New California Laws & Upcoming 2026 California Employment Law
We hope you are enjoying the changing of the seasons, and as always, this is a time of year when we are tracking legal and legislative updates that will impact California employers in 2026.
Over the next month, we will be sending multiple updates highlighting key new laws and other legal developments.
New CCRD Regulations: No Discriminatory Use of AI in Employment Decisions
In accordance with new California Civil Rights Department (CCRD) regulations effective as of October 1, 2025, employers may not utilize automated decision systems (ADS) including AI in a discriminatory manner relative to hiring, promotion, or other employment decisions. The regulations do not necessarily change an employer’s existing obligation to comply with the state’s Fair Employment and Housing Act (FEHA), but they do provide more specific guidance as to how anti-discrimination law functions in today’s increasingly automated workplaces.
Requirements that now clearly apply to how employers may utilize AI or other ADS technology include retaining related data for four years, and defining ADS vendors as “agents” of an employer, thus making the employer potentially liable for a vendor’s actions. Situations in which ADS may be utilized include using targeted advertising to recruit for an open position, measuring an applicant’s skills or characteristics, analyzing facial expressions or word choices in online interviews, and analyzing employee or applicant data from third parties. None of these things can be done in a manner that overtly discriminates or creates a disparate impact based on a protected characteristic under FEHA, including race, national origin, sex, pregnancy, gender identity, disability, or religion.
Anti-bias testing or other proactive efforts can support a defense to claims of ADS-related discrimination. Employers should review their current practices and policies to ensure that they are compliant with these requirements.
Minimum Wage: New State Minimum Hourly Rate & Annual Salary Threshold Amounts
In addition to the numerous local minimum wage updates that took effect in July (summarized in an earlierupdateand reflected inthis table), employers should be aware that the statewideminimum wagewill rise again in the new year. As of January 1, 2026, and asconfirmedby the state Director of Finance, the California hourly minimum wage in most industries will increase from $16.50 to $16.90. This means that the minimum exempt annual salary threshold will also increase, and will be $70,304 in 2026.
Employers should be sure to make the appropriate payroll adjustments and issue updated Labor Code section 2810.5 notices to non-exempt staff reflecting the applicable rates of pay. Additionally, remember to post updated minimum wage rate notices as required.
SB 642: Pay Equity Enforcement Act
This law, effective January 1, 2026, expands significantly on California’s existing Equal Pay and Pay Transparency laws. As to pay transparency, SB 642 amends the definition of “pay scale” to require employers to be more specific about pay ranges listed in job postings. Specifically, employers must now provide “a good faith estimate of the salary or hourly wage range that the employer reasonably expects to pay for the position upon hire,” as opposed to a broader overall potential range.
California’s Equal Pay law prohibits employers from paying workers less than others for substantially similar work on the basis of sex. The new law amends this requirement by replacing the reference to the “opposite” sex with “another” sex, making these protections more inclusive of nonbinary and gender diverse employees. SB 642 also broadens the definition of “wages” with respect to the equal pay requirement (applicable to this law only), clarifying that these include all forms of pay, such as bonuses and travel reimbursements, unless there is a business or merit-based reason for a difference in compensation.
The amendments also extend the statute of limitations for an Equal Pay Act claim to three years, and an employee may seek recovery for the entire time a violation exists, up to six years. A violation is defined broadly, and includes instances where an individual becomes “subject to” or “affected by” an unlawful compensation decision or other practice, and when such a decision or practice is adopted. Employers should be sure to review and update job descriptions and compensation practices in light of these expanded employee protections.
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We will be in touch soon with further updates regarding additional new laws, as well as details regarding the free training we will be offering in early 2026 on compliance with these new requirements.
Clements Employment Law, P.C.
2026 California Employment Law Update Webinar
We are also offering a free 2026 California Employment Law Update webinar for existing and prospective clients on January 15, 2026 from 12 p.m. to 1:30 p.m. PST, which you can RSVP for below.