New Year, New Rules
As we move into 2026, California’s business environment continues its shift toward increased transparency and expanded worker protections. Several significant new laws and compliance deadlines take effect on January 1, 2026.
Below is the updated outlook for small to medium-sized businesses (SMBs) in California for the 2026 calendar year.
Wages and Compensation
The most immediate change for every business is the annual adjustment to pay scales.
State Minimum Wage Increase: Effective January 1, 2026, the California state minimum wage increases to $16.90 per hour for all employers, regardless of size.
Exempt Salary Threshold: Because California’s “white-collar” overtime exemption is tied to the minimum wage, the new minimum annual salary for exempt employees rises to $70,304 ($5,858.67 per month).
Sector-Specific Pay: * Healthcare: Many healthcare facilities will see their specialized minimum wage rates increase again on July 1, 2026.5Fast Food: The Fast Food Council may implement further adjustments to the $20/hour base established in 2024.
New Workplace Protections (SB 294)
Starting in 2026, the Workplace Know Your Rights Act introduces several new administrative requirements for employers:
Mandatory Annual Notice: By February 1, 2026, and annually thereafter, you must provide a standalone “Know Your Rights” notice to all employees. This covers workers’ comp, immigration inspection rights, and the right to organize.
Emergency Contact for Arrests: By March 30, 2026, you must give all current employees the chance to designate an emergency contact specifically for if they are arrested or detained at work. You are legally required to notify this contact if an arrest occurs during work hours.
PAGA Reform & Compliance
The 2024 reforms to the Private Attorneys General Act (PAGA) are now in full swing for 2026. This is a “proactive” year for small businesses:
The “Right to Cure”: Small businesses (under 100 employees) now have a more robust window to remedy Labor Code violations (such as wage statement errors) before a lawsuit can proceed.
Penalty Reductions: You can significantly reduce potential penalties (by up to 85%) if you perform regular audits and “remediate” (fix) issues before receiving a notice of violation.
Recordkeeping & Hiring Changes
Training Records (SB 513): Employees now have the right to inspect and copy their “education and training records.” If you provide software or safety training, your records must now include the provider’s name, dates, “core competencies” achieved, and any certifications earned.
Ban on “Stay or Pay” (AB 692): Effective Jan 1, 2026, most contracts that require employees to repay training or relocation debts upon leaving are prohibited, with very narrow exceptions for signing bonuses that meet specific criteria.
AI in Hiring: New regulations clarify that if you use Automated Decision Systems (ADS) to screen resumes or target job ads, you must provide reasonable accommodations for applicants with disabilities who the algorithm might screen out.
Workplace Violence Prevention (SB 553)
While the requirement to have a written plan began in 2024, the final deadline for Cal/OSHA to adopt its formal “General Industry” standards is December 31, 2026.
Action Item: Ensure your Violent Incident Log is being maintained and that your staff receive their required annual interactive training in 2026.
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