Firm News & Events

New Laws for 2027

by Kali N. Smiley

October 9, 2026

Question: I heard there are some new California laws that will affect employers in 2027.  What are the new laws, and when do they go into effect?

Answer: Yes, several new employment laws will become effective January 1.  This year, there are some significant impacts relating to minimum wage, the use of artificial intelligence, discrimination and harassment, training requirements, arbitration agreements, and leaves of absence.  Below is a summary of the new laws in these areas. 

Minimum Wage

California’s minimum wage for non-exempt employees will increase to $17.40 per hour.  The minimum salary for full-time exempt employees will increase to $72,384 per year.  Employers should keep in mind that the minimum wage differs for certain employees and should check their city or county’s minimum wage to ensure they are paying their employees the correct minimum wage.

Artificial Intelligence and Automated Decision Systems

This new law prohibits employers from using Artificial Intelligence to avoid compliance with labor and employment laws, inquire about an employee’s protected status, or to discipline employees for exercising their legal rights.  Additionally, employers who primarily rely on Automated Decision Systems to make disciplinary or termination decisions must have a human review and corroborate the output of the Automated Decision System.  The employer must also provide the affected employee with a written notice that the employer used an Automated Decision System.

Immigration Status Discrimination

The new law prohibits employers from using an employee’s perceived immigration status to dissuade the employee from exercising their rights as an employee or to persuade the employee into doing something they can legally refuse or opt out of.  The actual immigration status of the employee is irrelevant, and an employer will still be liable for violating the statute even if the employee faced no risk of deportation or other adverse immigration consequences.  Employers who violate this law may face a $10,000 penalty per employee for each violation.

Harassment and Discrimination on the Basis of Sex

The legislature has expanded the definition of the term “sex” under the California Fair Employment and Housing Act.  The new definition of “sex” will include several new categories including but not limited to: pregnancy, childbirth, breastfeeding, and related medical conditions; gender identity and expression; gender-affirming healthcare; and variations in sex characteristics, including intersex traits or differences in sex development.  Employers should review their policies and practices to ensure they comply with the expanded employee protections.

Bereavement Leave

Under the new law, employees will be permitted to designate any individual as their “designated person” when the employee requests bereavement leave.  Employers must allow employees to take 5 days of bereavement upon the death of any “family member,” which now includes the employee’s designated person.  Employers may limit an employee to one designated person in a 12-month period.  Employers should update their bereavement policy and notify their supervisors and human resources managers of the change of law.

Arbitration Agreements

Arbitration agreements governed by the California Arbitration Act are now subject to all protections and exemptions codified in the Federal Arbitration Act.  Employers with arbitration agreements governed by the CAA should review the FAA to ensure their arbitration agreements are still enforceable and update them as necessary.

To reduce risk, employers are encouraged to conduct internal audits of their handbook policies, personnel procedures, posting compliance, and use of AI.  This article discusses only some of the new laws that will go into effect on January 1.  Employers should contact their labor counsel to ensure compliance with all new labor and employment laws.

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Refresher on Exemption Thresholds

by Marco A. Lucido

September 25, 2026

Question: I’m going to hire a new employee soon.  I want this person to be exempt from the normal overtime and meal and rest period rules.  Can I make this person exempt by paying them a higher salary?

Answer:  Maybe.  A high salary alone does not automatically make an employee “exempt” for purposes of overtime, minimum wage, and meal and rest periods.  In California, an employee needs to satisfy both a salary test and a duties test to be classified as an “exempt” employee.  If an employee cannot satisfy either test, the employee should be classified as a “non-exempt” employee instead.

It is important for an employer to first understand the difference between an “exempt” employee and a “non-exempt” employee.  An “Exempt” employee is generally paid a salary and is not entitled to overtime pay or meal or rest periods.  This employee generally has decision-making authority, and, given the exemption, does not need to complete a timesheet.  On the other hand, a “non-exempt” employee generally must track all time worked and is entitled to overtime pay, meal and rest periods, and other wage-and-hour protections.  For most employees to properly be classified as “exempt,” they must satisfy both “salary test” and the “duties test.”

The “salary test” in California requires that an employee earn at least twice the state’s minimum wage for full-time work (i.e. 40 hours per week).  For 2026, the salary test is a minimum annual salary of $70,304.  Because the test is connected to the state’s minimum wage, it changes each time the state minimum wage changes.

The “duties test” is equally important and sometimes overlooked.  To satisfy the “duties test,” an employee generally needs to meet the requirements of an administrative, executive, or professional exemption as outlined by the California Labor Code and applicable Industrial Welfare Commission (IWC) Wage Order.  The administrative exemption focuses on employees who perform non-manual work related to management or general business operations.  The executive exemption focuses on employees who manage part of the business, including supervision of other employees and authority to hire and fire employees.  The professional exemption focuses on employees who perform work that requires advanced knowledge in a recognized field.  Each exemption generally requires the employee to customarily and regularly exercise discretion and independent judgment.  Employers should keep in mind that the law focuses on the employee’s actual job duties—not only the employee’s job description.

In addition to the administrative, executive, and professional exemptions, there are a few other specific exemptions.  These include outside salespersons, computer software professionals, and physicians.  Different tests that apply to these exemptions.  Also, employers in certain fields, such as healthcare or fast food, must keep in mind that those industries have specific minimum wage rules that could impact that salary test.

Misclassifying an employee as exempt when they should be non-exempt can have costly consequences for employers.  Employers may be held liable for unpaid overtime wages, missed meal and rest break premiums, penalties, interest, and attorneys’ fees.  California also imposes additional penalties for willful misclassification.

