On September 30, 2026, Governor Gavin Newsom signed Assembly Bill (AB) 1697 into law, revising California’s restrictions on stay-or-pay provisions. Some of the changes at a high level include:

  • Postponement of compliance until January 1, 2027.
  • Expansion of the exception for certain bonuses awarded later in the employment relationship so that they need not be entered “at the outset of employment” as earlier required. Now retention bonuses and relocation bonuses for current employees may be subject to the exception if they meet certain requirements.
  • Creation of a new exception for certain compensation agreements between securities broker-dealers, insurance providers, or investment advisers, including their affiliates, and their agents or representatives who are registered with the SEC or FINRA, or licensed under applicable California law.
  • Permits employers to recoup advanced paid time off (PTO) payments when an employee voluntarily leaves employment under certain conditions.

The underlying restrictions apply to contracts entered into on or after January 1, 2027, rather than January 1, 2026. Agreements previously made to comply with AB 692 remain enforceable.

Overview of the Expanded and Pre-Existing Exceptions

AB 1697 retains the original exceptions and adds new ones. Each exception has its own conditions. An arrangement does not qualify merely because the employer labels it a bonus, tuition benefit, advance, or loan.

  • Government programs. The law does not apply to contracts under federal, state, or local government loan repayment assistance or loan forgiveness programs. It also now excludes contracts under government grant-funded recruitment or retention programs that offer recruitment or retention bonuses, provided the repayment obligation complies with the grant and does not exceed the grant’s required service obligation.
  • Transferable credentials. An employer may use a qualifying tuition repayment agreement for a degree offered by an accredited third-party institution when the degree is not required for the worker’s current job and is useful beyond the current employer. The agreement must be separate from the employment contract; the credential cannot be a condition of employment; the repayment amount must be disclosed in advance and cannot exceed the employer’s cost; repayment must be prorated without acceleration following separation; and an employer generally cannot require repayment after an employer-initiated termination, except for misconduct.
  • Approved apprenticeships. Contracts related to enrollment in apprenticeship programs approved by the California Division of Apprenticeship Standards remain outside the prohibition.
  • Discretionary or unearned payments. A repayment agreement for a discretionary or unearned monetary payment, including a financial bonus not tied to specific job performance, may qualify if all statutory safeguards are met. The repayment terms must appear in a separate agreement from the primary employment contract. The employee must receive notice of the right to consult counsel and at least five business days to do so. The obligation cannot accrue interest, must be prorated over a retention period of no more than two years from receipt, and must give the worker the option to defer the payment until the retention period is completed, eliminating repayment. Early separation must be solely the employee’s choice or the employer’s decision based on misconduct.
  • Residential property. Contracts involving the lease, financing, or purchase of residential property remain excluded, including contracts governed by the California Residential Mortgage Lending Act.
  • Specified financial and insurance affiliations. AB 1697 adds a separate exception for certain payments used to induce or maintain a worker’s affiliation with a securities broker-dealer, insurance producer, or investment adviser, including affiliates. The agreement must be separate from the employment contract, and the payment must be additional to compensation otherwise payable. The worker must receive notice of the right to consult counsel and at least five business days for that review. Any post-separation interest may not exceed the applicable federal rate. The exception is limited to agents or representatives registered with the Securities and Exchange Commission or FINRA, or licensed under the specified California securities, investment adviser, or insurance statutes.
  • Advanced paid time off. A repayment obligation may arise when a worker voluntarily separates after requesting and receiving an advance payment for paid time off beyond the worker’s accrued balance. The obligation must be clearly disclosed separately from the primary employment contract when the worker requests the advance, cannot exceed 40 hours of accrued paid time off, and cannot accrue interest.

The Removal of the Requirement That Certain Bonuses Be Offered at “the Outset of Employment.”

AB 692’s original bonus exception applied to a discretionary or unearned payment made “at the outset of employment.” AB 1697 deletes this requirement that these arrangements be entered into at the beginning of the employment relationship. As a result, a qualifying payment made after employment begins, such as a mid-employment retention bonus, may now fall within the exception. This change gives employers more flexibility to offer retention incentives or relocation offers to existing employees instead of limiting the exception to sign-on arrangements.

