Enenstein Pham Glass Gutenplan & Bolling

2026 California Legislative Roundup

Stephen D. Britt, Senior Counsel

The 2026 California legislative session produced a number of new laws that may affect business owners and high-net-worth individuals. Unless otherwise noted, these laws will take effect on January 1, 2027:

Employment laws

  • AB 692 / AB 1697 (stay-or-pay ban): AB 692 bans most employment repayment and "exit-fee" provisions, such as clawbacks of bonuses or training costs when an employee leaves early. AB 1697 took effect on signature as an urgency law and limits the ban to contracts entered into on or after January 1, 2027, which eliminates liability for 2026. It also adds exemptions for grant-funded recruitment and retention bonuses, repayment of advanced PTO on voluntary separation, and certain securities and insurance affiliation agreements.
  • AB 2495 (immigration-related retaliation): This law expands Labor Code §1019 to reach any conduct tied to a person's perceived immigration status that would reasonably tend to discourage a worker from exercising rights under any law. Actual immigration status is irrelevant, and the protections extend to applicants and former employees. Penalties run up to $10,000 per employee or person for each violation, on top of existing remedies.
  • AB 2563 (definition of "sex" under FEHA): This law expands FEHA's definition of "sex" to expressly include conformity to sex or gender stereotypes, access to gender-affirming care, pregnancy-related decision-making, and intersex traits. It also directs that sex and gender discrimination laws be liberally construed. Employers should start by reviewing dress codes, grooming standards, and uniform policies that differ by gender.
  • SB 1149 (bereavement leave): Employers with five or more employees must allow bereavement leave for the death of a "designated person," meaning someone related by blood or whose association with the employee is the equivalent of a family relationship. Employers may limit employees to one designated person per 12-month period, and the existing documentation rules still apply.
  • SB 464 and SB 1237 (pay data reporting): SB 464 increases the number of job categories in pay data reports from 10 to 23. SB 1237 raises the penalty for a repeat failure to file from $200 to $1,000 per employee. Employers with 100 or more employees should treat the May 2027 filing as a priority.
  • AB 2155 (arbitration): This law writes Federal Arbitration Act exemptions into the California Arbitration Act, including the exemption for transportation workers and the federal law barring forced arbitration of sexual assault and harassment claims. As a result, those exemptions apply even where only the California act governs an agreement, which can make certain agreements unenforceable.
  • AB 1331 and AB 1883 (workplace surveillance): AB 1331 bars monitoring employees in workplace bathrooms and lets employees leave surveillance devices outside when they go in. AB 1883 bars workplace surveillance tools that collect neural data or claim to read an employee's emotional state.
  • SB 951 (AI layoffs and Cal-WARN): When a covered mass layoff, relocation, or termination results from AI or automation, the Cal-WARN notice must describe the number, location, and types of jobs displaced and the technology involved. The existing 60-day notice period is unchanged.
  • SB 947 ("No Robo Bosses Act") [operative July 1, 2027]: Employers may not rely solely on an automated decision system to discipline or fire employees, and a human must corroborate any decision that primarily relies on one. Employers must give written notice after the fact, and employees may request up to 12 months of their own data that the system used. The Labor Commissioner and public prosecutors enforce the law, with a $500 civil penalty per violation.
  • AB 1803 (anti-hate speech training) [operative January 1, 2028]: Harassment prevention training must add practical guidance on recognizing, reporting, and confronting workplace speech that targets FEHA-protected characteristics. It does not lengthen the existing one- and two-hour training minimums.

