2025/2026 Labor Law Changes

December 13, 2025

Minimum Wage Increase

Starting January 1, 2026, the minimum wage for employees at all California businesses rises to $16.90. The hourly minimum wage is currently $17.87 for businesses in the City of Los Angeles and $17.81 in unincorporated Los Angeles County. These two local rates are scheduled to be adjusted for inflation on July 1, 2026. Please account for these changes when calculating employees’ wages in the new year, and contact our firm if you need assistance.

California and Los Angeles Minimum Wage Schedule
Statewide California
Current	$16.50
January 1, 2026	$16.90
City of Los Angeles
Current	$17.87
July 1, 2026	$17.87 + CPI
Unincorporated Los Angeles County
Current	$17.81
July 1, 2026	$17.81 + CPI

The minimum wage for employees of large fast-food franchise businesses in California, with at least 60 locations nationwide, remains $20.

Mandatory Paid Sick Leave and Unpaid Family Leave

All California companies provide employees who have worked for at least 6 months with at least 40 hours (5 days) of paid sick leave annually. Employees accrue 1 hour of paid sick leave for every 30 hours worked and may begin using it after 3 months of employment. Employers must give existing and new employees written notice of the mandatory sick leave policy and retain records of hours worked and paid sick leave calculations for at least three years. A law requiring 48 hours (6 days) of annual paid sick leave is in effect for companies in the City of Los Angeles and applicable Los Angeles County areas. Under SB1383, businesses with at least 5 employees must provide up to 12 weeks of unpaid family leave annually for needs such as childbirth or caring for family members, and guarantee reinstatement after leave. Employers may not require employees to use vacation before taking paid family leave.

California’s Mandatory Employee Retirement Plan Requirement

California’s requirement to offer an employee retirement plan currently applies to businesses with at least 5 employees. Beginning in 2026, it expands to businesses with at least 1 employee. Businesses without a separate retirement plan must enroll in the state-provided CalSavers program. Unlike a typical 401K plan, CalSavers does not require employers to match employee contributions, and employees may opt out. Failure to provide a retirement plan can result in penalties of $250 to $500 per employee. Enrolling in CalSavers or claiming an exemption once does not end the employer’s responsibilities: information must be updated whenever a new employee is hired. The penalty grace period has recently ended and penalty notices are being sent to businesses, so please take care.

Stronger Penalties for Wage Theft

Under the labor law currently in effect (SB572), employers who fail to pay wages may face felony charges and liens against their assets. If unpaid wages owed to one employee reach $950 or more, the conduct is considered grand theft. An employer who intentionally or willfully withholds wages or tips may face 3 years in prison. Labor agency liens may cover real estate as well as personal and business assets such as equipment, machinery, jewelry, furniture, and artwork.

Other Labor Law Matters

· Display all required workplace labor law notices in a clearly visible location. Complete and retain Forms I-9 and W-4 for each employee, and always provide a pay stub when paying wages.

· If an employee is arrested at work by immigration authorities or similar authorities, the employee’s family must be notified.

· Follow legally required rest-break and overtime rules, and follow the labor law procedures when terminating employment.

· California labor law requires written notice of wage terms to all new employees. The notice must include the wage amount, how wages are calculated, pay dates, the employer’s legal and business names, headquarters address and telephone number, and the workers’ compensation insurer’s name, address, and telephone number. The California Notice to New Employee form may be used. Employers must also notify employees within 7 days of any subsequent changes. This requirement does not apply to overtime-exempt employees.

· During hiring interviews, employers may not ask about prior salary history or criminal records unrelated to the job.

· When providing employees with Forms W-2, business owners must also provide a notice explaining possible eligibility for the Earned Income Tax Credit when filing their tax returns.

· Businesses with at least 15 employees must disclose pay levels when recruiting. · Employers must pay the costs of the food handler certificate required for restaurant workers, and compensate employees for time spent on the related training and examination.

· A driver’s license may not be required unless driving is essential to the job.

· A written contract is required when hiring freelance services costing $250 or more.

· Under the trucking expense reimbursement law (SB809), a transportation company using an employee-owned vehicle must reimburse the associated maintenance and depreciation costs.