CHANGES IN CALIFORNIA EMPLOYMENT LAW: 2025–2026 UPDATE

Overview of Laws Relating to HR Functions

There are many laws and policies that establish employee rights and employer responsibilities. As an HR professional, you must be familiar with these laws and regulations. Failure to follow these laws can lead to fines, loss of an organization’s reputation, loss of business, and other negative penalties. 

Because there are so many laws relating to employment, the laws sometimes overlap or conflict with one another, especially when state laws differ from federal regulations. In situations where laws and regulations conflict, an employer should pursue whichever action is in the employee’s best interest. It is essential to be knowledgeable about both state and federal laws to avoid potential issues. 

The following laws and regulations are among the most common:

Americans with Disabilities Act (ADA)

The ADA protects qualified employees with disabilities and requires employers to make accommodations for employees with disabilities. In a job description, the duties and tasks must provide reasonable accommodations to ensure that the position can be done by people with disabilities. 

Clayton Antitrust Act

The Clayton Antitrust Act of 1914 clarified and strengthened many provisions of the Sherman Antitrust Act (see description below), but it specifically exempted labor unions from the law's provisions. The Clayton Antitrust Act allows the use of injunctions to stop strikes only when there is a threat of damage to property.

Computer Fraud and Abuse Act

The Computer Fraud and Abuse Act criminalizes "intentionally access[ing] a computer without authorization or exceed[ing] authorized access, and thereby obtaining . . . information from any protected computer." While initially passed to combat hacking, this Act has also been used by employers to bring charges against employees who have accessed unauthorized information on electronic devices, systems, or networks owned by the organization.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

COBRA requires employers to extend a health care coverage purchase option for employees and dependents after an employee is terminated, resigns, or has a reduction in their work hours. The length of time that health care must be extended varies depending on the reason the employee is no longer with the organization. COBRA does not require that employers offer a health coverage purchase option to employees terminated for gross misconduct.

Consumer Credit Protection Act (CCPA)

The CCPA of 1968 established that employers may be required to withhold money from the paychecks of employees with certain kinds of financial debts. The CCPA also provides certain protections for employees whose wages are garnished. Employers are not allowed to terminate employees who have their wages garnished for a single debt, and limits are placed on how much may be garnished in any particular week.

Davis-Bacon Act

The Davis-Bacon Act was passed in 1931 and was the first federal legislation to mandate that laborers and mechanics be paid the prevailing wage on public works projects.

Drug-Free Workplace Act

The Drug-Free Workplace Act of 1988 aims to prevent workplace accidents arising from employee drug use. The law requires any employer that receives federal funding or has federal contracts totaling at least $100,000 annually to establish a drug-free policy for the workplace.

Electronic Communication Privacy Act

This Electronic Communication Privacy Act, passed in 1986, makes it illegal to monitor oral or wire-based communications unless an employer has a legitimate business need to do so or an employee consents to be monitored.

Employee Retirement Income and Security Act (ERISA)

ERISA provides the rules associated with employee vesting. It also outlines access to and withdrawals from qualified retirement plans. Employer contributions are 20 percent vested after three years of service, and vesting increases incrementally until seven years of service, when contributions are 100 percent vested. Employees are always entitled to the contributions they make to their pension plans. 

Equal Pay Act

This Equal Pay Act, which was passed in 1963,  requires that men and women in the same workplace be given equal pay for equal work. The jobs need not be identical, but they must be substantially equal. Job content (not job titles) determines whether jobs are substantially equal. If there is an inequality in wages between men and women, employers may not reduce the wages of either sex to equalize their pay.

Family and Medical Leave Act (FMLA)

The FMLA mandates that employers provide up to 12 weeks of unpaid leave to employees for qualified circumstances. These circumstances include the birth or adoption of a child, , the care for a seriously ill child, parent, or spouse, or care for themselves if seriously ill. Both men and women are entitled to the same leave benefit.

