California Overhauls Labor Laws, Targeting Pay Gaps and Worker Debt

California is rolling out a sweeping set of new employment laws for 2026 that increase pay transparency, ban controversial "stay-or-pay" contracts that indebt workers, and expand employee rights, as first reported by FBT Gibbons. The changes, outlined in multiple new bills and official state communications, aim to create a more equitable environment for the state's workforce.

• Show me the money: Starting January 1, the statewide minimum wage will climb to $16.90 per hour, pushing the minimum annual salary for most exempt employees to just over $70,000. Under new pay transparency rules, employers must include a "good faith estimate" of the pay range in job postings, and the state's Equal Pay Act now offers clearer protections for non-binary workers and gives all employees up to three years to file a discrimination claim.

• Cutting the financial leash: In a major win for worker mobility, the state is making "stay-or-pay" clauses unlawful. AB 692 makes these controversial agreements, which can saddle departing employees with debt for training costs, unenforceable in contracts signed on or after January 1, 2026.

• Know your rights: Employers will now be responsible for informing their workforce of its rights through a detailed annual notice. According to a letter from the California Labor Commissioner's Office, failing to provide this disclosure carries a penalty of up to $500 per employee. The law also introduces a novel requirement that speaks to worker anxieties over workplace raids: employers must now offer an option to designate an emergency contact to be notified if an employee is detained on the job.

The collection of laws reinforces the state's position as a leader in progressive labor policy. "By enhancing workers’ rights, strengthening accountability, and expanding pay standards, we’re building a better future for hardworking Californians," said California Labor Secretary Stewart Knox in a press release.