California Employment Law Updates Employers Need to Know for 2026

California continues to expand employee protections across a wide range of workplace practices. Several new statutes and regulatory updates taking effect in 2026 will require employers to revisit notices, contracts, recordkeeping practices, and postings, as we previously reported on here. Below is a summary of four developments that should be on every California employer’s radar.

1. New Annual “Workplace Know Your Rights” Notice Required by February 1, 2026

Beginning February 1, 2026, California employers must distribute a new stand-alone notice to employees under the Workplace Know Your Rights Act.

What the Notice Must Cover

The required notice is designed to provide employees with a plain-language overview of key workplace rights, including:

• Workers’ compensation benefits and protections
• Rights related to union organizing and concerted activity
• Immigration-related protections, including notice of federal immigration inspections
• Constitutional rights during interactions with law enforcement at the workplace
• The right to designate an emergency contact to be notified if an employee is arrested or detained while working

The notice must be provided in the language the employer typically uses to communicate with the employee and that the employee understands, if the Labor Commissioner has published a template in that language. Templates are already available in English and Spanish, with additional translations forthcoming.

Distribution and Timing

Employers must provide the notice to all current employees by February 1, 2026 and annually thereafter, to new hires at the time of hire, and to exclusive collective bargaining representatives on an annual basis.  In addition, delivery must occur through a method the employer normally uses for workplace communications (such as personal delivery, email, or text message) so long as it can reasonably be expected to reach the employee within one business day.  Employers should plan to maintain records showing when and how each notice was distributed for at least three years.

Additionally, California employers must, by March 30, 2026, provide employees with the opportunity to indicate whether their designated emergency contact should be notified in the event of an arrest or detention.

2. AB 692 Significantly Limits “Stay-or-Pay” Repayment Agreements

Effective January 1, 2026, AB 692 sharply curtails the use of contractual provisions that require employees to repay employer-provided benefits if employment ends—a practice often referred to as “stay-or-pay” arrangements.

As a condition of employment, employers may not require agreements that: (a) obligate employees to repay employment-related or education-related costs if their employment ends; (b) trigger debt collection or end debt forbearance upon separation; or (c) impose penalties, fees, or other costs tied to termination of employment.  These restrictions apply to new agreements and incentive arrangements entered into in 2026 and beyond.

The statute preserves limited exceptions, but only if specific safeguards are met:

• Sign-on or retention bonuses may be subject to repayment if governed by a separate agreement, prorated over a defined period (not exceeding two years), interest-free, and triggered only by voluntary separation or termination for misconduct. Employees must be advised of their right to consult counsel and given at least five business days to do so.
• Tuition repayment agreements are permitted where the credential is transferable, not required for the job, disclosed in advance, and repayment is limited to actual costs and prorated over the service period.
• Other agreements: Approved apprenticeship programs, government loan repayment or forgiveness programs, and certain residential property transactions are excluded from the statute.

3. Personnel File Requests Now Include Training and Education Records

SB 513 expands employee access to personnel records by amending Labor Code section 1198.5 to expressly include education and training records within the scope of documents subject to inspection.  Previously, employers were required to provide records relating to performance or grievances. Now, training and education records tied to employee performance must also be produced upon request.  If an employer maintains training or education records, those records must include:

• Employee name
• Trainer name
• Dates and duration of training
• Core competencies addressed (such as equipment or software skills)
• Any resulting certification or qualification

Employers must continue to respond to written requests within 30 days (or up to 35 days by agreement) and retain personnel records for at least three years after separation.

4. DLSE Updates Paid Sick Leave Poster to Reflect Expanded Uses

The California Division of Labor Standards Enforcement issued a revised Healthy Workplaces/Healthy Families Act (HWHFA) paid sick leave poster. Employers should confirm that the January 2026 version is posted in a conspicuous workplace location.  Recent statutory amendments clarified that paid sick leave may be used alongside certain court-related absences and victim-protection leaves. The updated poster reflects these changes and reinforces that paid sick leave in California often overlaps with other protected leave rights.

The revised paid sick leave poster confirms that accrued paid sick leave may be used for purposes such as jury service, compliance with subpoenas or court orders, court proceedings where the employee or a family member is a victim of qualifying crimes, and obtaining relief, treatment, or services related to acts of violence, including for employers with 25 or more employees.

5. Employer Takeaway

These developments reflect California’s continued expansion of employee protections through notice requirements, contract limitations, transparency obligations, and leave rights. Employers should review existing practices now, including employment agreements, onboarding materials, personnel record systems, and workplace postings. For assistance, please contact one of Honigman’s Labor and Employment attorneys here.