Labor and Employment

Believe it or not, we are almost half-way into 2026 and the California Legislature has been busy proposing new legislation that will impact the workplace. The Legislative calendar will take us through August 31, 2026 which is the deadline for the Legislature to pass any bills that have been proposed and get them to the Governor’s office to sign or veto by September 30, 2026. Below are just a few of the proposed employment-related bills to watch:

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On May 21, 2026, Governor Newsom signed Executive Order N-6-26 (“EO N-6-26”) which will require state agencies to research and propose certain policies and measures to mitigate the negative impact of AI on California workers.

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Pursuant to Senate Bill 294 which went into effect January 1, 2026 and added a new Part 5.6 to the California Labor Code (sections 1550 – 1559), the California Department of Industrial Relations (“DIR” aka “Labor Commissioner”) has issued the anticipated “California Workplace – Know Your Rights” Notice (“Notice”).

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On October 13, 2025 Governor Newsom signed into law Assembly Bill (“AB”) 692 which is another law allegedly aimed at preventing contracts deemed to be a restraint on trade. Employers should be aware of the new law as it could significantly impact their ability to enter into, and/or enforce, certain contracts with employees for the repayment of a debt.

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For some industries, and in particular, construction, periods of slow work are inevitable.  When no work is available, many employers place their employees on “furlough” – an unpaid, non-working status, but still on the Company “books” – because the employer doesn’t want to deal with terminating and re-hiring the employee.  In California, an employer may temporarily furlough but only if the furlough is truly short-term. Under longstanding guidance from the California Division of Labor Standards Enforcement (DLSE) which was confirmed by the Ninth Circuit Court of Appeals in Hartstein v. Hyatt Corporation, the label of “furlough” or “temporary layoff” is not decisive; what matters is the lack of a specific return-to-work date within that pay period.  As such, a furlough that extends beyond the length of the employer’s regular pay period is considered a termination or “layoff” for wage-and-hour purposes.

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California recently passed Senate Bill 617 which requires additional information to be provided in Cal-WARN Act notices issued on or after January 1, 2026.

As a brief background, there are federal and state laws which discuss the issue of notice owed to employees before large layoffs. The Federal law is known as the Worker Adjustment and Retraining Notification or “WARN” Act. California’s version of the WARN act (AB 2957, the “Cal-WARN Act”) contains additional provisions employers must be aware of. Cal-WARN Act notices are required if a “covered” establishment suffers a “mass layoff” or 50 or more employees, a “termination” of substantial operation, or a “relocation” to a different location 100 or more miles away. (Cal. Labor Code §§1400.5(d)-(f).) The notices must be sent to affected employees, the state Employment Development Department (“EDD”), and other local agencies. See our prior articles addressing these requirements in more detail here, as well as the EDD’s summary of the laws here.

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