Fair Labor Standards Act (FLSA)

The FLSA is also referred to as the “Wage and Hour Act.” This act regulates the wages of workers who are paid on an hourly basis. The act requires employers to classify each employee as either exempt or nonexempt employees. Nonexempt employees must be paid at least the minimum wage and overtime when they are required to work more than 40 hours in a week.

FLSA Overtime Salary Threshold — 2024 Rule Vacated

The Biden DOL's 2024 overtime rule would have raised the minimum salary threshold for executive, administrative, and professional (EAP) exemptions — first to $43,888 per year on July 1, 2024, then to $58,656 per year on January 1, 2025. However, a federal court in Texas vacated the entire 2024 rule on November 15, 2024, causing the threshold to revert to the pre-2024 level. Homebase

The current governing federal standard is the 2019 salary threshold of $684 per week ($35,568 annually) for EAP exemptions, and $107,432 annually for highly compensated employees. The DOL has since revised its regulations to formally restore the pre-2024 amounts. Genova Burns

Many states set higher salary thresholds than the federal level. Employers with employees in multiple states must follow whichever standard is more protective of the employee.

Federal-State Unemployment Insurance Program

Established in 1935 as an extension of the Social Security Act, the Federal-State Unemployment Insurance Program provides benefits to employees who have lost their employment for certain reasons. Employees may collect a percentage of their previous income in the form of unemployment for a limited amount of time after employment ends. The length of coverage and the number of unemployment benefits that can be collected vary from state to state, but most states do not permit employees to collect unemployment if they have been terminated for fault. Employers pay a state unemployment insurance tax to support the availability of this benefit.

Health Insurance Portability and Accountability Act (HIPPA)

HIPAA mandates that, regardless of pre-existing conditions, a worker must be able to switch to a new job and transfer the insurance he or she had with a previous employer to a new insurance program. HIPPA also regulates access to protected health information, which is any information that is collected or created by an entity involved in healthcare that could be connected to a particular patient or individual.

Immigration Reform and Control Act (IRCA)

IRCA makes it illegal for companies to base hiring decisions on a person's nationality or citizenship—as long as that person can legally work in the United States. At the same time, it also makes it illegal for companies knowingly to hire or recruit people who cannot work legally in the U.S. New hires must complete the I-9 form, and employers must confirm that the employee has the required documentation. Employers who hire undocumented workers or do not follow recordkeeping protocols face fines. Repeated violations can result in criminal charges.

Labor Management Relations Act (LMRA)

The LMRA of 1947, also known as the Taft-Hartley Act, identified union activities that constitute "unfair labor practices." The act stipulates that employees cannot be forced to join a union or take part in union activities, and it forbids unions from requiring members to discriminate against colleagues who are not members of the union. It also prohibits unions from charging members unreasonably high membership dues.

Mental Health Parity Act

The Mental Health Parity Act of 1996 requires that insurers provide the same limits for employees’ mental health services that they provide for other medical benefits.

National Labor Relations Act (NLRA)

The NLRA of 1935 guarantees workers the right to organize a union, to bargain collectively, and to engage in collective activities. It defines unfair labor practices, provides for secret ballots in union votes, and establishes the National Labor Relations Board (NLRB).

Norris-LaGuardia Act

The right to unionize was protected by the Norris-LaGuardia Act of 1932. This act also prevents employers from forcing employees to sign contracts indicating they will not join a union (also known as yellow dog contracts) and from interfering in nonviolent union activities.

Occupational Safety and Health Act

The Occupational Safety and Health Act protects employees who work in dangerous work environments. This act "requires employers to provide their employees with working conditions that are free of known dangers." The act created the Occupational Safety and Health Administration (OSHA), which sets and enforces protective workplace safety and health standards.

Old Age, Survivors, and Disability Insurance Program

The Old Age, Survivors, and Disability Insurance Program was established as part of the Social Security Act in 1935. This program offers benefits to employees who retire or become unable to work, as well as to eligible surviving dependents if the employee dies. To support the program, employees pay a percentage of their income to the federal government, and employers match those contributions.

