A wide-ranging set of California employment laws took effect on January 1, 2026, with additional notice-related requirements rolling out early in the year pursuant to multiple statutory amendments to the California Labor Code and Government Code.
The changes affect compensation transparency, equal pay enforcement, certain employment contract provisions, workplace notices, and layoff disclosures.
While the laws apply broadly, they are particularly relevant to employees and employers in the technology, startup, and finance sectors, where compensation structures often include equity incentives, bonuses, and other non-salary components that are expressly addressed by recent legislative updates. They may also affect workers located outside California when an employment agreement contains a California choice-of-law provision or otherwise applies California law.
To discuss how these new changes affect you, contact Potomac Legal Group to review your matter. Our California counsel is experienced in assisting employees in complex employment matters.
Restrictions on Certain Repayment and Retention Provisions
One key change affects so-called “stay-or-pay” arrangements. California law now restricts many contractual provisions that require employees to repay training costs, relocation expenses, or similar amounts if their employment ends before a specified period. While some retention-related bonuses or repayment structures may still be permissible, they are subject to narrower statutory conditions and more specific structuring requirements set forth in the legislation.
Because sign-on bonuses, relocation packages, and specialized training agreements are common in technology, startup, and finance roles, these restrictions may be particularly impactful when California law governs the agreement. Employers and employees alike may need to reassess how such incentives are structured and enforced in light of the new statutory limitations.
Pay Transparency and Equal Pay Act Expansions
California’s pay transparency framework continues to evolve. Under recent amendments, job postings must now include a good-faith estimate of the compensation the employer reasonably expects to pay for the position at the time of hire, rather than a broad or open-ended range. This change is intended to provide applicants with more accurate and meaningful information, particularly in industries where posted pay ranges have historically been expansive.
The Equal Pay Act was also expanded to reflect changes in workforce composition and compensation practices. Comparisons are no longer limited to employees of the “opposite sex,” extending protections to nonbinary employees. In addition, the definition of “wages” for equal pay purposes now expressly encompasses a wider array of compensation, including bonuses, stock or stock options, profit-sharing arrangements, allowances, and benefits. The statute of limitations for bringing an Equal Pay Act claim has also been extended, allowing for a longer lookback period in certain cases.
These changes are especially relevant in technology, startup, and finance environments, where total compensation frequently includes equity grants, incentive bonuses, and other non-salary components. As a result, equal pay analyses may increasingly focus on how these forms of compensation are awarded and documented.
Expanded Workplace Notice Requirements
California has also updated its workplace notice obligations. Employers are now required to provide a standalone written notice informing employees of certain workplace and constitutional rights under the Workplace Know Your Rights Act. In addition, new requirements address how employers must handle emergency contact notifications in the event of an employee’s arrest or detention. These changes are primarily procedural, but they affect onboarding processes, policy distribution, and recordkeeping practices, including for employers with remote or hybrid workforces.
Revival Window for Certain Civil Claims
Separate legislation creates a limited revival window for certain civil sexual assault claims that were previously time-barred. The window runs from January 1, 2026, through December 31, 2027, subject to specific statutory conditions outlined in the statute. While this change does not alter the underlying standards for liability, it may affect risk assessments, document retention practices, and the evaluation of historical claims.
Changes to Cal-WARN Notice Content
California’s Worker Adjustment and Retraining Notification (Cal-WARN) law already requires advance notice for covered mass layoffs, relocations, and terminations. Recent amendments expand the information that must be included in these notices, including additional disclosures related to employee assistance and public resources. For employers in sectors prone to rapid growth, restructuring, or workforce reductions, such as technology and finance, these changes may require updates to notice templates and internal compliance checklists.
Practical Implications for California-Law Employment Agreements
This year’s developments underscore the continued expansion and refinement of California’s employment law framework. For employees whose agreements are governed by California law, the changes may influence how compensation is disclosed, how equity and bonuses are evaluated, and how certain contractual provisions are enforced.
As California employment law continues to evolve, understanding how these changes interact with industry-specific practices can help you navigate employment matters, job transitions, and separations.
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