The deletion does not validate every bonus claw-back. The payment still must be discretionary or unearned and cannot be tied to specific job performance. Employers also must satisfy every procedural and substantive condition, including a separate agreement, the notice to consult with counsel and five-business-day review period, proration, the two-year maximum retention period, the no-interest rule, the deferral option, and the limits on the reasons for separation that may trigger repayment. The reference to employer-initiated separation for misconduct uses the definition of misconduct in Unemployment Insurance Code section 1256, so employers should not assume that any discharge characterized as “for cause” will qualify.

Employer Preparation for 2027

Employers should identify agreements that condition repayment or collection on separation, including sign-on and retention bonuses, tuition assistance, training costs, relocation or immigration expenses, leave advances, and arrangements administered through affiliates or third parties. Agreements intended to rely on an exception should be reviewed against each required element, not only the general purpose of the payment.

If you have questions about AB 1697 or related stay-or-pay arrangements, contact a Jackson Lewis attorney to discuss.

Governor Newsom signed Assembly Bill (AB) 1883, establishing new restrictions on how employers may use surveillance tools in the workplace, particularly those powered by artificial intelligence. A trend may be emerging as other states, such as Maine and Connecticut, have recently enacted or updated their electronic monitoring laws, and existing laws exist in states such as Delaware, New Jersey, and New York.

AB 1883 regulates an employer’s use of “workplace surveillance tools,” with a particular focus on AI-driven monitoring technologies that have become increasingly common in today’s workplaces. The law prohibits employers from deploying AI-powered surveillance tools that are capable of recognizing, or making inferences or predictions about, an individual’s emotional state, or that collect neural data.

This means technologies such as emotion recognition software and neural monitoring devices that claim to measure whether a worker is concentrating, tired, or stressed are now off-limits in California workplaces.

The law defines AI broadly as “an engineered or machine-based system that varies in its level of autonomy, and that can, for explicit or implicit objectives, infer from the input it receives how to generate outputs that can influence physical or virtual environments.” Employers should note that this is a sweeping definition that could capture a wide range of tools already in use for certain use cases. Those use cases include tools that either (i) recognize or make inferences or predictions about an individual’s emotional state, or (ii) collect neural data.

The definition of “employer” meanwhile includes any person or governmental entity that directly or indirectly employs or exercises control over an employee’s wages, hours, or working conditions, and extends to farm labor contractors, foreign labor contractors, and entities contracting with labor contractors for services.

California’s Labor Commissioner and “public prosecutors”—defined under CA Labor Code Section 180 as the Attorney General, district attorneys, city and county counsel, along with city or county prosecutors—are authorized to enforce the law’s provisions. Actions may be brought in the superior court of any county where the alleged violation occurred or where the employer transacts business, and successful petitioners may be entitled to injunctive relief and awarded punitive damages, reasonable attorney’s fees, and costs. Employers found in violation additionally face penalties of $500 for each violation.

However, two notable exceptions from this bill permit the use of these types of AI-powered surveillance tools depending on the industry an employer works in, provided that industry is subject to federal laws or contracts. AB 1883 does not apply to employers responsible for the development of aircraft used in the national airspace as well as employers developing products or services for national security, military, space, or defense purposes. These exceptions also only apply to the extent this workplace surveillance is “reasonably necessary” to comply with federal laws, federal regulations, or a binding federal contract.

If you have questions about compliance with AB 1883 or related issues, contact a Jackson Lewis attorney to discuss.

Governor Newsom signed Assembly Bill (AB) 1961 and AB 2179 on September 30, 2026. The companion measures amend Section 527.8 of the Code of Civil Procedure to expand when employers may seek workplace violence restraining orders (WVROs) and to modernize how those proceedings may be filed and heard.

Under prior law, an employer seeking a WVRO generally was required to identify an employee who had suffered harassment, unlawful violence, or a credible threat of violence that could reasonably be construed to have occurred, or to be carried out, at the workplace. That framework created difficulty, at times, when a threat targeted a worksite or group of employees rather than a particular individual.

AB 1961 addresses that issue by allowing an employer to file a petition to seek a temporary restraining order and an order after hearing on behalf of all employees at a workplace, or at a location where a group of employees performs its primary job duties, when harassment, unlawful violence, or a credible threat of violence is directed at that workplace or location. The employer need not name a specific employee in the petition. A court may issue an order restricting the respondent from telephoning or otherwise contacting the workplace or location, coming within a specified distance of it, or engaging in other conduct necessary to make the order effective.

