and what you should do to prepare.
Ban on Stay-or-Pay Agreements (AB 692)
Effective Date: January 1, 2026
California will prohibit most “stay-or-pay” or training repayment contracts. These agreements previously required employees to repay training or other fees if they left a job early.
Key Details:
Most stay-or-pay agreements will be illegal starting in 2026.
Exceptions exist for tuition reimbursement and certain retention bonuses if they meet specific requirements.
Employers should review and update all employment or training repayment agreements now to ensure compliance.
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Pay Transparency Requirements (SB 642)
Effective Date: January 1, 2026
California is strengthening pay transparency requirements to promote equity and fairness.
Key Details:
Job postings must include a good faith estimate of the pay range, covering all forms of compensation such as bonuses, stock, and profit sharing.
The statute of limitations for pay discrimination claims is extended to three years, and employees may recover up to six years of back pay.
Employers should review job postings, internal pay structures, and train hiring teams on how to provide a good faith pay estimate.
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Immigration & Law Enforcement Rights Notification (SB 294)
Effective Date: February 1, 2026
Employers in California must provide employees with written notice about their constitutional and workplace rights when interacting with law enforcement.
Key Details:
Employees must receive a written notice of their rights.
Employees also have the option to designate an emergency contact to be notified if they are arrested or detained on the job (deadline March 30, 2026).
Employers should update onboarding, HR policies, and training materials to ensure employees are informed.
🔗 Read more from Fisher Phillips
What Employers Should Do Now
To stay compliant and protect your organization:
Audit Policies & Agreements: Review all employee contracts, stay-or-pay agreements, and onboarding materials.
Update Job Postings: Ensure your postings include a good faith pay estimate.
Train Your Team: Make sure HR staff and hiring managers understand the new requirements and can communicate them clearly to employees.
Coordinate With Legal Counsel: Especially for complex policies like exceptions to training repayment agreements.
Communicate With Employees: Clear communication helps reduce confusion and ensures a smooth transition when these laws go into effect.
Bottom Line:
California employers have several compliance deadlines approaching in 2026. Taking proactive steps now will help protect your business, reduce risk, and ensure employees know their rights and compensation expectations.
Want Help Preparing for These Changes?
We are here to keep you running smoothly with HR audits, policy reviews, and manager training to make sure your organization is compliant, efficient, and employee-friendly. Schedule a discover call today to get started.
