With California’s September 30 gubernatorial signing deadline behind us, employers can begin preparing for the latest round of changes to California employment law.

This year’s legislation covers a wide range of subjects, including artificial intelligence and workplace surveillance, employment agreements, bereavement leave, harassment-prevention training, Labor Commissioner proceedings, pay-data reporting, workplace safety, public works, and several industry-specific issues. Many of the measures discussed below take effect January 1, 2027, although several have later operative dates.

Below are some of the most significant laws California employers should have on their radar.

Artifical Intelligence and Workplace Surveillance

SB 947 imposes new requirements on automated disciplinary and termination decisions

California employers using artificial intelligence and other automated tools to manage their workforces will face new restrictions beginning July 1, 2027. SB 947 regulates an “automated decision system” (ADS), broadly defined to include a computational process derived from machine learning, statistical modeling, data analytics, or artificial intelligence that produces a score, classification, recommendation, or other simplified output used to assist or replace human discretionary decision-making and materially impacts individuals.

The law does not prohibit employers from using an ADS to make employment decisions, but it implements limits on that use. Among other things, an employer may not use an ADS to infer an employee’s protected status or predict and take adverse action against a worker for exercising legal rights. More significantly for day-to-day employment decisions, an employer may not rely solely on an ADS when making a disciplinary or termination decision. If the employer primarily relies on an ADS output, a human must corroborate the decision using the information underlying the output or other relevant supporting information. If the output cannot be corroborated, or the human reviewer concludes that it is inaccurate, incomplete, or misleading, the employer may not use the output to make the decision.

SB 947 also gives an employee the right to request a meaningful, objective description of the employee’s own data used by the ADS when the employer primarily used the system to make a disciplinary or termination decision. At the time the employer communicates such a decision, it also must provide a separate written notice stating, among other things, that an ADS was primarily relied upon, that a human reviewed and corroborated the output, and how the employee can obtain additional information.

Employers should begin identifying now which HR, productivity, scheduling, performance-management, security, and other systems use algorithms or artificial intelligence in ways that may affect disciplinary or termination decisions. That inquiry should extend beyond software marketed as an “AI” product because the statutory definition extends to other data-analytics and automated decision-making tools.

AB 1331 and AB 1883 restrict certain forms of workplace surveillance

Two companion measures impose new limits on employee surveillance beginning January 1, 2027.

AB 1331 broadly defines a “workplace surveillance tool” to include systems or devices that collect employee data, activities, communications, actions, biometrics, or behaviors through means other than direct human observation, including video or audio surveillance, incremental time tracking, and geolocation. The law’s substantive restriction is considerably narrower than that definition: absent a court order, employers generally may not use such tools to monitor employees in workplace bathrooms. Employees also generally have the right to leave employer surveillance tools behind when entering a bathroom, subject to specified exceptions for certain safety, identification, access, and on-call requirements.

AB 1883 addresses a different category of technology. Employers may not use an AI-enabled workplace surveillance tool to recognize, infer, or predict an employee’s emotional state or to collect “neural data,” which is defined as information generated by measuring activity of the central or peripheral nervous system. Violations may result in penalties of up to $500 per violation.

Together with SB 947, these laws mean employers should move quickly to inventory their workplace technology. Employers should understand not only which systems HR has purchased, but also the functionality embedded in security systems, timekeeping programs, wearable devices, productivity software, and vendor-provided platforms.

SB 951 adds AI disclosures to certain Cal-WARN notices

SB 951 addresses job displacement flowing from workplace automation. The law does not create a new trigger under the California Worker Adjustment and Retraining Notification Act (Cal-WARN) merely because artificial intelligence or automation results in job losses. Rather, when an employer is already required to provide notice of a covered mass layoff, relocation, or termination under Cal-WARN, and that event was caused in whole or substantial part by an AI system or other automated technology replacing or automating positions, the notice must contain additional information. That includes the affected classifications or occupations, job functions being automated, and the category or type of technology substantially responsible for the displacement. The notice also must state at the top that it is a notice of “technology displacement.”

Employers contemplating restructuring associated with AI or automation should add this issue to their existing Cal-WARN analysis.

Employment Agreements and Arbitration

AB 1697 delays and revises California’s restrictions on “stay-or-pay” provisions

AB 1697 makes important changes to California’s restrictions on so-called “stay-or-pay” agreements, i.e., contract provisions under which a worker must repay money or incur a financial obligation if the worker leaves employment before a specified date.

