California’s employment laws shift every year, and for mid-market manufacturers, automotive suppliers, and other industrial businesses, staying compliant isn’t optional—it’s mission-critical. From wage increases to workplace safety mandates, the rules you follow today will directly impact productivity, retention, and risk management tomorrow.
This guide summarizes the 2024 and 2025 changes already in effect and highlights what to expect in 2026 so you can get ahead of compliance before it becomes a costly issue.
Key Employment Law Updates
Paid Sick Leave Expansion (SB 616)
Since January 1, 2024, California requires employers to provide at least 5 days or 40 hours of paid sick leave annually. Accrual must be at least 1 hour per 30 hours worked, with a maximum accrual cap of 80 hours or 10 days. Employers must also allow employees to use a minimum of 40 hours or 5 days each year. Local ordinances (like Los Angeles and San Diego) may set higher standards—your policy must meet the strictest rule.
Reproductive Loss Leave (SB 848)
Employees are now entitled to up to 5 days of unpaid leave for qualifying reproductive loss events, with strong anti-retaliation protections in place.
Noncompete Agreements and Mandatory Notices
With AB 1076 and SB 699, most noncompete agreements in California are void. Employers were required to notify current and certain former employees by February 14, 2024 that these agreements are unenforceable. All handbooks, offer letters, and contracts should be scrubbed of noncompete provisions.
Workplace Violence Prevention Plans (SB 553)
Since July 1, 2024, nearly every California employer must maintain a written Workplace Violence Prevention Plan (WVPP), log incidents, train employees, and review the plan annually. Industrial employers with large worksites or multiple shifts should build systems to track and report incidents consistently.
Indoor Heat Illness Standard
As of mid-2024, employers must implement controls when indoor temperatures reach 82°F, with stricter measures at 87°F or when employees wear protective clothing. This has major implications for manufacturing plants, machine shops, and warehouses, where heat build-up can be significant.
Off-Duty Cannabis Protections (AB 2188 & SB 700)
Employers can no longer discriminate against employees for lawful, off-duty cannabis use or rely solely on drug tests detecting non-psychoactive metabolites. Exceptions exist for certain safety-sensitive and federally regulated positions.
Expanded Enforcement of Wage/Hour Laws (AB 594)
Local prosecutors, county district attorneys, and the state Attorney General now have authority to bring civil or criminal actions for Labor Code violations, significantly raising enforcement risks for employers.
PAGA Reform (AB 2288 / SB 92)
The 2024 reform narrowed who can file claims, provided opportunities for early resolution, and reduced penalties for compliant employers. Maintaining accurate records and proactive compliance practices is now more valuable than ever.
State Minimum Wage and Exempt Salary Threshold
Effective January 1, 2025, the California minimum wage is $16.50/hour statewide, raising the exempt salary threshold to $68,640 annually. Local minimum wage ordinances may still exceed this baseline.
Paid Family Leave / State Disability Insurance Enhancements
Starting in 2025, employees filing new claims can receive 70–90% of wages, with a maximum weekly benefit of $1,681. This makes taking leave more financially feasible and may increase utilization rates.
Ongoing Requirement: FSA Deadline Notices
Since 2020, California has required employers offering flexible spending accounts (FSAs) to provide two forms of notice of any withdrawal deadlines, including for health, dependent care, and adoption assistance FSAs.
Approved methods include:
- Text message
- Postal mail
- In-person communication
Best practice: issue one notice early in the plan year and another near year-end or upon termination of employment.
While there is some uncertainty over whether ERISA preempts this rule for health FSAs, no formal guidance has been issued. Dependent care and adoption FSAs are not ERISA-covered and must comply.
What Industrial Employers Should Do Now
- Update policies and handbooks to reflect new leave laws, cannabis protections, and sick leave requirements.
- Implement a compliant WVPP with training, recordkeeping, and annual review.
- Develop indoor heat illness protocols for worksites where high temperatures are common.
- Eliminate noncompetes and retain proof of compliance with the 2024 notice requirement.
- Adjust payroll systems for the 2025 exempt salary floor.
- Send FSA notices at open enrollment, termination, and year-end deadlines.
- Audit wage/hour practices to reduce exposure under the reformed PAGA.
- Plan for wildfire smoke seasons by monitoring AQI, offering respirators, and updating hazard response protocols.
What to Expect in 2026
- Minimum wage increase: Early projections indicate the statewide minimum wage may rise to ~$16.90/hour, lifting the exempt salary threshold to about $70,304 annually.
- New WVPP standards: Cal/OSHA is required to adopt a permanent workplace violence prevention standard by December 31, 2026.
- Heat and wildfire smoke regulations: Further revisions are expected, including stricter acclimatization and air-quality monitoring requirements.
