Is Your Business Ready for January 1, 2026
New year, new laws. As you focus on serving your client and building your community, let us help you protect your business. Use this checklist to audit your current practices against California’s newest employment regulations.
1.Wage & Hour Compliance
Deadline January 1, 2026
- Update Base Pay Rates: Ensure all employees (non-exempt) are earning at least $16.90 per hour.
- Audit “Wage Compression”: Review pay rates for senior staff. If the minimum wage hike has closed the gap between entry-level and experienced staff, consider adjustments to maintain morale.
- Update Workplace Posters: Replace breakroom labor law posters with the 2026 versions reflecting the new minimum wage.
- Review Exempt Status: Verify what salaried exempt employees meet the new minimum salary threshold (typically 2x minimum wage), which rises alongside the hourly rate.
2. Employment Contracts (AB 692)
Deadline: Contracts signed on/after January 1, 2026
- Remove “Stay-or-Pay” Clauses: Delete any language requiring employees to repay training, education, or relocation costs if they leave the company.
- Review Bonus Agreements: If yo use sign-on or retention bonuses with clawback provisions, ensure they:
- Are in a separate agreement (not the main offer letter).
- Provide a 5-day review period for employees.
- Have a retention period of less than 2 years.
- Are not treated as a loan (no interest).
- Check Credentials Policy: If you pay for professional licensing (e.g., CPA, Nursing), ensure repayment agreements are capped at actual cost and prorated.
3. Hiring & Pay Transparency (SB 642)
Effective: January 1, 2026
- Update Job Postings: Ensure all active job advertisements include a “good faith” salary or hourly wage range. Avoid “DOE” (Depends on Experience) or broad, speculative ranges (e.g., “50k – 200k”)
- Internal Equity Audit: Review current employee pay. With the statute of limitations extended to 3 years (and back pay to 6 years), identify and correct any unexplained pay disparities among employees doing similar work.
- Update Gender Terminology: Ensure HR documents and applications use inclusive language (replacing “opposite sex” with “another sex” or gender-neutral terms).
4. Leave Policies (SB 590)
Effective: January 1, 2026
- Update Employee Handbook: Revise your Paid Family Leave (PFL) and CFRA policies to include “Designated Person” in the definition of family members.
- Create a Designation Form: Prepare a simple form for employees to identify their “designated person” at the time they request leave.
- Train Managers: Ensure supervisors understand they cannot deny leave simply because the sick individual is not a blood relative or spouse.
5. Risk Management (SB 261)
Ongoing Strategy
- Due Diligence Check (For Buyers): If acquiring a business, specifically audit for unsatisfied wage judgments to avoid successor liability.
- Review Outstanding Disputes: If your business has any unpaid wage judgments, resolve them immediately. Unpaid judgments＞180 days can now incur triple penalties.
Need a Deeper Dive?
This checklist covers the basics, but every business is unique. If you need a comprehensive review of your Employee Handbook or Employment Agreements, we are here to help you facilitate great careers and protect your legacy.
Contact Griswold LaSalle Today
(559) 584-6656 | www.griswoldlasalle.com