Several significant employment bills went into effect on January 1, 2026. Here is a practical breakdown of the changes that matter most, with the bill numbers and code sections so you can look them up yourself.
AB 692: Stay-or-Pay Provisions Are Now Restricted
This is probably the biggest change for 2026. Assembly Bill 692 extends California's longstanding hostility toward non-competes (Bus. & Prof. Code § 16600) to cover "stay-or-pay" contract terms. These are clauses requiring workers to reimburse training costs, signing bonuses, relocation stipends, or other employer-provided benefits if the worker quits before a specified date. Under AB 692, most of these provisions are now unenforceable for contracts entered into on or after January 1, 2026. If you signed one of these agreements and are worried about leaving, this law very likely protects you. If you are an employer still using these clauses, they need to come out of your offer letters and employment agreements.
SB 261: Triple Penalties for Unpaid Wage Judgments
This one has teeth. Under SB 261, if an employer fails to pay a final wage judgment within 180 days, the penalty can now reach up to three times the amount of wages owed. Previously, collecting on wage judgments was a grind. Many employers simply ignored them. This law changes the calculus. For employees: if you have an unpaid wage judgment, the leverage just shifted in your favor. For employers: take wage judgments seriously. The cost of ignoring one just tripled.
New Notice Obligations (Effective February 1, 2026)
Employers must now provide written notice of several employee rights, including the right to workers' compensation benefits, protections against unfair immigration-related practices, notice requirements for immigration agency inspections, and the right to organize. These notice obligations are in addition to the existing requirements under Labor Code § 2810.5. Employers should update their onboarding packets and ensure current employees receive the required notices by the effective dates.
SB 294: Emergency Contact Designation
By March 30, 2026, employers must provide every employee an opportunity to name an emergency contact who would be notified if the employee is arrested or detained. The practical context here is immigration enforcement. This law ensures workers can designate a family member or attorney to be contacted in the event of a workplace arrest or detention. For employers, the compliance requirement is straightforward: distribute the form, collect responses, and maintain the records.
App-Based Drivers Can Unionize (Effective July 1, 2026)
The Transportation Network Company Drivers Labor Relations Act creates a first-of-its-kind framework allowing Uber, Lyft, and similar app-based drivers to unionize and bargain collectively while remaining classified as independent contractors. This is a significant legal experiment. It acknowledges that the traditional employee/independent contractor binary doesn't capture the reality of gig work, and it attempts to give workers collective bargaining power without reclassifying them. The long-term implications for labor law are substantial.
Workers' Comp Fraud Enforcement
New legislation closes loopholes that allowed some employers to avoid carrying workers' compensation insurance. The state now has stronger tools to identify non-compliant employers and collect penalties. Under Labor Code § 3700, every California employer is required to carry workers' comp coverage. The 2026 changes make it harder for non-compliant employers to hide.
Need to understand how these laws affect your situation? Lightview represents both employees and employers. Call (818) 646-8156.