What’s Changing for 2026

Minimum Wage Increase
The statewide minimum wage will rise to $16.90 per hour, applying to all employers regardless of size. The minimum annual salary for exempt employees will also increase to $70,304 per year ($1,352 per week).

Retirement Plan Requirement

By December 31, 2025, all businesses with at least one employee must offer a qualified retirement plan to comply with California’s new statewide mandate. Businesses that fail to meet this requirement will face penalties.

To simplify compliance, small employers can use streamlined options like Guideline’s Starter(k) or explore HR solutions via Gusto.

Workplace Know Your Rights Act (SB 294)
Signed into law in 2025, this new act 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
   Update your payroll systems and salary structures to reflect the 2026 minimum wage and exempt salary levels.
2. Confirm Retirement Plan Compliance
   Evaluate your existing benefits package to confirm you’re meeting the new state retirement plan requirement.
3. Update Employee Handbooks and Notices
   Include the new “Know Your Rights” notice and ensure your policies on law enforcement interactions and employee privacy are up to date.
4. Train Managers and HR Teams
   Conduct a compliance refresher before the end of the year. Proper training minimizes risk and ensures consistent application of new laws.

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.

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 leadership training and compensation planning, our team will ensure your business transitions smoothly into 2026. Contact us today!