Upcoming Webinar: New Year, New Laws – What Oregon Employers Need to Know for 2026 – February 4, 2026
As a new year gets underway, gain a clear understanding of the employment law changes Oregon employers need to know. Join Stoel Rives labor and employment attorneys Melissa Healy, Matt Tellam, and Megan Bradford for an engaging webinar on the most significant Oregon legislative updates. They’ll share practical guidance to help you stay compliant and make informed decisions for your workplace. More information and registration is available here.

California’s wage and hour rules remain strict in 2026, with new minimum wage thresholds, greater attention to regular rate calculations, and ongoing scrutiny around breaks and rounding. Small mistakes can result in expensive class actions.

Here’s what California employers need to keep top of mind this year.

New Minimum Wage Means New Exempt Thresholds

As of January 1, 2026, California’s minimum wage is $16.90 per hour. But that’s just the starting point. Several localities, including San Francisco at $19.18, set their own, higher wage floors. In addition, certain industries, such as fast food, now have separate minimums of $20 per hour and above.

The increase also raises the exempt employee salary threshold to $70,304.  Remember, employees who are covered by white-collar exemptions must meet the duties test and the new salary minimum.

Regular Rate Errors Keep Driving Lawsuits

Employers paying bonuses, commissions, shift differentials, or any form of incentive pay must ensure those amounts are included in the employee’s regular rate of pay, not just their base rate. This affects calculations for:

• Overtime
• Meal and rest break premiums
• Paid sick leave

Failing to include all earnings commonly leads to wage claims, especially class and PAGA actions.

Rounding Time: Still Legal (for Now), But Risky

California courts still allow rounding in limited cases, but the practice carries significant risk, as regulators and plaintiffs’ attorneys continue to challenge it. Employers must ensure rounding does not shortchange employees over time, with supporting records.

If rounding results in employees losing time, even unintentionally, it increases risk. Consider phasing it out if you still use rounding.

Meal and Rest Breaks: Documentation Matters

Break violations remain a key issue in wage-and-hour litigation.

• Meal breaks must be 30 minutes, uninterrupted, and recorded.
• Rest breaks must be 10 minutes per four hours worked or major fraction thereof, but do not require documentation

Some employers try tracking rest breaks, but this often backfires when employees forget to log them, leading to potential liability. Daily or weekly attestations confirming breaks were provided are more effective.

Key Takeaways for Employers

• Review exempt classifications to ensure salary thresholds are met under the new minimum wage
• Audit how you calculate the regular rate; bonuses and incentive pay must be factored in
• Consider ending time rounding to reduce risk
• Ensure meal breaks are tracked, but rest breaks are not over-documented
• Use attestation forms to support compliance in a manageable way

Conclusion

California’s wage and hour rules remain complex, with small errors leading to major liability. Employers should review pay, break, and timekeeping policies now to avoid future issues.