California Legislative Update: Legislature's Pens Down, Governor Gets To Work

Seyfarth Synopsis:  The California Legislature concluded its 2024-2025 session in the wee hours of September 13, 2025, and sent the last of its approved bills to Governor Newsom for consideration. The Governor has until October 13 to approve or veto a variety of bills impacting employers in California.

The California Legislature put pencils down on September 13, 2025, and sent the last of its approved bills to Governor Newsom, who has until October 13 to decide which employment bills will become laws effective January 1, 2026.

According to Chris Micheli, about 1/3 of the almost 2,400 bills introduced this Session between the Senate and Assembly passed the Legislature and made their way to the Governor's desk. The most significant bills for his consideration impacting employers address regulation of employers' use of automated decision systems, extensions of meal and rest period exemptions for certain industries, policing tip theft, pay equity, and immigration rights.

Bills Already Signed Into Law

AB 751 – Rest Periods – Petroleum Facility Safety Sensitive Positions

AB 751, signed into law on July 14, 2025, indefinitely extends the exemption from rest period requirements for safety-sensitive positions at a petroleum facility and specifies that the exemption also applies to employees who hold a safety-sensitive position at a refinery that produces fuel through the processing of alternative feedstock. The exemption was previously slated to sunset on January 1, 2026.

This bill amends Section 226.75 of the Labor Code.

SB 646 – Enforcing Tip Theft

SB 648, signed into law on July 30, 2025, authorizes the Labor Commissioner to investigate and issue a citation or file a civil action for any gratuities taken or withheld by an employer.

This bill amends Section 351 of the Labor Code.

SB 693 – Exemption from Meal Period Requirements

SB 693, signed into law on July 30, 2025, expands the categories of employees exempt from the state's meal period requirements to include employees of a “water corporation.” “Water corporation” is defined as “every corporation or person owning, controlling, operating, or managing any water system for compensation within this State.”

This bill amends Section 512 of the Labor Code.

Bills On the Governor's Desk

AI-Related Bills (The Summary Could Write Itself…?)

SB 7 – Automated Decision Systems

SB 7 would require employers utilizing artificial intelligence (“AI”) “automated decision systems” (“ADS”) to make “employment-related decisions” to provide pre-use and post-use written notice of that use to all workers directly or indirectly affected by the ADS.

The pre-use notice for employment-related decisions, not including hiring, would need to be made (1) at least 30 days before an employer first deploys an ADS; (2) if an ADS is already in effect, by no later than April 1, 2026; and (3) within 30 days of hiring a new worker. A post-use notice issued after an employer has primarily relied on an ADS to make discipline, termination, or deactivation decisions would need to be made at the time the employer informs the employee of the decision, and allow employees to request a copy of the worker's own data relied on in making such a decision. Employers would also be required to notify a job applicant of the use of ADS in hiring decisions.

The bill carries an anti-retaliation provision that would prohibit an employer from discharging or in any manner discriminating against any worker who asserts their rights under the bill. Under the bill, the Labor Commissioner would have enforcement authority to issue citations and file civil actions against employers.

This bill would add Part 5.5.5 (commencing with Section 1520) to Division 2 of the Labor Code. 

SB 7 is the first significant employment-related bill to seek the Governor's approval, with 2024 AI legislation also failing to make the cut, and a similar ADS bill, AB 1018, failing this legislative season. AB 1018 would have required employers to provide employees with disclosures regarding AI-driven decisions and to give employees a chance to appeal the decision. AB 2930 of 2024 also proposed regulating the use of ADS in employment practices, including pay, promotion, hiring, termination, and task allocation. At that time, we previewed an expectation of more action on this topic in years to come, as the Governor's veto message on non-employment AI bill AB 1047 previewed. We similarly expect AI legislation in the employment space and beyond to continue.

There's been action on the AI regulatory front this year as well. Read our summary of the AI employment discrimination regulations here.

Wage and Hour Bills

SB 261 – DLSE Enforcement of Wage Judgments

SB 261 would subject an employer to a civil penalty of not more than three times the amount of an outstanding judgment if a final judgment arising from the employer's nonpayment of work performed in this state remains unsatisfied after 180 days. The bill would permit the employer to demonstrate by clear and convincing evidence that good cause exists to reduce the amount of the penalty. Any Court-assessed civil penalty would be distributed 50% to the employee and 50% to the Division of Labor Standards Enforcement (“DLSE”) for enforcement of labor laws. A prevailing employee would also recoup all reasonable attorney's fees and costs incurred in enforcing the judgment.

