2026 California Employment Law Updates

ByContent Manager
2026 California employment law updates for employers

Significant Cases (2025)

Harper v. Sirius XM Radio (2025)

  • Pending class-action case alleging that Sirius XM’s use of an AI-powered hiring tool systematically discriminated against Black applicants.
  • Brings claims of racial discrimination under Title VII, arguing both disparate treatment and disparate impact.

Mobley v. Workday (2025)

  • Mayor class-action case alleging claims of racial discrimination under Title VII, arguing both disparate treatment and disparate impact
  • Claims Workday’s tools filter candidates based on factors correlated with race, age, and disability, violating federal anti-discrimination laws (ADEA and Title VII)

ACLU v. Intuit/HireVue (2025)

  • Employer’s use of automated video interview platform unfairly blocked her promotion due to AI-driven biases related to her disability and race.
  • Employer refused to accommodate employee’s request for human generated captioning.      

AB 566- Opt Me-Out Act (Related to CA Privacy Protection Act)

  • Effective January 1, 2027, under California Opt Me Out Act law, businesses that operate websites in California must include web browser functionality for consumers to automatically send an opt-out preference signal to website operators.
  • Specifies that opting out must be easy to locate and configure.

Note: California is the first state to adopt this type of law, as part of its efforts to increase the control consumers have over their personal data.

FYI- CAHR Services will develop AI and California Privacy policies once we have consulted with outside counsel.

6. Employee Mobility: Prohibitions on Stay-or-Pay Agreements (AB 692)

Effective Jan 1, 2026.
Makes it unlawful to require employees to repay training/debt if employment ends, with limited exceptions.

Penalties:

  • Actual damages or $5,000 per worker
  • Injunctive relief, attorneys’ fees, costs

Exceptions include:

  • Transferable credential tuition agreements (must be separate, prorated, no interest, no accelerated repayment, no repayment unless terminated for misconduct).
  • Certain discretionary sign-on bonuses (separate agreement, 5-day review, option to defer payment, prorated repayment only, no interest, repayment only on voluntary quit or misconduct termination).

Suggested Action Plan:

  • Review offer letters, training repayment, and relocation agreements for compliance
  • Create separate agreements
  • Ensure proper electronic signature procedures
  • Train HR on proration rules
  • Remove any accelerated repayment terms

Penalties:

  • Monetary damages equal to either the worker’s actual losses or $5,000—whichever amount is greater, injunctive relief, and reasonable attorneys’ fees and legal costs for the employee.

7. Labor Law Developments (AB 288) Expansion of PERB’s Authority

Authorizes PERB to enforce NLRA-like rights if NLRB fails to act within 6 months.

  • Could allow PERB to certify unions, order bargaining, reinstate terminated employees, impose penalties.
  • Would decide unfair labor practices that the NLRB has not resolved within six months.

California private employers could face:

  • Risk of duplicate forums and stronger leverage for unions.
  • Expanded remedies: PERB may impose civil penalties, a sanction not available under the NLRA.
  • Binding mediation orders and expedited remedies could tilt the balance of bargaining power.
  • Uncertainty in compliance: Employers will be forced to navigate overlapping—and potentially conflicting—federal and state labor law obligations.

Status:

  • Enforcement is currently uncertain; facing federal preemption litigation.
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