AB 2179 adds procedural changes beginning January 1, 2028. Once these changes take effect, a party or witness may appear remotely at a WVRO hearing, and a superior court may not charge a party a fee to appear remotely. Each superior court must develop local rules and instructions for remote appearances and post them on its website, and the Judicial Council must develop the necessary forms and rules by that date.

Also beginning January 1, 2028, courts that receive WVRO petitions must permit the petitions and related filings to be submitted electronically. When a petitioner files electronically, the court must electronically provide the request, notice of the hearing date, copies for service on the respondent, and any temporary restraining order that is granted, unless the petitioner elects to obtain those documents from the court in physical form.

The two laws contain coordination language because both amend the same statute. Accordingly, AB 1961’s expanded authority to seek workplace-wide relief takes effect January 1, 2027, while AB 2179’s remote-appearance and electronic-filing requirements commence January 1, 2028. The Judicial Council also must adopt or modify forms for workplace-wide petitions by January 1, 2028.

Employers should review their workplace violence response protocols and identify who will coordinate with legal counsel, security personnel, and law enforcement when a threat affects a worksite or group of employees. Employers considering a WVRO should preserve evidence of the threat and consult counsel regarding the applicable evidentiary, notice, service, and filing requirements. If you have questions about AB 1961, AB 2179, or related issues, contact a Jackson Lewis attorney to discuss.

Governor Gavin Newsom has signed Assembly Bill (AB) 1331, which takes effect January 1, 2027, and adds Part 5.8 to the California Labor Code (beginning at Section 1560). The law imposes new limits on workplace surveillance tools, requiring employers to reassess monitoring practices, privacy boundaries, and compliance controls.

What AB 1331 Does

AB 1331 broadly defines a “workplace surveillance tool” as any system, application, instrument, or device that collects or facilitates collection of employee data, activities, communications, actions, biometrics, or behaviors other than through direct human observation. The definition covers video and audio systems, GPS and other location tracking, time- and pace-tracking, electromagnetic and optical systems, and biometric tools; it excludes smoke detectors, carbon monoxide detectors, and weapon-detection systems that automatically screen a person’s body.

Key Prohibitions

AB 1331 prohibits surveillance in bathrooms located in the workplace. It prohibits tracking how often employees use those spaces.

The law permits limited exceptions for an employee’s voluntary use of a surveillance tool; safety or identification badges, personal alarms, and similar tools that do not detect or record audio or video and do not contain physically embedded or attached AI; one-time bathroom entry or exit checks; and surveillance required by federal or state law or regulation. These carve-outs should be read narrowly and do not automatically validate existing practices.

Key Compliance Considerations

Before January 1, 2027, employers should audit surveillance technology; update monitoring policies; and train supervisors and HR on the new requirements.

If you have questions about AB 1331 or need assistance evaluating your organization’s workplace surveillance practices, please contact a Jackson Lewis attorney to discuss.

Governor Newsom has signed Senate Bill (SB) 1237, significantly increasing the penalties for employers who repeatedly fail to file California’s required pay data reports.

Under the new law, first-time failures remain subject to penalties of up to $100 per employee. But for subsequent failures, the maximum penalty jumps from $200 to $1,000 per employee—a fivefold increase.

Miss once, pay a little. Miss twice, pay a lot.  A company with 500 employees that misses a second filing deadline could face up to $500,000 in civil penalties—compared to $100,000 under the prior cap. The California Civil Rights Department (CRD) must still obtain a court order to impose penalties, but the dramatically higher ceiling gives the agency considerably more leverage in enforcement actions.

SB 1237 also requires CRD to publish aggregate, anonymized reporting data annually. But individual company filings remain confidential—the statute expressly exempts them from disclosure under the California Public Records Act.

Employers should also note that the May 2027 filing cycle—the first subject to SB 1237’s enhanced penalties—will require reporting under 23 Standard Occupational Classification (SOC) job categories rather than the 10 EEO-1 categories used in prior years. This change, enacted in 2025, requires employers to map each employee to more granular job classifications based on occupational function. Organizations that have not yet updated their HRIS systems or reporting processes should begin preparation now to avoid compliance gaps when the new requirements take effect.