This bill would amend Section 98.2 of, and add Sections 238.05 and 238.10 to, the Labor Code. 

SB 355 – Notice Requirement for Judgment Debtor Employers

SB 355would require that, within 60 days after a judgment is entered against an employer requiring payment to an employee or to the state, the employer inform the Labor Commissioner that: (1) the judgment is fully satisfied; (2) the bond required by subdivision Section 238(a) has been posted (if applicable); or (3) the judgment debtor has entered into an agreement for the judgment to be paid in installments. Failure to comply with these notice requirements would result in a civil penalty of $2,500.

This bill would add Section 96.9 to the Labor Code.

SB 809 – Independent Contractors and Employee Vehicle Business Expenses

SB 809 would provide, and state as declarative of existing law, that mere ownership of a vehicle, including a personal vehicle or a commercial vehicle used by a person in providing labor or services for remuneration does not make that person an independent contractor. The bill would also provide, and state as declaratory of existing law, that the duty of an employer to indemnify its employees for reasonable business expenses, applies to the use of a vehicle owned by an employee and used by that employee in the discharge of their duties. The bill would also establish the “Construction Trucking Employer Amnesty Program” which would relieve eligible construction contractors from liability for statutory or civil penalties from misclassification of drivers as independent contractors if the contractor executes a settlement agreement with the Labor Commissioner by January 1, 2029 that contains certain driver classification provisions.

This bill would add Sections 2750.9, 2775.5, and 2802.2 to the Labor Code.

AB 692 – Employment Contract Repayment Prohibition

AB 692 would, for contracts entered into on or after January 1, 2026, make it unlawful to require the worker pay an employer a debt if the worker's employment or work relationship terminates. The bill would authorize a private right of action and specify civil penalties.

This bill would add Section 16608 to the Business and Professions Code, and Section 926 to the Labor Code.

AB 858 – Rehiring and Retention of Displaced Workers

AB 858,as we discussed here and here, current law provides certain hospitality employees a right to rehire after being “laid off” related to COVID until December 31, 2025. This bill would extend operation of these provisions to January 1, 2027, and allows DLSE enforcement of violations occurring before December 31, 2026 to be enforced after the revised sunset date.

This bill would amend Section 2810.8 of the Labor Code.

SB 703 – Ports: Truck Driver Independent Contractors

SB 703 would require trucking companies and truck drivers not classified as employees by the company, to provide to the Port of Long Beach or Port of Los Angeles, certain information including the trucking company's sworn affidavit that the company is withholding all required taxes from the wages of any driver who is considered an employee. The bill would require the trucking company to update a port within 30 days of a change to its operation resulting in more than 50% of its employees being replaced by independent contractors and impose a $5,000 penalty for failure to do so. It would impose a $50,000 penalty for providing misleading information for purpose of representing compliance with the above requirements.

This bill would add Part 3 (commencing with Section 2000) to Division 6 of the Harbors and Navigation Code, and to add Article 1.6 (commencing with Section 2790) to Chapter 2 of Division 3 of the Labor Code.

Leaves of Absence, Anti-Discrimination, and Pay Equity

SB 590 – Paid Family Leave – Designated Person

Continuing the “designated person” trend from prior years' leave legislation, SB 590 would, beginning July 1, 2028, expand eligibility for benefits under the paid family leave program to include individuals who take time off work to care for a seriously ill “designated person.” The “designated person” definition aligns with the definition under the California Family Rights Act (“CFRA”), which defines “designated person” as any individual related by blood or whose association with the employee is the equivalent of a family relationship.

An employee would identify the designated person the first time they file a claim for family temporary disability insurance benefits to care for a designated person, and would be required to state under penalty of perjury, how they are associated with that person by blood or the equivalent of a family relationship.

This bill would amend, repeal, and add Sections 3301, 3302, and 3303 of the Unemployment Insurance Code.

SB 642 – Definition of Pay Scale   

SB 642 Current law requires that employers make available the “pay scale” of a position to a candidate applying for that position. SB 642 would revise the definition of “pay scale” to mean a “good faith” estimate of the salary or hourly wage range that the employer reasonably expects to pay for the position upon hire. The bill would also expand the statute of limitations to assert pay equity claims from two years to up to three years after the cause of action occurs, and allow recovery of lost wages for the entire time during which the violation occurred, up to six years. “Wages” and “wage rates” are defined in the bill as including, for purposes of Labor Code Section 1197.5 only, “all forms of pay, including, but not limited to, salary, overtime pay, bonuses, stock, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, cleaning or gasoline allowances, hotel accommodations, reimbursement for travel expenses, and benefits.”

