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California’s leave and benefits landscape continues to expand with revised paid sick leave rules, upcoming changes to paid family leave, and broader personnel file access requirements. Employers must understand these changes to avoid disputes and maintain compliant practices.

Here is what you need to know.

Paid Sick Leave Expansion

California’s paid sick leave law now requires more generous leave than in prior years. The minimum leave available to employees has increased to 40 hours (5 days) per year. Employers may still use an accrual method, such as one hour of sick leave for every 30 hours worked, provided it is at least as generous as the statutory requirement.

The law also expands the reasons for which employees may use paid sick leave beyond their own health or caring for an ill family member. Employers should ensure their policies reflect these broader qualifying uses and that their payroll systems calculate pay at the employee’s regular rate of pay.

Paid Family Leave Benefits Are Expanding in 2028

Beginning July 1, 2028, California will broaden its Paid Family Leave program to allow eligible employees to receive benefits to care for a designated person with a serious health condition. This category includes any individual related by blood or whose relationship to the employee is like a family relationship.

While employers will not administer the benefit directly, they should be aware of the change and inform employees of available benefits when relevant.

Personnel File Requests Have Grown

Under Senate Bill 513, personnel file requests now explicitly include educational and training records. Employers must produce all signed documents and performance-related materials in the personnel file upon an employee’s request.

Employers should prepare for these requests, as they often signal a potential claim or a demand letter. Providing a complete and timely response helps mitigate risk.

Conclusion

Paid sick leave and paid family leave developments, along with expanded personnel file access, require thoughtful policy review and communication. Employers should confirm that accrual methods meet the law, that leave use criteria are up to date, and that personnel files are complete and organized.

Through new legislation and shifting enforcement priorities, California continues to challenge common workplace practices, including collectible wage judgments and binding employment agreements. Employers must understand how new rules on wage judgment penalties, stay-or-pay provisions, and arbitration agreements affect risk and strategy.

Below is what employers need to know for 2026.

Wage Judgment Enforcement Is Getting Serious

Senate Bill 261 significantly increases the consequences of failing to pay a wage judgment within 180 days. Employers who do not pay judgments on time now face penalties that can amount to three times the unpaid amount plus interest. In addition, the employee or the Labor Commissioner may recover attorney fees and costs associated with enforcement.

This law emphasizes the importance of promptly resolving and paying wage claims. Delays that may have been part of internal planning or appeals processes in the past now carry real financial risk.

Restrictions on Stay-or-Pay Contracts

Assembly Bill 692 limits an employer’s ability to enforce stay-or-pay provisions in employment agreements. These clauses typically require repayment of signing bonuses or educational benefits if the employee terminates before a defined period.

Under AB 692, employers must satisfy strict criteria for these agreements to remain enforceable. The agreement must be in writing and separate from any offer letter or handbook. Employees must be able to either receive the bonus immediately or decline it and avoid repayment obligations.

There are no industry-specific carve-outs at this time, so employers in healthcare, technology, trades, and other sectors must review existing stay-or-pay clauses carefully.

Arbitration Is Not a One-Size-Fits-All Strategy

Many employers rely on arbitration agreements to reduce litigation risk and avoid costly court litigation. Arbitration can speed resolution and limit exposure in certain instances, like in class or representative actions when agreements include valid waivers.

However, arbitration also incurs costs that accrue more quickly than in court, including arbitrator fees paid upfront by the employer. There are limits on appealing an adverse decision, and employers must be consistent in enforcing these agreements or risk waiving their rights.

California courts have steadily narrowed certain arbitration doctrines and may treat selective enforcement as a waiver. Because arbitration law evolves quickly, employers should evaluate the benefits and risks with legal counsel before adopting or revising arbitration policies.

Conclusion

The combination of harsher wage-judgment enforcement penalties, limitations on stay-or-pay contracts, and complexities around arbitration agreements requires careful planning. Employers should review existing wage judgments, contract language, and dispute-resolution mechanisms now and update their policies to align with current law.

California continues to push pay transparency further into the mainstream of employment law. Employers with 15 or more employees now face more detailed requirements for posting wage ranges and reporting pay data. Penalties for missing or incomplete information have increased, and misunderstandings about these rules can lead to significant exposure.

Here is what every California employer should know for 2026.

Expanded Pay Transparency Requirements

Senate Bill 642 strengthens California’s pay transparency laws. Employers must publish a good-faith estimate of the compensation that a position will pay, including all elements of wages that an employee can reasonably expect at the start date. This means employers can no longer list a range that reflects only future negotiated pay, or omit items such as expected bonuses or incentive pay.

