New employment laws are coming in 2026 — prepare your business now! 

California employers once again face a busy compliance year in 2026. In addition to another increase to the state minimum wage, the Legislature has adopted a slate of laws that touch issues such as wage levels, training repayment agreements, wage garnishments, and expanded pay data obligations. 

Here’s an overview, along with practical steps you can take to reduce risk.  

California’s new minimum wage 

 Starting January 1, 2026, California’s statewide minimum wage rises from $16.50 to $16.90 per hour, for all employers, regardless of size.  

Because California ties the white-collar exemption threshold to double the state’s minimum wage, this 40-cent bump also increases the minimum salary for most exempt employees to at least $70,304 per year.  

Action item: Take a hard look at your pay practices now. Update your hourly rates and salary bands, audit exempt classifications, and confirm that all offer letters, handbooks, and other required postings match the new 2026 rate. Remember that local ordinances and other industry-specific rules (fast food, health care, etc.) may require even higher minimums.  

AB 692: No more “stay-or-pay” 

Assembly Bill 692 aims to end training repayment agreements, stipulating that employers may not require workers to sign employment contracts that obligate them to repay any debts— like training costs, sign-on or retention bonuses, immigration or relocation expenses, or other exit fees—simply because their employment ends.  

While a few narrow exceptions remain, contracts that violate AB 692 will be treated as unlawful restraints of trade and will be voided. Employers can face civil actions with statutory damages of at least $5,000 per worker, in addition to attorneys’ fees.  

Action item: If you rely on training-repayment clauses or similar bonus clawbacks, discontinue the practice now and work with counsel to restructure any repayment terms that you hope to keep in place for 2026 and beyond. 

AB 774 tightens the screws on garnishment reporting 

Effective January 1, 2026, Assembly Bill 774 makes precise changes to the state’s current Wage Garnishment Law. Employers, once served with an earnings withholding order, must put additional details in the employer’s return. This includes noting specifically when and how the employee received the earnings withholding order and notice, and who provided it.  

So, what does this look like in practice? It means updating current garnishment procedures, forms, and HR/Payroll training so employers can document timely notice to the employee while still responding accurately to the levying officers.  

Action item: If you’re handling garnishment on a regular basis, audit current workflows now to meet AB 774’s expanded reporting requirements in the new year. 

What HR and Payroll need to do now to address SB 464 

There’s a new law on California’s books that tightens the state’s pay data reporting rules: Senate Bill 464. In brief, if a business has 100 or more employees and already files an annual pay data report, a few key changes are needed.  

Starting January 1, 2026, any demographic information collected for pay data reporting (think race, ethnicity, or gender) must be stored separately from employees’ personnel files. In addition, when the Civil Rights Department goes to court because an employer didn’t file the required report, financial penalties will be issued. 

Action item:  For the 2026 report due in May 2027, you must reclassify employees into 23 job categories based on the federal Standard Occupational Classification (SOC) system, instead of the 10 Equal Employment Opportunity Report (EEO-1) buckets many employers currently use. Essentially, your HR and payroll teams should start planning  how to remap job titles to the new framework.  

 Your time to act is now 

Taken together, these changes continue a familiar trend of more employee protections, increased documentation, and rising exposure for employers who don’t keep up. Now is the time for your HR, payroll, and leadership to get on the same page. Review pay practices, offer letters, training and bonus agreements, data reporting processes, and record keeping systems to be sure you’re ready when 2026 dawns.