Key Takeaway

SB 1237 takes effect January 1, 2027. Employers with 100 or more employees should use the intervening period to audit their pay data reporting processes, ensure their systems can accommodate SOC-based classifications, and calendar the annual filing deadline (the second Wednesday of May).

If you have questions about California’s pay data reporting requirements or need assistance preparing for the upcoming filing cycle, please contact a Jackson Lewis attorney.

California has enacted Senate Bill (SB) 951, expanding the information employers must provide when a workforce reduction covered by the California Worker Adjustment and Retraining Notification Act (Cal-WARN) results from artificial intelligence or other automated technology. The new requirements take effect January 1, 2027.

Cal-WARN generally requires a covered employer to provide 60 days’ advance written notice before ordering a mass layoff, relocation, or termination at a covered establishment. A covered establishment is an industrial or commercial facility, or part of one, that employs or has employed at least 75 people within the preceding 12 months. A mass layoff generally involves the layoff of 50 or more employees at a covered establishment during a 30-day period.

SB 951 does not create a notice obligation every time an employer introduces AI or automation. Instead, its additional requirements apply when an employer is already required to provide Cal-WARN notice and the mass layoff, relocation, or termination is caused “in whole or in substantial part” by an AI system or other automated technology replacing or automating employment positions.

When the new requirements apply, the employer’s Cal-WARN notice must state at the top: “This notice is for a technology displacement.” The notice must also identify the number, classification or occupation, and work location of layoffs substantially attributable to AI or automation. In addition, it must describe the job functions performed by the affected workers that will be automated and identify the specific category or type of AI system or other automated technology that substantially resulted in the displacement.

The Employment Development Department (EDD) must publish summaries of technology-displacement notices on its website and issue quarterly statewide summaries of reported displacements. SB 951 also directs the EDD to submit a report to the Legislature by January 1, 2028, addressing AI’s effects on business hiring practices, industries, and occupations at the state and regional levels. The report may include recommendations concerning future notice requirements for AI-related cessations in hiring. However, SB 951 itself does not require employers to report decisions to stop hiring for positions because of automation.

If you have questions about SB 951 or related issues, contact a Jackson Lewis attorney to discuss.

In 2025, Governor Newsom signed Assembly Bill (AB) 692, which made it unlawful to include in any employment contract or requirement that a worker execute, as a condition of employment, a contract that includes terms that require the worker to pay an employer, training provider, or debt collector for a debt if the worker’s employment or work relationship with a specific employer terminates, unless it fell under one of five exceptions. The bill applied to contracts entered into on or after January 1, 2026.

On September 30, 2026, the Governor signed AB 1697 which delays the effective date of AB 692 to January 1, 2027.

The amendments also add additional exceptions to the law, including the following:

  • Retention bonuses if certain requirements are met
  • Repayment obligation arising from voluntary separation related to advanced paid time off
  • Sign-on or retention bonuses within some regulated professions if certain requirements are met

The amendments under AB 1697 take effect immediately pursuant to an urgency clause in the bill.

If you have questions about AB 1697 or related issues, contact a Jackson Lewis attorney to discuss.

Governor Gavin Newsom has signed Senate Bill (SB) 947, adding new requirements to the California Labor Code for employers that use automated decision systems in the workplace for disciplinary and termination decisions. The law takes effect July 1, 2027.

What is Covered?

SB 947 defines an automated decision system, or ADS, as any computational process derived from machine learning, statistical modeling, data analytics, or artificial intelligence that issues simplified output, including a score, classification, or recommendation, which is used to assist or replace human discretionary decision-making and materially impacts natural persons. The definition excludes certain common tools, including spam filters, firewalls, antivirus software, calculators, databases, and datasets.

What are the New Limitations for Employers?

  • Limitations on Disciplinary and Termination Decisions: As a result of SB 947, an employer may not solely rely on an ADS to make a disciplinary or termination decision. When an employer primarily relies on ADS output to make a disciplinary or termination decision, a human must review and corroborate the decision using the information that produced the output or other relevant material. Potential corroborating information may include managerial evaluations, personnel records, work product, peer reviews, and witness interviews. If the output cannot be corroborated, or the human reviewer determines that it is inaccurate, incomplete, or misleading, the employer may not use it to discipline or terminate the employee.

