What Changed for 2026: California Employment Law Updates Now in Effect

Minimum Wage Increase

The statewide minimum wage increased on January 1, 2026, applying to all employers regardless of size. The minimum annual salary for exempt employees also increased accordingly.

Retirement Plan Requirement

As of January 1, 2026, all businesses with at least one employee in California are required to offer a qualifying retirement plan. Businesses that have not yet met this requirement are now subject to penalties.

Employers who have not confirmed their compliance should review their current benefits package immediately. Contact LFV HR Consulting for guidance on evaluating your options.

Workplace Know Your Rights Act (SB 294)

The Workplace Know Your Rights Act, signed in 2025 and effective in 2026, requires employers to:

• Provide written notice to employees of their constitutional rights when interacting with law enforcement at work.
  
  
• Notify the employee’s designated contact if they are detained or arrested during working hours.
  
  

Key Steps Employers Must Take

1. Review Payroll and Salary Classifications

Confirm your payroll systems and salary structures reflect the current 2026 minimum wage and exempt salary thresholds. If this has not yet been reviewed, conduct a payroll audit immediately.

1. Confirm Retirement Plan Compliance
   

   If you have not yet confirmed retirement plan compliance, this is now an active penalty risk. Evaluate your benefits package and establish a qualifying plan if one is not already in place.

2. Update Employee Handbooks and Notices
   

   Confirm your employee handbook includes the Workplace Know Your Rights notice required under SB 294, along with updated policies on law enforcement interactions and employee privacy.

3. Train Managers and HR Teams
   

   Conduct a compliance training session for managers and HR staff if one has not already been completed. Proper training reduces risk and ensures consistent application of the updated requirements.

California Employee Handbook Requirements for 2026

Your employee handbook is one of the most direct tools for demonstrating compliance with current California employment law. For 2026, employers should confirm their handbook includes all of the following:

Required Updates for 2026 Compliance

Workplace Know Your Rights Notice (SB 294)
Your handbook must include a written policy informing employees of their constitutional rights during law enforcement interactions in the workplace and your company’s process for notifying a designated contact if an employee is detained or arrested during working hours.

Updated Minimum Wage and Exempt Salary Policy
Any wage-related policies must reflect the current 2026 statewide minimum wage and updated exempt employee salary thresholds. Confirm city-specific rates are also addressed if you operate in jurisdictions with higher local minimums.

Retirement Plan Enrollment Information
Include information about your company’s qualifying retirement plan, consistent with the California retirement plan mandate now in effect.

California Paid Sick Leave Policy (SB 616)
Handbooks must reflect the current minimum of 5 days (40 hours) of paid sick leave per year. If your handbook still references the pre-2024 standard of 3 days, it must be updated.

California Paid Family Leave (AB 2123)
PFL-related policies must reflect the updated 70-90% wage replacement rates and the removal of the employer vacation mandate, both effective January 1, 2025.

Remote Work Policy
If your company has remote or hybrid employees, your handbook should include a dedicated remote work policy covering expense reimbursement under Labor Code Section 2802, timekeeping for hourly staff, and communication expectations.

Why This Matters for Your Business

Ignoring these updates can lead to costly penalties, strained employee relations, and compliance audits. By preparing early, you can avoid disruptions and demonstrate your commitment to transparency and fairness in the workplace.

Beyond compliance, these updates are an opportunity to improve communication, reinforce employee trust, and strengthen your company’s culture heading into 2026.

Frequently Asked Questions: California Employment Laws 2026

What are the key new California employment laws for 2026?

The primary 2026 California employment law changes include an updated statewide minimum wage, a new statewide retirement plan requirement for all employers with at least one employee, and the Workplace Know Your Rights Act (SB 294), which requires written notice to employees about their rights during law enforcement interactions at work.

What must California employee handbooks include in 2026?

California employee handbooks for 2026 should include the Workplace Know Your Rights notice under SB 294, updated wage and exempt salary policies, retirement plan enrollment information, updated paid sick leave language under SB 616, updated Paid Family Leave language under AB 2123, and a remote work policy if applicable. Handbooks that have not been updated since 2023 are likely missing several required elements.

What is the penalty for not offering a retirement plan in California?

Employers who do not comply with California’s retirement plan requirement are subject to penalties. Employers who were not compliant by the December 31, 2025 deadline should take corrective action immediately. Contact an HR advisor to understand the penalty structure and the fastest path to compliance.

What does the Workplace Know Your Rights Act (SB 294) require from employers?

SB 294 requires employers to provide employees with written notice of their constitutional rights when law enforcement is present in the workplace, and to notify the employee’s designated emergency contact if the employee is detained or arrested during working hours. This notice must be included in the employee handbook and distributed to all staff.

How LFV HR Consulting Can Help

Policy changes can feel overwhelming, but LFV HR Consulting is here to help you stay ahead. From compliance audits and handbook updates to manager training and compensation planning, our team ensures your business stays fully compliant with California’s current employment requirements. Contact us to schedule a free HR assessment.