The Legislature enacted the underlying prohibition in 2025, but AB 1697 delays its application to contracts entered into on or after January 1, 2027 and makes the prior version inoperative during 2026. Beginning in 2027, an employment contract generally may not require a worker, because the employment relationship terminates, to repay a debt, permit collection or forbearance on a debt to resume, or incur a penalty, fee, or cost.

AB 1697 also creates several important exceptions. Among them, qualifying tuition-repayment arrangements for transferable credentials may remain permissible if statutory requirements are satisfied: (1) the agreement is separate from any contract for employment; (2) the agreement does not require obtaining the transferable credential as a condition of employment; (3) the agreement specifies the repayment amount before the worker agrees to the contract, and the repayment amount does not exceed the cost to the employer of the transferable credential received by the worker; (4) the agreement provides for a prorated repayment amount during any required employment period that is proportional to the total repayment amount and the length of the required employment period and does not require an accelerated payment schedule if the worker separates from the employment; and (5) the agreement does not require repayment to the employer by the worker if the worker is terminated, except if the worker is terminated for misconduct.

Certain discretionary or unearned bonuses (including some signing and retention bonuses) also may contain repayment requirements if, among other things, the repayment obligation is contained in a separate agreement, the employee is notified of the right to consult counsel and receives at least five business days to do so, the obligation is prorated without interest over a retention period not exceeding two years, the employee has the option to defer the bonus until the end of the retention period, and repayment is triggered only by voluntary separation or discharge for misconduct. The law also contains exceptions for certain government-funded programs, approved apprenticeships, specified financial-services arrangements, and limited advances of paid time off.

The remedies for violations can be significant. A worker may bring a civil action, including on behalf of similarly situated workers, and recover actual damages or $5,000 per worker, whichever is greater, plus injunctive relief and reasonable attorneys’ fees and costs.

Employers should review signing and retention bonuses, education and training repayment agreements, relocation arrangements, advanced paid-time-off programs, and other agreements containing repayment obligations before issuing new agreements in 2027.

AB 2155 limits enforcement under the California Arbitration Act where federal law would preclude enforcement

AB 2155 adds an important provision to the California Arbitration Act. Beginning January 1, 2027, an agreement is unenforceable under California Code of Civil Procedure section 1281 “to the extent” it would not be enforceable under the Federal Arbitration Act.

The Legislature expressly identified the FAA’s transportation-worker exemption and the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act as examples of federal exclusions incorporated into California law. As a result, employers generally cannot rely on the California Arbitration Act as an alternative means of enforcing an arbitration agreement where the FAA itself makes the agreement or dispute unenforceable.

Employers with California arbitration programs (particularly employers with employees potentially falling within the FAA’s transportation-worker exemption) should review whether their agreements rely on state law as an alternative enforcement mechanism.

Leave, Discrimination and Harassment-Prevention Training

SB 1149 expands bereavement leave to a “designated person”

California already requires employers with five or more employees to provide an eligible employee with up to five days of bereavement leave following the death of specified family members. Beginning January 1, 2027, SB 1149 expands the definition of “family member” to include a “designated person.” A designated person is an individual related to the employee by blood or whose association with the employee is the equivalent of a family relationship.

An employee may identify the designated person when requesting bereavement leave. Employers may limit employees to one designated person during a 12-month period for purposes of bereavement leave. The legislation does not increase the amount of available leave: employees remain entitled to up to five days, which generally must be completed within three months of the death and need not be taken consecutively.

Employers should update bereavement policies and leave-request materials before the end of 2026. Employers also should decide whether their policies will expressly exercise the statute’s option to limit employees to one designated person per 12-month period.

AB 2563 clarifies the scope of sex discrimination under California law

AB 2563 adopts a broad, statewide definition of “sex discrimination” and amends the Fair Employment and Housing Act’s definition of “sex” accordingly. The legislation specifies that sex discrimination includes discrimination based on actual or perceived characteristics such as assigned sex or gender category, conformity to sex or gender stereotypes, gender identity and expression, pregnancy and related medical conditions, pregnancy-related decision making or care, sexual orientation, and variations in sex characteristics. The Legislature characterized these changes as declaratory of existing law rather than an expansion or contraction of existing rights.

Employers may have seen proposals this year specifically addressing menopause. AB 2563 contained alternative provisions that would have expressly incorporated perimenopause, menopause, and postmenopause if AB 1940 also became law. The Governor vetoed AB 1940, so those conditional provisions do not become operative.