Older Worker Benefit Protection Act

The Older Worker Benefit Protection Act of 1990, an amendment to the Age Discrimination in Employment Act of 1967, prohibits employers from discriminating against older employees within benefit plans.

Patient Protection and Affordable Care Act (PPACA)

The PPACA is a health care reform bill that was signed in March 2010. The PPACA has many employer implications, including requiring accommodation for breastfeeding. Most importantly, though, it ensures that Americans have access to affordable health care. While employers are not required to provide healthcare insurance, the law penalizes large organizations that do not provide access to affordable "minimal essential coverage."

Pension Protection Act

The Pension Protection Act of 2006 protects employees when they are entitled to pension plans, but those plans do not have the funds necessary to provide the promised benefits.

Portal-to-Portal Act

The Portal-to-Portal Act determined that commute time is not compensable, but that employers must compensate workers for performing job-related tasks outside of work hours or during lunch breaks.

Pregnancy Discrimination Act (PDA)

The Pregnancy Discrimination Act makes it illegal to discriminate against pregnant women and also requires that employers must amend the term of employment to allow a person who goes on maternity to return to the same job. 

Railway Labor Act

Passed in 1926 and amended in 1936, the Railway Labor Act was intended to prevent railroad and airline strikes from resulting in significant trade and transportation problems. It requires employees in these industries to seek alternative dispute resolution methods before resorting to a labor strike.

Retirement Equity Act

The Retirement Equity Act reduced the existing age limits restricting participation in pension plans, provided more protections for survivors of employees entitled to pensions, and restricted conditions that could be placed on survivor plans.

Sarbanes Oxley Act (SOX)

The Sarbanes-Oxley Act was passed in 2002 to hold senior executives responsible for the financial practices of an organization. The SOX Act also prohibits employers from retaliating against whistleblowers—employees who refuse to participate in or report financial misconduct or financial conduct they reasonably believe violated federal law.

Sherman Antitrust Act

The Sherman Antitrust Act of 1890 was intended to prevent organizations from inhibiting or restricting free trade. While it was originally meant to rein in the monopolistic practices of big-business trusts, the courts ruled that the law's prohibition of "restraint of commerce" applied to labor union strikes and boycotts, as well. By allowing legal injunctions to be used to stop strikes and boycotts, the Sherman Act was the first federal law that had an impact on organized labor.

Stored Communication Act

This act, also passed as part of the Electronic Communications Privacy Act in 1986, protects the storage of electronic communications, such as emails. In general, employers are not prohibited from accessing communications stored on their wire or electronic communications services (for example, employer-provided email service). Organizations should, however, announce this policy.

Title VII of the CIvil Rights Act of 1964

This act states that it is illegal for private employers, state and local governments, and educational institutions with 15 or more employees to discriminate in the job based on race, color, religion, sex, or national origin. Sexual harassment also violate Title VII, according to the Supreme Cour case Meritor Saving Bank v. Vinson. The Age Discrimination in Employment Act makes it illegal to discriminate against anyone that is 40 or older from holding a job in a government agency, a private enterprise with 20 or more workers, or a union with more than 25 members. Additionally, several states and municipalities have passed laws to protect against other forms of discrimination based on personal characteristics, such as discrimination based on sexual orientation, parental or marital status, and political affiliation.

Uniformed Services Employment and REemployment Rights Act (USERRA)

USERRA was enacted to protect the rights of military reservists who are called to duty in the armed forces. The law prohibits employers from discriminating based on past, current, or future military obligations. USERRA applies to all employers, regardless of size; it covers regular employees, but not temporary workers.

Walsh-Healey Public Contracts Act

The Walsh-Healey Public Contracts Act of 1936 protects employees working under government contracts from working for substandard wages. It established that employees were entitled to overtime pay, prohibited hiring children under 18 and people who have been convicted of a crime, and required that workplaces meet safety and sanitation standards. Many of these provisions were incorporated two years later into the Fair Labor Standards Act, which covers all private-sector employees—not just those working for companies with federal contracts.

