WITH 2026 now upon us, so is a slew of new laws and regulations that affect California businesses. Every year, laws passed by the state Legislature and signed into law by the governor take effect, and 2025 was a busy legislative session in Sacramento. The end result is another wave of new legislation that California employers need to stay on top of.
1. Protected leave expanded AB 406, which took effect Oct. 1, 2025, adds new categories of protected absences. The law amends both the state’s paid sick leave law — the Healthy Workplaces, Healthy Families Act — and Government Code section 12945.8, which governs unpaid job-protected leave. The new law added two reasons for which employees can take protected time off:• To appear in court as a witness to comply with a subpoena or court order, including if the employee is a crime victim.• To serve on an inquest jury or trial jury. As of Jan. 1, the law also extends job-protected leave for employees or family members who are victims of certain serious crimes (the law identifies 14 qualifying crimes).Covered workers may now take protected leave to attend court or administrative proceedings related to those crimes, such as arraignments, pleas, sentencing hearings, parole hearings and other proceedings where victims’ rights are at issue.
2. New AI-in-hiring rules As of Oct. 1, 2025: , any California employer that uses artificial intelligence or other automated tools in recruiting, hiring, promotion and related human resources decisions must ensure that the tools don’t discriminate against protected classes. The new regulations, promulgated by California’s Civil Rights Department, cover any “automated decision system,” which the rules broadly define as:• Artificial intelligence,• Machine learning,• Algorithms,• Statistics, and• Other data-processing techniques. If your firm uses AI or another data driven system in hiring, you’ll want to beef up record-keeping and set testing procedures to ensure compliance.
3.The Workplace Know Your Rights Act :added a new notification requirement for California employers. The new law requires employers to annually distribute a notice that informs them about:• Workers’ compensation,• Immigration inspection rights,• The right to organize/unionize, and• Constitutional protections during law enforcement interactions at work. The law includes a separate provision mandating that employers notify an employee’s emergency contact if they are arrested or detained at work. This only applies if the employee has predesignated an emergency contact for this purpose.
4. Labor board’s purview grows: AB 288 is the state’s response to the National Labor Relations Board’s paralysis due to lack of a quorum under the Trump administration and the board’s retreat from its historical duties. The law expands the jurisdiction of the California Public Employment Relations Board, which enforces labor issues for the public sector, to private sector labor relations by the National Labor Relations Act may petition the PERB if the NLRB has expressly or impliedly ceded jurisdiction. PERB is authorized to:• Hear unfair practices charges,• Conduct union elections,• Certify bargaining representatives, and• Order certain remedies, among other things. The NLRB has sued to stop the law from taking effect, arguing that it is preempted by the National Labor Relations Act.
5. Employment contract repayment provisions: A new law bars employers from including or requiring workers to sign employment-related contracts that impose financial penalties, repayment obligations or fees if the employment ends before a specific date. AB 692 addresses issues that arise when employers provide signing bonuses, tuition assistance and other benefits and require employees to return the funds if their employment ends prematurely
