Business owners — 2026 is bringing some major HR changes, and most of them will impact every single employer in California, even if you only have 1–5 employees.
Every year, I see the same thing happen:
January rolls in, new laws take effect, and suddenly businesses are scrambling to fix their handbooks, change their payroll, update their notices, and correct something that’s been outdated for months.
Let’s not do that this year.
Here’s everything you need to know — in plain English — so you’re ready before these laws hit.
1. Minimum Wage Increases to $16.90/hr (Statewide)
Effective January 1, 2026
California’s minimum wage will increase to $16.90/hr for all employers, regardless of size.
Here’s why this matters even if you pay above minimum wage:
👉 Your exempt employees must meet a higher salary threshold.
If the state minimum wage goes up, the exempt salary requirement goes up too.
For 2026, that means exempt administrative/professional/executive employees must be paid at least $70,304 per year to maintain exempt status.
This is one area where businesses get hit with lawsuits and back pay — so review this now, not later.
2. New Annual “Know Your Rights” Notice (Feb 1, 2026)
This one impacts all employers, not just large ones.
Beginning February 1, 2026, California requires every employer to provide a standalone, written “Know Your Rights” notice to all employees — every single year.
This is separate from your handbook.
Separate from your onboarding documents.
Separate from posters.
This is a brand-new requirement.
And it must be provided annually.
3. Higher Penalties for Unpaid Wage Judgments
Effective January 1, 2026
If a business loses a wage-related judgment (ex: missed breaks, unpaid overtime, underpayment) and doesn’t pay the judgment within 180 days, California can impose:
✔️ Additional penalties
✔️ Attorneys’ fees
✔️ Court costs
✔️ Potentially triple the judgment amount
This means failing to resolve wage claims quickly can get extremely expensive.
4. Mandatory Employee Handbook Updates
Yes — your handbook must be updated for 2026.
Here’s why:
California attorneys have already identified required changes for 2026, including updates to:
✔️ Protected leave policies
✔️ Anti-harassment and anti-retaliation language
✔️ Wage & hour compliance
✔️ Acknowledgments & notice sections
✔️ Classification guidelines (exempt vs non-exempt)
If you have employees in California, your handbook must reflect the 2026 laws — otherwise it becomes a liability.
5. Local Minimum Wage Ordinances
Many major California cities (Los Angeles, San Francisco, Oakland, San Jose, etc.) have local wage ordinances that exceed the state minimum.
These will continue adjusting in 2026.
If your employees work in or travel into higher-wage cities for work, you must comply with local rules.
6. Classification Reviews (Huge for 2026)
With the exempt salary threshold increasing and different wage laws kicking in, many employers will need to re-evaluate:
Exempt vs non-exempt roles
Independent contractors
Salaried vs hourly
Commissioned employees
Misclassification is one of the most common — and expensive — HR issues in California.