An employer that primarily relies on an ADS for discipline or termination must also give the affected employee a separate written notice when communicating the decision. The notice must explain the employer’s reliance on the ADS, confirm human review and corroboration, provide contact information for a person who can provide more information, describe the employee’s right to request a meaningful and objective description of the employee data used by the ADS, and state that retaliation is prohibited. The notice must be written in plain language and provided through a simple method.

  • Prohibition Against Ascertaining an Employee’s Protected Status: Employers may not use an ADS to infer an employee’s protected status under the Fair Employment and Housing Act (FEHA), or to predict and take adverse action against a worker for exercising legal rights.
  • Prohibition Against Evading the Law: The law prohibits employers from using an ADS to prevent compliance with or violate employment, labor, workplace safety, or civil rights laws.

The Labor Commissioner and public prosecutors may enforce the law. A qualifying collective bargaining agreement may waive the law’s provisions if it satisfies specified requirements, including protections from algorithmic management.

Before July 2027, employers should identify workplace tools that may qualify as an ADS and evaluate how their outputs affect disciplinary and termination decisions. Employers should also consider documenting human review procedures, developing compliant notices and data-response processes, and coordinating implementation with vendors.

If you have questions about SB 947 or related issues, contact a Jackson Lewis attorney to discuss.

Governor Gavin Newsom has signed Assembly Bill (AB) 2495, expanding California’s protections against retaliation and other workplace conduct involving a person’s perceived immigration status. The new law amends Labor Code section 1019 and will take effect January 1, 2027.

Existing California Labor Code section 1019 prohibits an employer or other person from engaging in specified “unfair immigration-related practices” for the purpose of retaliating against a person who exercises certain workplace rights. These practices include requesting more or different employment-verification documents than federal law requires, misusing E-Verify, threatening to file or filing a false report with a government agency, and threatening to contact or contacting immigration authorities.

Previously, section 1019 referred to rights protected by the Labor Code or a local ordinance applicable to employees. The amended statute covers the exercise or attempted exercise of rights under any local, state, or federal statute or regulation applicable to employees. Protected activity includes making a good-faith complaint, seeking information about legal compliance, informing another person of potential rights and remedies, or assisting that person in asserting those rights. Though the law excludes conduct undertaken by the employer at the express and specific direction or request of the federal government.

The new law also reaches conduct intended to prevent protected activity before it occurs. It prohibits conduct related to a person’s perceived immigration status that would reasonably tend to dissuade the person from doing something the person has a legal right to do. It similarly prohibits conduct that would induce a person to do something the person has a legal right to decline. As a result, an employer may face potential liability for statements or actions alleged to have discouraged a workplace complaint even if the individual ultimately did not assert the underlying right.

In addition, AB 2495 defines “employee” to include applicants, current employees, and former employees. The law also provides that a person’s actual immigration status is irrelevant to determining liability, consistent with existing Labor Code section 1171.5.

Before the law takes effect, employers should review their anti-retaliation, complaint-handling, hiring, and employment-verification practices. Human resources personnel, recruiters, and managers should understand that immigration-related comments, questions, or threats may create legal risk even when they do not follow a formal complaint.

If you have questions about AB 2495 or related issues, contact a Jackson Lewis attorney to discuss.

California has passed Assembly Bill (AB) 2054, which expands the definition of “covered active duty” under Section 3302.1 of the Unemployment Insurance Code for purposes of eligibility for Paid Family Leave (PFL) benefits from the state.

Under existing law, “covered active duty” includes deployment of a member of the regular Armed Forces of the United States to a foreign country and deployment of reserve components to a foreign country under a federal call or order.

Under the amendment, “covered active duty” means:

  • deployment other than to a foreign country;
  • with respect to a member of the regular Armed Forces of the United States, duty during the deployment or training of the member with the regular Armed Forces; and
  • with respect to a member of the reserve components of the Armed Forces of the United States, including the National Guard, duty during training or a call or order to federal or state active duty.

However, implementation of the amendments will not take place until the changes can be incorporated into the EDD’s claims management system or on July 1, 2028, whichever occurs first.

If you have questions about AB 2054 or related issues, contact a Jackson Lewis attorney to discuss.