AB 1803 will add anti-hate-speech content to mandatory harassment training

California employers with five or more employees already must provide harassment-prevention training every two years: at least two hours for supervisory employees and one hour for nonsupervisory employees. AB 1803 adds anti-hate-speech training to that existing requirement beginning January 1, 2028. The required component will include practical guidance on recognizing, reporting, and confronting workplace speech that vilifies, humiliates, or incites hatred against people based on characteristics protected by the Fair Employment and Housing Act.

Importantly, AB 1803 modifies California’s training requirements. It does not create a new standalone statutory cause of action whenever an employee engages in speech falling within the training requirement. Nevertheless, employers should expect the new content to affect how managers are trained to identify and respond to potentially inappropriate workplace conduct.

Employers do not need to retrain the workforce immediately. However, employers should confirm that internal training programs and third-party vendors will incorporate the new material when the requirement becomes operative in 2028. Employers revising their harassment, discrimination, and workplace-conduct policies during 2027 may want to coordinate those revisions with the new training requirements.

Wage-and-Hour Enforcement and Pay-Data Reporting

SB 1316 raises the stakes for responding to Labor Commissioner document requests

SB 1316 makes several procedural changes that matter when an employer is investigated by the Labor Commissioner. Most significantly, the law expands circumstances in which an employer may be barred from using payroll, timekeeping, personnel, and other required employment records if the employer fails to produce those records in response to a timely Labor Commissioner request.

The amended statute generally gives an employer at least 15 days to respond to a records request, although the Labor Commissioner may establish a shorter period where circumstances require it. When the original request provides at least 15 days to respond, an employer that timely responds in good faith that additional time is needed receives an automatic 15-day extension. The Labor Commissioner also must consider reasonable extension requests.

The consequences of noncompliance could be significant. Records not timely produced may be excluded not merely as affirmative evidence but from being “used or relied on” during the administrative or writ proceeding, including for impeachment. Similar rules will apply in specified public-works proceedings.

SB 1316 also strengthens the Labor Commissioner’s collection tools by permitting liens securing final Labor Commissioner awards to be renewed for additional 10-year periods.

For employers, a Labor Commissioner document request should be treated much like formal discovery with an imminent evidentiary deadline. Employers should promptly preserve and collect responsive records, document any difficulty completing the production, and request additional time before the deadline rather than assuming documents can be produced later.

SB 1444 modernizes Labor Commissioner service and expands a misclassification remedy

The Legislature also enacted SB 1444, an employment omnibus bill containing several changes to Labor Commissioner proceedings. Among other things, a represented party in a Labor Commissioner proceeding must provide counsel’s email address and accept electronic service from the Labor Commissioner. Parties also must notify the Labor Commissioner of changes to their electronic address while a claim is pending. (Amending Cal. Labor Code §§ 98, 98.1).

SB 1444 also modifies Labor Code section 226.8, which governs willful independent-contractor misclassification. Under SB 1444, civil penalties may now be recovered as damages by the employee, the Labor Commissioner, or a public prosecutor (alternatively). The underlying statutory penalties for willful misclassification remain substantial, ranging from $5,000 to $15,000 per violation and from $10,000 to $25,000 where there is a pattern or practice.

Employers involved in DLSE proceedings should ensure that responsibility for electronic notices is clearly assigned and monitored. Employers using independent contractors should likewise continue to treat classification as a substantive compliance issue rather than merely a payroll designation.

SB 1237 increases the penalty for repeated failures to file pay-data reports

California private employers with 100 or more employees generally must file an annual pay-data report with the Civil Rights Department. Employers with 100 or more workers supplied through labor contractors generally must file a separate labor-contractor report.

SB 1237 does not change those basic thresholds. However, it substantially increases the potential penalty for repeated noncompliance. A court may continue to impose a penalty of up to $100 per employee for an initial failure to file, but the maximum penalty for a subsequent failure increases from $200 to $1,000 per employee.

For covered employers, the increased penalty makes ownership of the annual reporting process a critical task.

Workplace Safety and Violence

AB 2321 increases the potential criminal consequences associated with Cal/OSHA investigations

AB 2321 expands the criminal-enforcement aspects of California’s workplace-safety laws. Among other things, the new law makes it a misdemeanor to willfully resist, prevent, impede, or interfere with the Cal/OSHA Chief or an authorized representative in performing specified investigative duties, or to willfully violate a related court order. The legislation also expands specified criminal provisions involving willful safety violations causing serious injury, illness, or exposure and increases coordination between Cal/OSHA’s Bureau of Investigations and prosecuting authorities.