This bill would amend Sections 432.3 and 1197.5 of the Labor Code.

SB 464 – Employer Pay Data

SB 464 would require an employer to collect and store any demographic information gathered by an employer or labor contractor for the purpose of submitting the required pay data report to the Civil Rights Department (“CRD”) separately from employees' personnel records, and would require a court to impose a civil penalty against an employer that fails to file the pay data report if requested to do so by the CRD. The bill would also, beginning January 1, 2027, increase the number of job categories on which the employer must report from 10 to 23.

This bill would amend, repeal, and add Section 12999 of the Government Code.

AB 250 – Extended SOL for Sexual Assault / Harassment Claims

AB 250would extend the eligibility period for revival of claims seeking to recover damages suffered as a result of an alleged sexual assault that would otherwise be barred prior to January 1, 2026 because the applicable statute of limitations has or had expired. To revive sexual assault claims, including derivative claims for wrongful termination and sexual harassment, among others, the plaintiff must demonstrate that one or more entities legally responsible for damages engaged in a cover up.

The bill defines a “cover up” as a “concerted effort to hide evidence relating to a sexual assault that incentivizes individuals to remain silent.” The bill would permit a cause of action for any such claim to proceed if already pending in court on the effective date of the bill or, if not filed by that date, to be commenced between January 1, 2026, and December 31, 2027.

This bill would amend Section 340.16 of the Code of Civil Procedure.

SB 1136 – Immigration and Work Authorization

SB 1136would require employers with greater than 25 employees to release an employee upon request for up to five unpaid working days in a 12-month period to attend appointments, interviews, or any other proceeding or meeting concerning the employee's immigration status or a related matter. The bill would require any employee whose employment is terminated due to an inability to provide documentation of proper work authorization to immediately be reinstated to their former classification without loss in seniority, subject to proper work authorization. An employer who is notified that an employee has been detained or incarcerated as a result of a pending immigration or deportation proceeding would be required under the bill to place the employee on an unpaid leave of absence for a period not to exceed 12 months. The bill would prohibit an employer from taking adverse action against an employee because of immigration status or national origin, or solely because the employee is subject to immigration or deportation proceedings. The bill's provisions would be enforced by the Labor Commissioner.

This bill would add and repeal Chapter 3.3 (commencing with Section 1019.6) of Part 3 of Division 2 of the Labor Code.

SB 294 – The Workplace Know Your Rights Act

SB 294would establish the “Workplace Know Your Rights Act” under which an employer would be required to provide a stand alone written notice to each current employee as well as employees upon hire with certain workers' rights, including workers' compensation, immigration agency inspections, and law enforcement actions at the workplace. This obligation would commence on or before February 1, 2026, and continue annually thereafter. The bill requires the Labor Commissioner to develop a template notice that must be available on or before January 1, 2026, and updated annually. The bill would also require, subject to an employee's request, that the employer notify the employee's designated emergency contact if the employee is arrested or detained at work. T The bill carries an anti-retaliation provision and would be enforced by the Labor Commissioner with a penalty of $500 per employee per violation, except that the penalty for a violation of the emergency contact provision would be an amount up to $500 per employee for each day the violation occurs, up to a maximum of $10,00 per employee.

This bill would add Part 5.6 (commencing with Section 1550) to Division 2 of the Labor Code.

AB 1326 – Right to Wear A Mask

AB 1326 would provide individuals with the right to wear a medical grade mask in a public place to protect themselves or the public with regard to communicable disease, air quality, or other health factors. This right would not be construed as a limitation or modification of certain requirements for the removal of a health mask relating to, among other things, essential workplace functions, security identification protocols, or emergency health care protocols.

This bill would add Chapter 26 (commencing with Section 28050) to Division 20 of the Health and Safety Code.

Record Retention and Production Bills

SB 513 – Personnel Records

SB 513 would require that personnel records relating to the employee's performance include education and training records and require the employer ensure those records contain the following information: employee name, training provider name, the duration and date of the training, core competencies of a training – including skills in equipment or software – and the resulting certification or qualification.

This bill would amend Section 1198.5 of the Labor Code.

Workplace Solutions

We will continue to keep you apprised through the October 13, 2025 bill signing deadline. Stay tuned for our end of session blog and sign up for our October 15, 2025 webinar in which we'll explore the final slate of new laws. Please check back in with us here at Cal Peculiarities for regular check-ins on California policy and legislative updates.

Edited by: Catherine Feldman

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.