SB 642 also clarifies that prohibited discrimination based on sex now includes nonbinary gender identifiers under the Equal Pay Act.

Pay Data Reporting Requirements

California’s reporting regime continues to evolve from the original SB 1162 framework. Employers with 100 or more employees must submit pay data reports to the Civil Rights Department. The job categories that must be reported increased from 10 to 23. Reporting must include the mean and median pay for each job category and demographic group.

Penalties for noncompliance have increased and may apply per employee, per pay period, for missing or incomplete data.

What Employers Should Do Now

Employers should review job postings and internal job descriptions to confirm that salary ranges reflect a good-faith estimate of total pay. Human resources should also prepare for the expanded reporting categories and ensure that internal payroll and job classification systems can generate the required data.

Employers with 100 or more employees nationwide, but only a few in California, must still report on those California employees.

Conclusion

Pay transparency and pay data reporting laws in California are more complex and more punitive than ever. Employers should treat compliance as a priority for 2026. Proper preparation now can protect organizations from costly penalties and avoid claims that stem from unclear or incomplete pay disclosures.

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.

As Congress approaches a funding lapse resulting in a government shutdown, California employers should prepare for several indirect effects on workplace operations. Although a federal shutdown does not halt California’s employment laws, it does pause many federal agency functions, as discussed below.

Federal Enforcement Agencies

Most federal labor agencies will furlough staff and suspend routine enforcement during a shutdown. For example, the U.S. Department of Labor (DOL) will furlough over 11,000 employees, which includes investigators from the Wage and Hour Division. Similarly, OSHA will cut nearly all inspectors and cease all non-emergency inspections. The EEOC will furlough a significant portion of its staff, halting charge investigations. The NLRB will pause new union elections and most hearings.

In practice, this means complaints or audits under FLSA, OSHA, NLRA, etc., will be delayed until funds are appropriated. Employers should note that California agencies and laws remain fully in force, so actions before the California Civil Rights Department, Labor Commissioner, and DLSE will remain mostly unaffected.

Immigration and Employment Verification Delays

A shutdown halts DOL’s immigration-related processes. All foreign labor certifications, such as PERM, and Labor Condition Applications for H-1B, H-2B and E-3 visas stop until funding is restored. Employers who rely on these visas or green-card sponsorship should file any time-sensitive applications before a lapse. USCIS itself is fee-funded and will mostly continue, but its system and E-Verify/I-9 reviews are funded by appropriations and will be inaccessible while the shutdown is in effect.

Regardless, employers should still complete Form I-9s for new hires, but enrolled companies cannot run new e-Verify cases or queries during the shutdowns. U.S. embassies generally remain open for visa processing (since visas are fee-funded), but some consular posts may slow routine cases if they reserve funds are exhausted.

Federal Contracting and Notice Requirements

Businesses with federal contracts should review funding clauses and potential layoff rules. If a contract is paused or canceled, employers may need to provide WARN notices. Under the federal WARN Act, a “mass layoff” or “plant closing” requires 60 days’ notice, although a shutdown’s duration may be uncertain. Critically, California’s mini-WARN Act is even broader, and requires advance notice of a temporary shutdown in some instances. Thus, any California employer – federal contractor or not – should consider whether temporary work stoppages or furloughs trigger notice under WARN laws.  Federally contracted employers should also check collective‐bargaining agreements and contract clauses for any mandated procedures during lapses in funding.

Wage-and-Hour and Furlough Compliance

Employers also at times respond to shutdowns by instituting paid leave or furloughs. However, employers should keep in mind that California’s wage-and-hour laws still apply during these periods. For furloughed hourly, non-exempt employees, they must only be paid for hours actually worked. Salaried exempt employees, however, are more constrained: under the FLSA and California law, if an exempt worker performs any work in a workweek, they must receive their full weekly salary.

California employers should also be aware of reporting requirements for furloughs of at least three weeks. Specifically, the Court in Internat. Brotherhood of Boilermakers, etc. v. NASSCO Holdings, Inc. (2017) 17 Cal.App.5th 1105, 1118 held that furloughs of at least three weeks can trigger an employer’s reporting obligations under CalWARN.

Thus, employers should carefully plan any partial-week furloughs for exempt staff, or alternatively give written instructions to ensure exempt employees do not perform any work during unpaid weeks. Employers should also consider California’s Paid Sick Leave law when altering schedules.