Employers responding to a serious workplace accident should ensure that managers and site personnel understand who will interact with Cal/OSHA investigators and that the employer’s response plans preserve both cooperation with the agency and applicable legal privileges.

AB 1961 expands the scope of workplace-violence restraining orders

AB 1961 gives employers a broader tool when threats are directed at a workplace generally rather than a particular employee. If harassment, unlawful violence, or a credible threat of violence is directed at a workplace or a location where a group of employees performs its primary duties, an employer may seek a workplace-violence restraining order on behalf of all employees at that location without identifying an individual employee as the protected party.

A related measure, AB 2179, will permit parties and witnesses in workplace-violence restraining-order proceedings to appear remotely beginning January 1, 2028 and requires courts to permit electronic filing of specified documents.

Public Works, Construction, and Workforce Development

AB 1198 changes how prevailing-wage determinations will apply to certain projects

Employers performing public works should pay particular attention to AB 1198, which changes the rules governing updated prevailing-wage determinations. Beginning July 1, 2027, the legislation establishes new rules governing when revised prevailing-wage determinations apply and creates procedures for challenging a new determination.

For covered projects (i.e., at least $35,000,000), contractors, awarding bodies, and representatives of affected crafts or classifications may petition the Director of Industrial Relations to review a changed prevailing-wage rate under the procedures established by the legislation. Certain affordable-housing projects are subject to a separate rule under newly enacted Labor Code section 1773.65.

For public-works contractors, AB 1198 should be considered together with SB 1316’s new evidentiary rules for Labor Commissioner document requests (discussed above). Failure to timely produce records requested during a public-works investigation may limit the contractor’s ability to rely on those records later in administrative or writ proceedings.

SB 909 increases penalties for public-works violations

SB 909 significantly increases the financial consequences of several public-works violations. Among other things, the law increases the amount the Director of Industrial Relations may establish as an annual contractor registration or renewal fee without formal rulemaking from $800 to $1,000. It also increases the maximum prevailing-wage penalty to $280 for each calendar day, or portion thereof, for each underpaid worker, with statutory minimums of $56 for most violations, $112 for certain repeat violations, and $168 for willful violations.

Other penalties increase as well. Failure to timely produce required certified-payroll records may result in a penalty of $140 per worker for each day of noncompliance. Knowing apprenticeship violations may result in penalties of up to $140 per day, increasing to $420 per day for specified repeat violations. Violations of skilled-and-trained-workforce requirements may carry penalties of up to $5,000 per month for a first violation and $10,000 per month for subsequent violations within three years. The law also directs civil penalties collected by the Labor Commissioner under the public-works chapter into the State Public Works Enforcement Fund, which may be used to support public-works enforcement staffing.

Public-works contractors should strengthen payroll, apprenticeship, prevailing-wage, and subcontractor-compliance controls in light of the increased penalties.

Other construction and apprenticeship legislation

The Governor also signed several measures directed at California’s construction and workforce-development systems, including SB 1227, which establishes a Department of Industrial Relations apprenticeship pilot program, and AB 1980, which establishes the Equal Representation in Construction Apprenticeships Grant Program.

These measures are more targeted than the generally applicable employment laws discussed above, but contractors, apprenticeship programs, unions, and employers that regularly perform public work should evaluate their potential application.

Health Care, Education, and Other Industry-Specific Changes

Several additional bills principally affect particular sectors.

AB 2311 authorizes qualifying health care districts to employ physicians under specified conditions

AB 2311 creates an additional exception to California’s general prohibition against the corporate practice of medicine until its January 1, 2037 sunset. Qualifying health care districts and nonprofit corporations whose sole corporate member is a health care district and that own or control a statutorily qualifying general acute care hospital may employ physicians and surgeons and charge for their professional services if the statutory conditions are satisfied. Those conditions include protections against interference with physicians’ professional judgment and annual reporting requirements.

Schools and Higher-Education Employers Face Additional Requirements

Education employers face an unusually dense group of new laws. For K–12 schools, AB 1381 requires applicants for certificated positions to disclose their prior education employers and requires prospective school employers to inquire about specified prior complaints, investigations, or discipline involving egregious misconduct. Failure by specified administrators to complete required employment-history inquiries may constitute unprofessional conduct.

