New California Labor Laws (2026): What Employers Need to Know

California continues to lead the nation in employee protection laws — and 2026 brings several important labor law changes that every employer, HR professional, and business owner must understand to remain compliant.

Below is a breakdown of the most important California labor law updates now in effect as of January 1, 2026.

📈 1. Statewide Minimum Wage Increase

Effective January 1, 2026, California’s statewide minimum wage increased to:

➡️ $16.90 per hour for all employers, regardless of size

This increase is tied to inflation under California’s CPI-based wage adjustment system and applies to nearly all non-exempt employees statewide .

Impact on Exempt Employees

Because California requires exempt employees to earn at least twice the state minimum wage for full-time work:

➡️ The minimum exempt salary threshold increased to $70,304 annually in 2026

Failing to meet this threshold may result in:

• Loss of exempt classification
• Overtime liability
• Wage and hour penalties

Employers should also note that:

• Some cities and counties have higher local minimum wages
• Certain industries (like healthcare or fast food) may have separate wage mandates

🏥 2. Expanded Paid Sick Leave Requirements

California has significantly expanded employee leave rights.

Employers must now provide:

➡️ At least 5 days (40 hours) of paid sick leave per year to eligible employees

This applies to:

• Full-time employees
• Part-time employees
• Temporary workers

Prior law allowed employers to cap sick leave usage at 3 days (24 hours) annually — meaning many employers had to update their PTO policies beginning in 2024 and continuing into 2026 compliance requirements .

New Permitted Uses of Sick Leave

Recent amendments now allow employees to use paid sick leave for:

• Attending court proceedings
• Supporting a family member who is a victim of a crime
• Certain legal or safety-related matters

⚖️ 3. Stronger Equal Pay & Worker Protection Laws

New legislative updates have strengthened enforcement mechanisms under California’s Equal Pay Act.

Workers now benefit from:

• More time to file unequal pay claims
• Expanded ability to recover lost wages
• Retroactive compensation for discriminatory pay practices

This increases potential liability for employers who:

• Do not maintain clear compensation policies
• Fail to document pay decisions
• Have inconsistent pay practices across protected groups

💵 4. Tip Protection Enforcement (SB 648)

New enforcement authority has been granted to the California Labor Commissioner to:

➡️ Investigate and penalize employers who unlawfully withhold employee gratuities

Service workers are now more protected through:

• Administrative citations
• Fines for tip theft
• Wage recovery enforcement

📢 5. Workplace Notice & Compliance Requirements

Employers are now required to:

• Update minimum wage postings
• Distribute revised paid sick leave notices
• Comply with new employee rights notice obligations

Failure to maintain updated workplace postings may result in:

• Civil penalties
• Labor Commissioner investigations

🧾 Final Thoughts

California’s 2026 labor law updates reflect a continued push toward:

• Increased worker protections
• Wage transparency
• Expanded leave rights
• Stronger enforcement against wage theft

For employers, this means now is the time to:
✅ Review employee classifications
✅ Update PTO and sick leave policies
✅ Audit compensation practices
✅ Post updated labor law notices

Non-compliance can expose businesses to costly penalties, back wages, and litigation — making proactive policy updates essential in 2026.