Union and Collective‐Bargaining Effects

A shutdown also does not relieve employers of collective‐bargaining obligations. The NLRB will likely suspend new union representation elections and most unfair labor practice

processing, but existing collective bargaining agreements (CBAs) remain in force. If layoffs, furloughs or schedule changes affect unionized employees, employers must still negotiate effects and give required notices under the NLRA and any applicable CBA. And of course, any violations during the shutdown may be enforced if and when federal funding resumes.

Relatedly, California’s governor recently signed into law AB 288, a statute that allows California’s Public Employee Relations Board to certify unions and resolve labor disputes in the private sector when the NLRB has “expressly or impliedly ceded jurisdiction.” California’s PERB will consider the NLRB to cede jurisdiction when the full board sits on a case for over a year, when the board cannot render a decision due to its lack of a quorum, when a case languishes before an NLRB judge for over six months and when an NLRB official fails to certify a union within six months of workers voting yes on union representation. The law does not go into effect until January 1, 2026.

State-Unemployment and Employee Benefits

State unemployment insurance (UI) systems are unaffected by a federal shutdown. Furloughed or temporarily laid-off employees may generally apply for California UI benefits as usual.

Employers should anticipate standard state reporting obligations for any terminations or reduced hours. Health and retirement plan obligations continue; for example, reduced hours or termination may trigger COBRA notice requirements under federal law (but COBRA administration itself is not affected by a shutdown).

Conclusion

In sum, the federal government’s shutdown mainly delays federal agency actions rather than changing California employers’ core obligations.

To the extent possible, employers should file time-sensitive immigration or labor applications before a shutdown, communicate promptly with staff about any furloughs or pay changes, and review federal versus California notice and wage rules before implementing workforce adjustments.

In Bradsbery v. Vicar Operating, Inc., a California Court of Appeal answered a question that many California employers may not have known even needed to be answered—whether California employees can prospectively waive their mandatory meal periods.  Given the almost universal use of such waivers by employers (based on the assumption that the waivers are revocable, not unconscionable, and free of coercion), the Court’s ruling had the potential to create significant exposure to employers up and down the Golden State.  Fortunately, however, the Court of Appeal confirmed the legality of these waivers thereby allowing their continued use. 

California law guarantees employees a 30-minute, off-duty meal period after five work hours and a second meal period after 10 work hours.  The question before the Court concerned the laws providing for waivers of these meal periods in certain circumstances.  Specifically, the law (California Labor Code section 512) provides that, for shifts between five and six hours, the first meal period “may be waived by mutual consent of both the employer and employee.”  Many employers have interpreted this to allow a one-time written waiver signed at the time of hire instead of requiring employees to execute this waiver on a shift-by-shift basis.  But until Bradsbery, no published appellate decision had confirmed the legality of this approach. 

The facts in Bradsbery were simple.  Plaintiff La Kimba Bradsbery (“Bradsbery”) worked as a veterinary technician for Vicar Operating, Inc. (“Vicar”), from September 2008 through February 2011.  In April 2009, Bradsbery signed a written waiver stating:

I hereby voluntarily waive my right to a meal break when my shift is 6 hours or less.  I understand that I am entitled to take an unpaid 30-minute meal break within my first five hours of work; however, I am voluntarily waiving that meal break.  I understand that I can revoke this waiver at any time by giving written revocation to my manager.

In July 2014, Bradsbery filed a putative class action in Los Angeles County Superior Court, alleging that Vicar had failed to provide statutorily mandated meal periods for shifts between five and six hours.  Specifically, Bradsbery argued that Vicar’s meal period waivers were improper and should have been secured on a shift-by-shift basis.

The trial court rejected Bradsbery’s argument and she appealed.  The Court of Appeal affirmed the trial court’s decision on the grounds that plaintiff’s interpretation was supported by neither the text of the relevant statutes and orders nor the legislative and administrative history.  The Court also rejected Bradsbery’s reliance on both (1) a prior decision by the California Supreme Court and (2) an opinion letter issued by the Division of Labor Standards Enforcement.

In the end, the Court of Appeal’s decision does not change much.  Employers may continue to use prospective, written meal period waivers for their employees.  To maximize enforceability, California employers should ensure that each waiver satisfies the following requirements:

  • The waiver is in writing and in a stand-alone document;
  • The waiver is secured voluntarily, noting that the employee’s execution is optional;
  • The waiver is revocable at any time by either the employee or the employer;
  • The waiver specifies the types of shifts employees may waive meal periods for; and
  • The waiver is signed by the employee.

