California Governor Gavin Newsom has announced that California’s statewide minimum wage will increase from $16.90 to $17.40 per hour effective January 1, 2027. The new rate, announced on July 31, 2026, reflects the annual inflation-based adjustment required under California law.

The increase will also affect the minimum salary threshold for employees classified as exempt under California’s executive, administrative, and professional exemptions. Effective January 1, 2027, exempt employees generally must earn a salary of at least $72,384 annually ($1,392 per week). This is an increase from the 2026 threshold of $70,304 annually ($1,352 per week).

Satisfaction of the minimum salary threshold alone does not establish that an employee is exempt. The increase provides a useful opportunity to confirm that employees classified as exempt continue to satisfy the applicable duties and all other requirements for the exemption being claimed.

The statewide increase also highlights the need to evaluate all applicable wage requirements, not just the state minimum wage. Numerous California cities and counties maintain minimum wage rates that exceed the statewide rate, and employees must be paid in accordance with the highest applicable minimum wage. Additionally, businesses in the fast-food and health care industry should also verify compliance with industry-specific wage requirements.

Certain occupations remain subject to separate compensation requirements. For example, California Labor Code section 515.5 establishes distinct hourly and salary compensation requirements for certain exempt computer software employees, which are adjusted annually.

Employers with questions about California minimum wage requirements, employee classifications, or the impact of the upcoming minimum wage increase should contact a Jackson Lewis attorney.

As children head back to school, California employees may need time away from work for school activities, childcare emergencies, disciplinary meetings, or to care for a sick child. Employers should keep the following California leave protections in mind for the 2026–2027 school year.

School and Childcare Activity Leave

California Labor Code Section 230.8 applies to employers with 25 or more employees working at the same location. It provides certain leave entitlements to employees who are “parents” of children attending kindergarten through grade 12, or a licensed childcare provider.

For purposes of this law, a “parent” includes a parent, guardian, stepparent, foster parent, grandparent, or person who stands in loco parentis to a child.

Eligible employees may take up to 40 hours each year for either of the following purposes:

  • Finding, enrolling, or re-enrolling a child in school or with a licensed childcare provider, or participating in school or childcare activities; or
  • Addressing a school or childcare emergency.

Time off for planned activities generally may not exceed eight hours in a calendar month. The monthly limit does not apply to time taken to address a school or childcare emergency.

Employees must provide reasonable advance notice of planned absences and notice of emergency absences. Employers may also request reasonable documentation from the school or childcare provider showing that the employee participated in a covered activity on a particular date and time.

For planned absences, employees generally must use available vacation, personal leave, or compensatory time off. Employees may use unpaid time only to the extent the employer makes it available. Accordingly, Section 230.8 does not require employers to create a separate bank of paid or unpaid leave.

Suspension or Expulsion Meetings

California Labor Code Section 230.7 applies to employers of all sizes. It prohibits an employer from discharging or discriminating against an employee who is the parent or guardian of a student for taking time off to appear at the student’s school at the school’s request under California Education Code Section 48900.1.

The employee must provide reasonable advance notice that the school has requested the employee’s appearance. Employees who experience prohibited discrimination may be entitled to reinstatement and reimbursement for lost wages and benefits.

Paid Sick Leave to Care for a Child

If parents need time for their children’s physicals or when they bring home the latest illness circulating at school, eligible employees may use accrued California paid sick leave for the diagnosis, care, or treatment of a child’s existing health condition or for preventive care. This can include attending a medical appointment or caring for a child who is ill.

California employers must provide at least five days or 40 hours of paid sick leave per year.

Employers should also determine whether a local paid sick leave ordinance applies. Where a local ordinance provides a more generous benefit, employers generally must comply with the more protective requirement, subject to limited areas in which state law preempts conflicting local rules.

Employers should review their leave policies, manager training, and notice procedures before the school year begins and ensure that requests involving school activities, childcare emergencies, disciplinary meetings, and a child’s illness or other preventative care are evaluated under all potentially applicable laws.