Worker Adjustment and Retraining Notification Act (WARN)

The WARN Act, enacted in 1988, requires larger employers to give their workers advance notice in the event of mass layoffs or plant closings. The Act applies to employers with 100 or more full-time employees, or 100 or more full- and part-time employees who work a combined 4,000 or more hours per week. It requires an employer to provide 60 days' notice to employees or their union before going through with a mass layoff or plant closing.

Pregnant Workers Fairness Act (PWFA)

The PWFA went into effect on June 27, 2023. The EEOC issued its final regulation to implement the law on April 15, 2024, with the regulation taking effect on June 18, 2024. U.S. Equal Employment Opportunity Commission

The PWFA requires employers with 15 or more employees to provide reasonable accommodations to pregnant workers with known limitations related to pregnancy, childbirth, or related medical conditions, unless doing so would impose an undue hardship. The law expands upon the protections of the Pregnancy Discrimination Act (PDA) by focusing specifically on accommodations rather than simply prohibiting discrimination.

Covered conditions include uncomplicated pregnancies, vaginal deliveries or cesarian sections, miscarriage, postpartum depression, and lactation, among others. Unlike the FMLA, there is no waiting period for eligibility or hours-worked requirement under the PWFA.

Employers may not force employees to take leave if a reasonable accommodation — such as adjusted scheduling, modified duties, or a stool to sit on — would allow the employee to continue working.

PUMP for Nursing Mothers Act (PUMP Act)

The PUMP Act, signed into law in December 2022 and effective April 2023, expands existing FLSA protections for nursing employees beyond what was previously available only to hourly workers.

The law requires employers to provide nursing employees with reasonable break time and a private space — shielded from view and free from intrusion — to express breast milk for up to one year after the child's birth. The space cannot be a bathroom. Importantly, the PUMP Act extends these protections to salaried, exempt employees who were previously excluded from the earlier FLSA nursing provisions. Employers with fewer than 50 employees may be exempt if compliance would impose undue hardship.

Fair Labor Standards Act (FLSA)

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DOL Issues Independent Contractor Final Rule

The classification of workers as employees or independent contractors has been one of the most contested areas of U.S. employment law, undergoing dramatic reversals across recent administrations.

The Biden-Era 2024 Rule (Now Being Rescinded)

In January 2024, the Biden administration's DOL issued a final rule for determining independent contractor status under the FLSA, which took effect on March 11, 2024. That rule applied a "totality-of-the-circumstances" multi-factor analysis — examining six factors with no single factor carrying greater weight than the others.

The six factors were: the degree of employer control over how the work is done; the worker's opportunity for profit or loss; the amount of skill and initiative required; the degree of permanence of the working relationship; the worker's investment in equipment or materials; and the extent to which the service is an integral part of the employer's business.

The Trump Administration Reversal (2025)

After President Trump returned to office, the DOL announced on May 1, 2025, via a Field Assistance Bulletin, that it would no longer enforce the 2024 Biden-era rule. While this did not formally rescind the rule, the DOL stated it would enforce the FLSA in accordance with the pre-2024 Fact Sheet #13 (from July 2008) and the reinstated Opinion Letter FLSA2019-6, which addresses classification in the context of virtual marketplace platforms.

New Proposed Rule (February 2026)

On February 26, 2026, the DOL proposed a new rule to formally rescind and replace the 2024 regulation. The proposed rule reinstates the "economic reality" test centered on two core factors: the employer's degree of control over how the work is done, and the worker's opportunity for profit or loss. The same framework would also apply to the Family and Medical Leave Act and the Migrant and Seasonal Agricultural Worker Protection Act.

A 60-day public comment period for the proposed rule closes on April 28, 2026. If finalized, the rule may make it easier to classify workers as independent contractors at the federal level — though employers must continue to navigate stricter state standards, such as California's ABC test.

Regardless of what federal rule is ultimately adopted, courts are not bound by DOL regulations, and independent contractor relationships continue to face scrutiny in litigation. Several states — notably California, Illinois, Massachusetts, and New Jersey — impose stricter tests for worker classification.