As always, this case is an important reminder that California employers can never take anything for granted but greatly appreciate the wins when they come.   

On January 21, 2025, the White House announced an Executive Order entitled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.”  The Order instructs federal agencies to take administrative and legal action against diversity, equity, and inclusion (“DEI”) programs, which it defines as systems of race- and sex-based preferences.  The Order is directed at both public- and private-sector conduct.

Private employers and educational institutions with DEI policies should consider consulting with an employment law practitioner to ensure those policies can withstand any legal challenges, including under Title VII of the Civil Rights Act.  The Order directs the U.S. Attorney General and the heads of agencies to propose a strategic plan to identify key sectors of concern within each agency’s jurisdiction and “the most egregious and discriminatory DEI practitioners in each sector of concern,” as well as “up to nine potential civil compliance investigations of publicly traded corporations, large non-profit corporations or associations, foundations with assets of 500 million dollars or more, State and local bar and medical associations, and institutions of higher education with endowments over 1 billion dollars.”

Further, participants in federal programs must be highly attentive to changes in agency guidance, rules, and contract language, because the Order directs agency program changes and expressly contemplates use of the False Claims Act as an enforcement tool.  Of particular note is that the Order directs that each agency include in all contracts and grant awards (1) a term requiring the contractual counterparty or grant recipient to agree that its compliance in all respects with all applicable federal anti-discrimination laws is material to the government’s payment decisions for purposes of the False Claims Act, and (2) a term requiring such counterparty or recipient to certify that it does not operate any programs promoting DEI that violate any applicable federal anti-discrimination laws.  This means that the Administration is already thinking that the Department of Justice, or individual private citizens acting as qui tam relators, might bring False Claims Act cases against federal program participants whose DEI policies are inconsistent with the Administration’s interpretation of federal anti-discrimination laws.  A federal program participant that violates the False Claims Act can face severe financial penalties, including three times the value of claims submitted, plus a civil penalty per claim.

Today is too soon to know where this will lead.  Private-sector actors would be well served to pay close attention to risks related to their policies and relationships with federal agencies.

On January 15, 2025, the United States Supreme Court issued a unanimous decision in E.M.D. Sales, Inc. v. Carrera, holding that the “preponderance of the evidence” is the applicable standard courts must use to analyze whether an exemption is proper under the Fair Labor Standards Act (FLSA). In practical terms, this means employers must demonstrate it is more likely than not that an employee qualifies for an exemption, rather than meeting a stricter burden of proof.

This decision resolves a split among lower courts and provides clarity on the burden of proof in exemption disputes. Employers should carefully review their employee classifications to ensure compliance. Click here to read our insight into the facts of the case, how the Court reached this decision, and how employers should react to this ruling. If you have any additional questions, please contact your labor and employment attorney.

As 2025 approaches, employers in Oregon, Washington, and California must prepare for several updates in employment laws. Here’s a concise overview of the most impactful changes that take effect on January 1, 2025:

Oregon

  1. Paid Leave Oregon Clarification: Employees can now use Paid Leave Oregon benefits to attend legal proceedings related to foster care or adoption. OFLA will no longer provide additional leave for these reasons.
  2. Warehouse Worker Protections: New rules mandate employers provide written documentation of quotas to warehouse employees upon hire or upon changes to the quotas. Employers that fail to comply with these rules may not take adverse actions against employees if quotas aren’t met.
  3. Agricultural Overtime: Employers must pay overtime to agricultural workers after 48 hours worked per week.
  4. Additional Updates: Changes to garnishment exemptions and a mid-year minimum wage increase.

Washington

  1. Minimum Wage Increase: Minimum wage rises to $16.66/hour statewide, with higher local rates (e.g., Seattle at $20.76/hour). Salary thresholds for exemptions also increase.
  2. Expanded Paid Sick Leave: New coverage includes ride-share drivers and additional reasons for protected leave, such as emergencies and care for non-family dependents.
  3. Healthcare Overtime Ban: Hospitals can no longer mandate overtime for most direct care staff, with some exceptions.
  4. Meal Period Compliance: A new court ruling mandates higher penalties for missed meal periods. The case, Androckitis v. Virginia Mason Medical Center[MH1] [MH2] [KJ3] , is pending discretionary review before the Washington Supreme Court.