SB 1083 similarly expands and clarifies investigation, reporting, hiring, and statewide-data-system requirements concerning egregious misconduct by noncertificated public-school and private-school employees, including requirements that covered employers continue certain investigations after separation and, for private schools, adopt written employee-investigation policies by July 1, 2027.

AB 2120 makes narrower, Los Angeles Unified School District-specific changes to merit-system hiring and layoff rules, while SB 998 defines the responsibilities of statewide discrimination-prevention coordinators and adds a Disability Discrimination Prevention Coordinator within the Office of Civil Rights.

Postsecondary institutions likewise face several significant changes. Several additional measures impose student-facing compliance duties rather than employment obligations, although implementation may involve human resources, Title IX, student-affairs, and designated compliance personnel. Beginning September 1, 2027, AB 1784 expands state nondiscrimination protections concerning marital status, familial status, and pregnancy or pregnancy-related conditions, requires reasonable accommodations for pregnant students, and requires institutions to designate an employee to coordinate compliance.

AB 1928 requires covered postsecondary institutions to permit a complainant or respondent in a sexual-harassment proceeding to have both a support person and an advisor during the grievance process.

Beginning August 1, 2027, AB 2212 updates postsecondary sexual-harassment and sexual-exploitation standards to address conduct including digitized sexually explicit material, sextortion, and other technology-facilitated sexual harassment, with corresponding effects on institutional policies and training.

Immigration Support Workers

AB 2624 creates new privacy protections for immigration-support workers and volunteers

AB 2624 expands California’s address-confidentiality protections to certain people who provide immigration support services and who face qualifying threats, harassment, or violence because of that work. The legislation also creates restrictions concerning the disclosure of specified personal information about covered individuals.

The measure is not a generally applicable employment statute. Organizations providing immigration legal, humanitarian, or related services should nevertheless determine whether employees or volunteers may qualify for the new protections and whether existing privacy and information-security practices need adjustment.

Agricultural Worker Minimum Wage

AB 2646 establishes a special minimum wage for certain agricultural workers

AB 2646 adds a new minimum-wage requirement for specified agricultural employees. New Labor Code section 1208 establishes a base minimum hourly wage of $19.75 for an “approved agricultural employee,” generally meaning an out-of-state resident permitted to work temporarily or seasonally through an application or job order approved in whole or in part by the Labor and Workforce Development Agency or Employment Development Department, and for a “corresponding employee.” A corresponding employee is a California resident performing the same or substantially similar agricultural work during the same time period for the same employer in the same county.

The statutory wage is subject to an annual adjustment tied to the Social Security cost-of-living adjustment beginning January 1, 2027 and each January thereafter. Agricultural employers using covered temporary or seasonal out-of-state workers therefore should identify corresponding California employees and ensure that both groups receive at least the applicable statutory rate.

Five Things California Employers Should Do Before the End of 2026

With January 1 approaching, employers should prioritize the following:

1. Review AI and workplace-surveillance technology. Employers should determine which systems use AI, algorithms, analytics, geolocation, productivity monitoring, biometrics, or other employee data. Employers should identify whether any are used in disciplinary or termination decisions. Employers also should review their vendors’ practices against the obligations arising under SB 947, AB 1331, and AB 1883. Although SB 947 does not become operative until July 1, 2027, understanding the technology already in use may take considerably longer than revising a policy.
2. Review repayment and “stay-or-pay” agreements. Employers should review signing and retention bonuses, education and training repayment agreements, relocation arrangements, advanced PTO, and other agreements requiring repayment following separation. New agreements entered on or after January 1, 2027, should be reviewed against AB 1697’s requirements and exceptions.
3. Update leave and EEO policies. Employers should revise bereavement policies to account for SB 1149’s “designated person,” decide whether to use the one-designated-person-per-12-month limitation, and review EEO policy terminology in light of AB 2563.
4. Tighten agency-response and reporting procedures. Establish a clear protocol for responding to Labor Commissioner record requests under SB 1316, monitoring electronic service under SB 1444, and completing annual CRD pay-data reporting given SB 1237’s increased penalties.
5. Review the 2027–2028 compliance calendar. Employers with arbitration programs should evaluate AB 2155. Employers planning reductions-in-force flowing from the use of AI should incorporate SB 951 into Cal-WARN planning. And employers should ensure harassment-training programs are updated for AB 1803 before its January 1, 2028 operative date. Public-works contractors, health care employers, educational institutions, agricultural employers, and other employers subject to industry-specific legislation should conduct a separate review of the measures applicable to their operations.