Labor and wage laws

  • State minimum wage increase: The state minimum wage rises to $17.40 per hour. That raises the minimum salary for full-time exempt employees to $72,384 per year ($6,032 per month). Where a city or county sets a higher local rate, the local rate must be paid.
  • AB 2646 (agricultural minimum wage): This law sets a $19.75 hourly minimum for approved agricultural employees, often H-2A workers, and for California residents doing the same work. The rate will increase each January 1 based on the Social Security cost-of-living adjustment. Legal challenges are expected.
  • AB 2321 (Cal/OSHA enforcement): This law expands criminal referrals from Cal/OSHA's Bureau of Investigations and requires immediate notice to the district attorney for incidents involving a fatality or five or more serious injuries. Willfully resisting or interfering with an inspector becomes a misdemeanor, though employers may still ask for a warrant.
  • SB 1444 and SB 1316: SB 1444 lets individuals recover civil penalties for willful misclassification under Labor Code §226.8. SB 1316 bars employers from introducing records at Labor Commissioner retaliation hearings that they withheld when asked.
  • AB 1961 and AB 2179 (workplace violence restraining orders): AB 1961 lets employers seek an order protecting all employees at a location without naming each one. AB 2179 requires courts to allow remote appearances and electronic filing for these petitions.
  • CPPA ADMT regulations: Businesses that use automated decision-making technology to make significant decisions must comply with the agency's ADMT requirements starting January 1, 2027. These rules were adopted as regulations rather than legislation, and their later effective date gave businesses extra time to prepare.

Corporate structure, entity, and competition statutes

  • Business tax credit cap: Under SB 122, the current $5 million cap on business credits continues through 2029. Starting in 2030, the cap becomes the greater of $5 million or 70% of tax owed.
  • Net operating loss deduction suspension expiration: Because neither budget tax bill extended the suspension of net operating loss deductions, it is scheduled to expire at the end of tax year 2026.
  • AB 1776 (COMPETE Act): This law extends the Cartwright Act to single-firm monopolization under a "substantial market power" standard. Notably, only the Attorney General and district attorneys can enforce it, and California businesses with 100 or fewer employees and $10 million or less in average gross receipts are exempt from this law.

Wealth preservation and estate statutes

  • AB 2199 (statutory form power of attorney): AB 2199 replaces California's Uniform Statutory Form Power of Attorney effective January 1, 2027. The new form adds successor agents and authority over digital assets and electronic communications, and it lets the principal nominate a conservator of the estate. Powers of attorney properly executed before that date remain valid.

Taxation statutes

  • SB 122 (sales and use tax on digital products): Starting January 1, 2027, sales and use tax applies to prewritten software and software as a service (SaaS) however they are delivered, while custom software stays exempt. For transactions over $5 million in the aggregate, the duty to remit the tax can shift from the seller to the buyer. Under CDTFA's draft regulations, subscriptions are taxed only for periods on or after January 1, 2027.
  • Settlement fund tax: For tax years beginning in 2026 through 2029, SB 122 taxes certain settlement fund payments. The tax is 100% and applies to payments from any "anti-weaponization" settlement fund set up by the federal Department of Justice.

Privacy and data retention laws

  • SB 923 (Expanding Privacy Rights Act): The CCPA right to delete now covers personal information collected "from or about" a consumer, including data obtained from third parties. Online-only businesses must offer an online way to submit requests, such as a webform. Businesses may keep suppression lists so deleted data stays deleted as new third-party data comes in.
  • AB 566 (Opt Me Out Act): By January 1, 2027, all web browsers on desktop and mobile must include a built-in opt-out preference signal. This lets consumers send opt-out signals such as Global Privacy Control automatically.
  • AB 883 (data brokers and DROP): Data brokers must check the state's Delete Request and Opt-Out Platform (DROP) and process deletion requests at least every 30 days instead of every 45. Starting July 1, 2027, elected officials and judges must be told about their DROP rights, and government attorneys can sue on their behalf.
  • SB 690 (CIPA reform): Only the Attorney General may bring claims under CIPA's pen register and trap-and-trace provision, Penal Code §638.51. The change applies retroactively to claims filed on or after January 1, 2025. It does not touch the wiretap provision (Penal Code §631) that most demand letters cite.

Intellectual property and related AI and content laws

  • SB 1050 (AI performers in advertising): Publishing an ad that prominently features a “synthetic performer” without a clear and conspicuous disclosure becomes an unlawful advertising practice. Certain ad platforms must remove such ads after a court order.
  • AB 853 (AI content provenance): Online platforms with more than 2 million unique monthly users must detect provenance data, show users that it is available, and not strip it from uploaded content. Generative AI hosting platforms take on related duties on the same date. Violations carry a $5,000 civil penalty per violation, and each day counts as a separate violation.
  • AB 1640 (Restaurant Reservation Anti-Piracy Act): This law bans reselling or transferring a restaurant reservation for more than its original price. The Attorney General, local prosecutors, and harmed restaurants and diners can all enforce the new law.