California

  1. Minimum Wage Updates: Statewide increase to $16.50/hour, with higher thresholds for specific industries (e.g., healthcare workers at $24/hour starting July).
  2. Expanded Sick Leave: New permissible uses include emergencies like wildfire and crime-related incidents.
  3. Freelance Worker Protection: Written contracts are now required, and payment timelines are strictly enforced.
  4. PAGA Reforms: Stricter standing requirements and a process for employers to address and cure alleged Labor Code violations.
  5. Anti-Discrimination and Leave Enhancements: New FEHA provisions on intersectionality and jury duty protections.

Key Takeaways

  • Action Required: Review and update employee handbooks, payroll systems, and compliance protocols to meet new wage, leave, and worker protection standards.
  • Plan for Transition: Ensure proactive communication with managers and employees about policy changes.
  • Monitor Compliance: With penalties and stricter enforcement mechanisms in place, employers should prioritize adherence to new laws to avoid costly infractions.

Click here to read the entire article, including detailed insights and resources to help your organization stay compliant in 2025.

A few weeks ago, Vermont Senator Bernie Sanders announced a bill to implement a 32-hour workweek.  While such a law is a long way from becoming a reality, it does raise interesting questions concerning exactly what a 32-hour workweek would look like, especially in California.

Before engaging in this thought experiment one thing should be made clear – most jurisdictions in the United States are “at-will” employment states, meaning either party has the ability to terminate the employment relationship for any lawful purpose.  Relatedly, employers have the ability to schedule employees to work any schedule they want with very few exceptions in discrete instances.  As such, employers would generally not be required to only schedule employees to work a maximum of 32 hours during any workweek, but rather would be disincentivized to do so through overtime requirements.

Federal law currently requires that all hours worked in excess of 40 hours in a single workweek be paid at one and one-half times the employee’s regular rate of pay. California adds an additional requirement that any hours worked in excess of eight hours in a single workday must be paid at one and one-half times the employee’s regular rate of pay, and any hours worked in excess of 12 hours in a workday be paid at twice the employee’s regular rate of pay.

The proposed method of implementing a 32-hour workweek would be through reducing the overtime hours threshold from 40 hours to 32 hours, meaning that employees working over 32 hours in a workweek would be entitled to overtime pay.  While Senator Sanders’ bill does not prohibit employers from scheduling employees to work 40 hours or more, it would provide a financial disincentive for employers to do so.  Senator Sanders’s bill would also amend federal law to coincide with California’s 8 hour and 12 hour overtime rules, making overtime significantly more expensive for employers across the United States.

What would this mean for California employers?  For one, California’s legislature generally does not like being one-upped in terms of favorable employee laws.  As such, and if a law reducing the federal workweek were passed, it is almost guaranteed that California would also reduce its weekly overtime threshold from 40 hours to 32 hours (if not less).  Moreover, under a 32-hour workweek, an employee would be working an average of 6.4 hours per day.  Given this, one possible outcome is that California reduces its daily overtime threshold to be more consistent with that reduced workweek – possibly to six hours per day.

Going further, California law currently provides that employees are entitled to one meal break before the end of the fifth hour of work and a second meal break after 10 hours of work and two paid 10-minute rest periods for every four hours worked.  This break schedule could be modified if a reduced workweek were put into place – possibly with a first meal break before the end of the fourth hour of work, a second meal break after nine hours, and a paid rest break for every three hours of work.

Reducing the workweek could also cause changes in other employee benefits, including protected leaves.  For example, employees are entitled to 12-weeks of leave under both the Family and Medical Leave Act (“FMLA”) and under California’s Family Rights Act (“CFRA”).  In order to be eligible for these types of leave, an employee must have worked at least 1,250 hours in the preceding 12 months.  Under a 40-hour workweek, an employee would work approximately 2,080 hours a year, meaning that they would have a FMLA/CFRA cushion of roughly 830 hours.  A reduction in the workweek from 40 to 32 hours would result in 1,664 hours per year and a reduced “cushion” of 414 hours.  As this likely does not comport with the intent of these statutes, it’s possible that the FMLA hours requirement would be reduced and almost guaranteed that California would reduce its CFRA threshold.

As for effects on workplace policies, one significant change employers would need to make is revising their paid leave policies. Given the reduction in hours worked, employers would need to revise the rates at which employees accrue paid time-off to ensure accrual rates line up with the new proposed workweek.

The 40-hour workweek has been the hallmark of employment law for more than 80 years.  While a change anytime soon is unlikely, it’s always good for employers, especially California employers, to be prepared for anything.