If you have questions about California leave requirements or related workplace issues, contact a Jackson Lewis attorney.

Recently, San Francisco amended its Fair Chance Ordinance (FCO) to further differentiate it from the State of California’s Fair Chance Act. The amendments take effect on August 10, 2026.

The FCO applies to employers located or doing business in San Francisco with five or more employees. Like the state Fair Chance Act, it bars covered employers from asking about arrest or conviction records before a conditional offer and from considering certain records, including arrests that did not result in a conviction.

The FCO also requires covered employers to:

  • Allow individuals to present mitigating evidence before adverse action based on conviction history or an unresolved arrest.
  • State in job postings that qualified applicants with arrest or conviction records will be considered.

Employers also must conspicuously post the official FCO Notice at each workplace/job site under their control.

Amendments

Under the amendments, employers may no longer use certain out-of-state convictions or unresolved arrests as a basis for adverse employment decisions where the underlying conduct is lawful under California law and related to:

  • Abortion-related healthcare
  • Drag performances
  • Gender-affirming care
  • Spontaneous abortion.

The amendments also increase administrative penalties for violations.

If you have questions about the amendments to the San Francisco FCO or related issues, contact a Jackson Lewis attorney to discuss.

California Labor Code section 2802 requires employers to reimburse employees for necessary expenses incurred in performing their job duties, which may include an employee’s use of their personal vehicle for work purposes, such as for work-related travel or driving between work sites.

When determining how to reimburse an employee for use of their personal vehicle, employers may select between different methods for reimbursement, including actual expense, mileage reimbursement, or a stipend.

The California Labor Commissioner has opined that the use of the Internal Revenue Service (IRS) mileage rate will generally satisfy an employer’s obligation to reimburse employees for the expenses incurred in the use of an employee’s car for work purposes, in the absence of evidence to the contrary.

Usually, the IRS announces any changes to the mileage allowance rate in the fall in connection with increases to take place at the beginning of the year. However, in response to recent increases in fuel prices, the IRS  announced on July 13, 2026, that it would increase the business travel mileage rate to 76 cents per mile, effective July 1, 2026. This is a special adjustment for the final six months of 2026.  Employers who reimburse using the mileage reimbursement method should consider increasing their reimbursement rate accordingly.

If you have questions about mileage reimbursement or related issues, please contact a Jackson Lewis attorney to discuss.

August 13, 2026 10:00 AM – 11:00 AM PST

Join Jackson Lewis P.C. attorneys in reviewing mid-year updates to California employment law. We will provide an overview of important case rulings, statutory developments thus far in 2026 and significant pending legislation California employers should be watching for this legislative season. This program will benefit HR professionals, risk managers, in-house counsel and insurance professionals.

Click Here to Register.

The California government launched what it describes as the first state tool to monitor and track the impact of artificial intelligence on the workforce. The new California AI-Unemployment Tracker will be updated monthly and is intended to identify early warning signs of AI-related job displacement.

As AI-related workforce issues continue to receive significant attention from the state government, this tool is a valuable resource for California employers.  While decisions about adopting AI tools remain business and operational decisions, the state’s new tracker reflects an effort to better understand how AI may affect jobs, industries, regions, and worker groups over time.

The initial data does not show a statewide surge in unemployment claims tied to AI-exposed occupations. The tracker’s early findings suggest that any effects may be more targeted into higher exposed categories, including among college-educated workers, workers in technology-heavy sectors, and workers in the San Francisco Bay Area. In other words, the state is not only looking at whether AI is associated with job loss in the aggregate. It is also examining which workers, occupations, regions, and industries contain higher exposure. This examination is consistent with nationwide research findings that there does not seem to be a national unemployment rate spike due to AI, but an increased unemployment rate in occupations with higher exposure. Similar to this state tracking, there have been federal attempts to do similar tracking, with a federal bill introduced in June.  

