New California Laws Taking Effect in 2026

As the calendar turns to 2026, California is once again at the forefront of legislative change. A wave of new laws will take effect on January 1, impacting everything from your workplace rights to your grocery shopping routine. This year's updates focus heavily on artificial intelligence safety, stricter environmental standards, and expanded protections for employees and tenants.

Understanding these changes is vital for residents and business owners alike. Whether you are an employer updating your handbooks, a landlord preparing a rental unit, or a consumer navigating new privacy rules, being informed is your best defense against non-compliance.

Major Employment Law Updates

The workplace landscape is shifting significantly in 2026. Several bills signed into law will alter how employees are paid and protected.

Minimum Wage Increase

Effective January 1, 2026, the statewide minimum wage will increase to $16.90 per hour for all employers. This adjustment also raises the minimum salary threshold for exempt employees to at least $70,304 annually, which is double the minimum wage for full-time work.

Ban on "Stay-or-Pay" Provisions

Under Assembly Bill 692, California effectively bans most "stay-or-pay" contract terms for contracts entered into on or after January 1, 2026. These are provisions that force employees to repay training costs, "quit fees," or other penalties if they leave their job before a certain date. This law ensures that workers are not trapped in jobs due to fear of financial retaliation.

Pay Transparency and Equity

SB 642 strengthens pay transparency by redefining "pay scale" to mean the range an employer reasonably expects to pay upon hire, rather than a broad, generic range. Additionally, the law updates language to include "another sex" (rather than just "opposite sex") to explicitly protect non-binary employees from pay disparity.

New Housing and Tenant Protections

Landlords and tenants face new requirements starting this year, aimed at improving habitability and transparency in the rental market.

• Appliance Requirements: Under AB 628, landlords are now required to provide a working stove and refrigerator in all rental units starting January 1, 2026.
• Real Estate Disclosures: Sellers must now disclose any known tobacco or nicotine residue on a property. Additionally, real estate professionals must clearly disclose when property listing photos have been digitally altered using AI.

AI Safety and Environmental Standards

California continues to lead in regulating emerging technologies and environmental sustainability.

The Transparency in Frontier AI Act

Following the veto of SB 1047, Governor Newsom signed SB 53, known as the "Transparency in Frontier Artificial Intelligence Act". Effective January 1, 2026, this law requires developers of powerful "frontier" AI models to publish transparency reports and safety frameworks. It also includes whistleblower protections for employees who report critical safety incidents.

Elimination of Plastic Bags

SB 1053 closes the loophole that allowed thicker plastic bags to be sold as "reusable." Starting January 1, 2026, grocery stores and retailers are prohibited from providing any plastic carryout bags at checkout. Shoppers must now either bring their own reusable bags or purchase paper bags, which must contain at least 50% post-consumer recycled content.

Steps to Take Now

With so many changes taking effect, proactive compliance is essential.

• For Employers: Review your employment contracts to remove "stay-or-pay" clauses and update your job postings to meet new pay scale definitions.
• For Landlords: Inspect your rental units to ensure they have the mandated appliances before the new year begins.
• For Consumers: Be prepared for the total removal of plastic bags at checkout and understand your new rights regarding AI transparency.

How KAASS LAW Can Help

Navigating these new laws can be complex, especially for business owners and property managers. A missed update in your employee handbook or a failure to disclose property details could lead to costly litigation. At KAASS LAW, we stay ahead of these legislative changes to ensure our clients are fully protected.

If you are an employer needing to audit your contracts for AB 692 compliance, or a landlord unsure about the new habitability standards, we can guide you through the process. We invite you to review our services to see how we can assist your company in 2026. Furthermore, if you believe your rights as a tenant or employee have been violated under these new statutes, please contact our team for a consultation.

For more details on the AI safety regulations, you can read the full text of SB 53 on the California Legislative Information website. Additionally, the Department of Industrial Relations provides official resources on the minimum wage increase.