Before classifying any employee as exempt, employers should carefully analyze the actual duties and responsibilities of the positions.  Written job descriptions should accurately reflect day-to-day work.  Employers should regularly review employee classifications, especially when roles change. When in doubt, an employer may consult with their legal counsel.

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Employment Restraining Orders

by Marco A. Lucido

September 11, 2026

Question: I run a small restaurant.  Over the past month, one of my staff member’s ex boyfriends has shown up several times to yell at and threaten my staff member.  Can I (and should I) do something about this?

Answer: Yes, you can (and probably should) do something about this.  In California, employers have a duty to maintain a workplace that is free of harassment.  This duty extends to harassment of employees by third parties, such as an ex-boyfriend.  Failure to take reasonable steps to prevent harassment at work could result in liability.

An employer facing this situation has options.  One important option to consider is a workplace violence restraining order.  An employer may seek a workplace violence restraining order against a person who has stalked, harassed, or been violent or threatened violence against one or more employees at the workplace.  Abuse at the workplace can include threats of violence that happen in person, over the phone, by mail, or online.  It may also include following an employee to or from work during work hours.

The employer can ask for protection for an employee who has been the target of abuse.  In addition, an employer may seek protection for volunteers, independent contractors, board members, and in coms cases, the spouses of employees.  The restraining order may be against any person who has engaged in the unlawful conduct described above.

If the employer is a registered legal entity (e.g. a corporation or an LLC), an attorney must represent the employer in the restraining order case.  Sole proprietors may hire an attorney or may represent themselves.  The employee does not need a lawyer.  The employee may be needed to testify in the case, but their only involvement is to be a witness for the employer’s case.

To seek a restraining order, the employer must complete, file, and serve several court forms.  In most cases, the form packet should include declarations from employees who witnessed the conduct.  Once the packet is filed and served, the judge will review the packet and decide whether to grant temporary protection based only on the completed forms.  The judge will then schedule a court hearing for about 3-5 weeks later.  If temporary protection is granted, it will be effective up to the date of the hearing.

At the hearing, the employer will need to present its evidence to justify the protection, and the responding party will have an opportunity to present its side.  The judge will then decide whether to grant a long-term restraining order.  The judge will normally grant the order if it finds that the employee suffered harassment, unlawful violence, or a credible threat of violence.  If granted, the restraining order will be effective for up to three years.  These orders may be rendered for an additional three years without a need to show further unlawful conduct.  In other words, the orders could be effective for up to 6 years.

Workplace violence restraining orders are one piece to an employer’s overall strategy to take reasonable steps to prevent harassment.  For example, an employer seeking a workplace violence restraining order may also need to update its workplace violence prevention plan and conduct training on workplace violence incidents.  Employers with questions about workplace violence restraining orders should contact their legal counsel.

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New Anti-Hate Speech Training Requirements

by Negin P. Roth

August 28, 2026

Question: I am a business owner and heard there are new anti-hate speech training requirements.  Is this true, and if so, when would this training take effect?

Answer: Additional training for anti-hate speech might be required if a new proposed bill (AB 1803) becomes law.  Existing law requires employers with five or more employees to provide at least two hours of classroom or other effective interactive training and education regarding sexual harassment to supervisors and one hour to nonsupervisory employees every two years.  Those trainings cover topics including sexual harassment, abusive conduct, and discrimination based on protected characteristics, including gender identity and sexual orientation.

AB 1803 is a proposed law that would require employers to add anti-hate speech training as a component to their existing sexual harassment prevention training.  In other words, the anti-hate speech training would be part of the regular training, not a separate course. If passed, the new requirements would begin January 1, 2028.

The stated purpose of the bill is to reduce the prevalence of hate speech/crimes in California.  According to its proponents, it would provide practical guidance on recognizing, reporting, and confronting workplace speech that vilifies, humiliates, or incites hatred against people based on protected characteristics, including age, national origin, disability, gender, race, religion, sex, and sexual orientation.  AB 1803 would identifies speech and conduct based on protected characteristics as something employees should learn to recognize, rather than leaving employees to infer it from general harassment standards.  The bill does not define hate speech.  Instead, it describes the training that should be provided to address hate speech.  The proposed instruction would be added to, rather than replace, the subjects already required as part of harassment prevention training.

If enacted, employees would not automatically need to undergo a new training if they start a new job.  The current proposed law states that an employee would have a six month grace period to complete the training if they received compliant training within the prior two years from a current, prior, alternate, or joint employer.  The employee would then be placed on a two-year tracking schedule based on the employee’s last training. The current employer has the burden of establishing that the prior training was legally compliant.

There is some opposition to the proposed new law.  The bill has been criticized as overly broad potentially unconstitutional.  Opponents also point out that California already has strong anti-hate speech mechanics in place and that any rise in hate speech is a result of successful policies, greater transparency, and increased reporting.  Because the bill has not yet become law and there is no implementing guidance, employers should not treat it as a current, separate legal requirement.

AB 1803 passed the Senate Judiciary Committee on June 30, 2026, and was referred to the Senate Committee on Appropriations for further consideration.  Although AB 1803 is not yet in effect, it is a good practice to make sure employees are current on harassment prevention training to ensure compliance with California law.  Employers may also want to review their training materials and tracking systems so they can add the new content if the bill becomes law.  Reviewing these materials now may help employers identify what would need to be revised while they continue providing the training currently required by law.  Employers with questions regarding harassment-related training compliance are encouraged to consult with their employment counsel.

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