That context is relevant for employers evaluating or expanding the use of AI. Companies may use AI tools to improve productivity, automate tasks, support decision-making, or reorganize work.  Depending on how those tools are used, or the decisions made due to these tools, employers must consider familiar employment law issues, including disparate impact, wage and hour compliance, layoff obligations, disability and accommodation issues, privacy, and employee notice concerns.

The tracker also fits within a broader policy discussion in California. State leaders have emphasized both AI innovation and worker-related issues such as retraining, civil rights, and privacy. As a result, employers will see an increase in attention to AI workforce practices from policymakers, regulators, employees, and other stakeholders, even as the legal framework continues to develop.

For employers, this may be an appropriate time to take inventory of workplace AI use. Relevant questions include what tools are being used, where they are being used, who approved them, what data they rely on, whether they are secure, what LLM they operate on, whether they affect employment-related decisions, and what level of human review is involved.

With this, employers must now consider whether existing policies adequately address employee use of AI, confidentiality, privacy, data security, accuracy, and appropriate limitations on AI use in HR, management, or productivity context. Proper training can help teammates and managers learn how to properly use AI tools, increasing productivity through responsible use without creating unnecessary exposure.

If you have questions about AI in the workplace or related issues, contact a Jackson Lewis attorney to discuss.

On June 30th, California’s Governor signed Assembly Bill (AB) 2155, which concerns the enforceability of written arbitration agreements in California. The bill amends Code of Civil Procedure Section 1281 and provides that any agreement unenforceable under the Federal Arbitration Act (FAA) is also unenforceable under the California Arbitration Act (CAA).

AB 2155 takes effect January 1, 2027.

The legislation underscores the importance of regularly reviewing arbitration agreements to ensure they reflect current federal and state requirements.

If you have questions about AB 2155 or related issues, contact a Jackson Lewis attorney to discuss.

In the latest chapter in a decade-long saga to determine if interstate drivers are subject to California’s meal and rest break rules, the Ninth Circuit affirmed that drivers of passenger-carrying commercial motor vehicles are not subject to the state’s break regulations. In People of the State of California ex rel. Xavier Becerra v. Federal Motor Carrier Safety Administration, the court affirmed a decision of the Federal Motor Carrier Safety Administration’s (FMCSA) holding that California meal and rest break rules are preempted.

In practical terms, the court confirmed that California’s meal and rest period requirements, as found in Wage Order 9-2001, do not apply where FMCSA has found them displaced by federal safety regulations.  The opinion relies heavily on the Ninth Circuit’s ruling in International Brotherhood of Teamsters, Local 2785 v. Federal Motor Carrier Safety Administration, which upheld similar preemption for property-carrying commercial motor vehicles.

California argued that FMCSA lacked authority in the passenger-carrier context because the applicable federal regulations do not impose the same mid-shift break rule found elsewhere in the federal scheme. The court rejected that argument, reasoning that the federal rules still regulate duty limits and off-duty periods in the same safety area. The court also held that FMCSA reasonably found California’s rules imposed an “unreasonable burden on interstate commerce,” citing the administrative record regarding scheduling disruptions, reduced operational flexibility, increased driver costs, and the difficulty of complying with varying state break requirements.

For California employers in the transportation industry, the decision is an important confirmation that California’s unique wage and hour laws may not apply to all drivers.  As the Ninth Circuit’s opinion was limited to the facts before it, employers should scrutinize whether their drivers and vehicles are subject to the federal Motor Carrier Safety Act and the Hours of Service regulations before assuming state law does not apply. 

Jackson Lewis monitors judicial and administrative decisions affecting employers in California. If you have any questions about this decision or related issues, please contact a Jackson Lewis attorney for assistance.

At the start of the year, the state minimum wage increased, along with several local jurisdictions. Many other California cities and counties will also increase their minimum wage on July 1.

The following localities will raise their minimum wage on July 1, 2026:

LocalityCurrent Minimum WageNew
Minimum Wage
Alameda$17.46$17.76
Berkeley$19.18$19.61
Emeryville$19.90$20.34
Fremont$17.75$18.05
City of Los Angeles$17.87$18.42
County of Los Angeles (unincorporated areas only)$17.81$18.47
Malibu$17.27$17.91
Milpitas$18.20$18.50
Pasadena$18.04$18.57
San Francisco$19.18$19.61
Santa Monica$17.81$18.47

While the current minimum wage in California is currently $16.90, certain industries in the state of California, such as fast food and healthcare, are subject to higher minimum wage thresholds than the state’s minimum wage. Fast food workers currently earn a minimum of $20 per hour, and covered healthcare facility workers have state-mandated minimum wages ranging between $18.00 and $24.00 per hour, depending on the facility type. Several cities also have a higher minimum wage for hotel workers. For example, in the City of Los Angeles, the minimum wage for hotel workers beginning on July 1, 2026, is $25.00 per hour, or $29.25 per hour if health benefits are not provided.

The healthcare worker’s minimum wage is based on a tiered system, which is higher than the state’s minimum wage, and which is set to increase on July 1, 2026.

Employers must continue to monitor the minimum wages at the industry, local, and state levels.   

If you have questions about minimum wage compliance or related issues, please reach out to a Jackson Lewis attorney to discuss.

California employers in the health care industry should prepare for increased scrutiny of executive compensation as a new statewide initiative heads toward the November 3, 2026, General Election ballot.

The California Secretary of State announced that Initiative 1985, formally titled “Limits Compensation for Health Care Executives, Managers, and Administrators. Initiative Statute,” became eligible for the ballot on May 12, 2026.

The measure, known as the Health Care Executive Compensation Act of 2026, would prohibit certain hospitals and medical entities from paying executives, managers, and administrators more than $450,000 in total annual compensation or severance payments. The cap would increase annually by the lesser of 3.5 percent or the applicable Consumer Price Index adjustment. The initiative text defines “total annual compensation” broadly to include salary, wages, paid time off, bonuses, incentive payments, lump-sum cash payments, stock options or awards, housing, transportation, travel, meals, entertainment, social club memberships, severance, insurance payments, and other benefits, subject to limited exclusions.

For health care employers, the measure’s scope is significant. It would apply to covered hospitals and medical entities, including general acute care hospitals, acute psychiatric hospitals, parts of integrated health care delivery systems, and physician groups. It would also reach both nonprofit and for-profit entities, including foreign corporations operating covered facilities in California. The initiative excludes certain facilities, including those operated or licensed by the U.S. Department of Veterans Affairs and public hospitals as defined in the measure, although health care district hospitals are treated separately and may be covered.

The proposal is not limited to employees. It would apply regardless of whether the individual exercising executive, managerial, or administrative authority is or was employed by the covered entity, including where the person provides services under a contract or subcontract. This provision may affect management services agreements, consulting arrangements, interim executive placements, and affiliated-entity staffing structures.

The measure also provides that the cap would not apply to medical or health care professionals whose primary duties involve medical services, research, direct patient care, or other nonmanagerial, nonexecutive, and nonadministrative services.

If approved, the compensation limits would become operative January 1 of the calendar year following the election. The measure also states that it would apply notwithstanding contracts entered before the effective date and that any scheme or artifice designed to avoid the limits would constitute a violation. Employers may wish to review existing executive agreements, deferred compensation arrangements, severance provisions, incentive compensation plans, retention bonuses, and benefit programs well before the election.

The initiative would also impose annual reporting obligations. Covered entities would have to report to the Attorney General information about individuals receiving compensation or severance exceeding the limit, including detailed breakdowns of wage and non-wage compensation. For nonprofit entities, board approval of the annual report would be required before submission, and the report would need to be attested to under penalty of perjury.

Jackson Lewis will continue to monitor this ballot measure. If you have questions about the ballot measure or related issues, contact a Jackson Lewis attorney to discuss.