Seyfarth Synopsis: The California Occupational Safety and Health Standards Board has approved a much-needed dose of revisions to California’s workplace first aid requirements for construction and general industries. For general industry employers, the most notable change removes a longstanding pain point that first aid kit contents be approved by a consulting physician. Instead, employers may now comply by providing a first aid kit meeting ANSI/ISEA Z308.1-2021 Class A requirements. The amendments should simplify compliance, but employers should not treat the revised rule as a quick fix. A key obligation remains: employers must  evaluate workplace-specific hazards and provide additional first aid supplies wherever reasonably necessary. In other words, a standard kit may stop the bleeding, but it won’t always cover every wound. Assuming approval by the Office of Administrative Law, the amendments are expected to take effect on January 1, 2027.

Background

The California Occupational Safety and Health Standards Board has approved long-awaited revisions to California’s workplace first aid requirements. For employers the changes are just what the doctor ordered. The amendments to 8 CCR sections 1512 (construction) and 3400 (general industry) modernize California’s approach to workplace first aid kits and provide employers with a more flexible path to compliance. The rulemaking now proceeds to the Office of Administrative Law (OAL) for review. If approved, the amendments are expected to take effect on January 1, 2027.

Ditching the Doctor’s Note For General Industry Employers

The most significant practical change affects general industry employers. Historically, 8 CCR 3400 required first aid materials to be approved by a consulting physician. Many employers nursed citations because of missing approval letters rather than because their first aid kits were inadequate. The revised regulation offers a simpler remedy. Employers may now either:

  • Provide a first aid kit that complies with ANSI/ISEA Z308.1-2021 Class A workplace first aid kit requirements; or
  • Have the contents determined by an employer-authorized licensed physician or other licensed health care professional (PLHCP).

It’s About More Than What’s In The Kit

A clean bill of health for employers takes more than a well-stocked first aid kit. The amendments also require employers to:

  • Evaluate the number of first aid kits needed based on employee locations and workplace hazards;
  • Ensure first aid kits are readily available;
  • Communicate first aid kit locations to employees;
  • Clearly identify kit locations where practicable; and
  • Inspect and replenish first aid supplies as necessary.

Employers should treat the amendments as an opportunity for a check-up of their entire first aid program—not just a change to first aid kit contents.

Hazard Warning: A Standard Kit Isn’t Always Enough

The amended standards require employers to provide additional specialized first aid items when a hazard assessment identifies workplace hazards that are unique, reasonably anticipated, and potentially serious. For example, an ANSI-compliant Class A kit may satisfy the baseline requirements, but it may not be sufficient for every workplace.

The Board specifically rejected proposals to require items such as naloxone or epinephrine in all workplaces, instead concluding that such needs are best diagnosed through the hazard assessment process. Employers should examine whether their operations involve chemical, electrical, thermal, remote-work, or other unique hazards that warrant additional supplies.

A Prescription For Workplace Solutions

Assuming OAL approval, employers should give their first aid programs a check-up before the anticipated January 1, 2027 effective date.

Key questions include:

  • Do existing first aid kits satisfy ANSI/ISEA Z308.1-2021 Class A requirements?
  • Are first aid kit locations adequately communicated and identified?
  • Is there a process for inspecting and replenishing supplies?
  • Has the employer evaluated whether workplace-specific hazards require additional first aid items?

Feeling any symptoms of uncertainty about the new requirements? Your favorite Seyfarth attorney, or any member of the Workplace Safety and Environment Team are here to assist with evaluating your first aid program before the anticipated January 1, 2027 effective date.

Edited By: Catherine Feldman

Seyfarth Synopsis: The California Legislature concluded the second year of its 2024-2026 session on September 1, 2026, and sent the last of its approved bills to Governor Newsom for consideration. The Governor has until September 30 to approve or veto fewer bills than we’ve seen in years, but those that remain will still impact employers in California.

On September 1, 2026, the California Legislature sent the last of its approved bills to Governor Newsom, who has until September 30 to decide which employment bills will become laws effective January 1, 2027 (or earlier as urgency legislation). Quite a bit lighter than in past years, and noticeably free of wage hour or PAGA legislation, the most significant bills for his consideration impacting employers address regulation of employers’ use of automated decision systems, changes to last year’s “stay or pay” law, temporary restraining orders, bereavement leave, and workplace surveillance.

Bills Already Signed Into Law

AB 2155 Validity of Agreements to Arbitrate

AB 2155, approved by the Governor June 30, 2026, makes arbitration agreements unenforceable under California law where the agreement would likewise be unenforceable under the Federal Arbitration Act, such as certain interstate commerce transportation worker agreements and claims relating to sexual harassment or sexual assault disputes.

The bill amended Section 1281 of the Code of Civil Procedure.

AB 1950 — Los Angeles Superior Court Civil actions: Mandatory Mediation

AB 1950, signed into law August 27, 2026, authorizes County of Los Angeles Superior Court judges to order cases into mediation regardless of the amount in controversy. Those cases will be entitled to up to three hours of in-person or remote no-cost mediation services through the court’s program. These provisions will be in effect January 1, 2027, through January 1, 2032. The legislation builds on the Court’s investment in alternative dispute resolution and the launch of its digital ADR platform in 2025, and is intended to assist with the Court’s 67% increase in civil filings since 2022.

This bill added Section 1775.16 to the Code of Civil Procedure.

SB 1316 — Labor Commissioner Liens and Hearing Evidence

SB 1316, signed into law August 27, 2026, authorizes the Labor Commissioner (LC) to renew a lien created on an employer’s real property to satisfy a wage order under Labor Code section 98.2 for an additional 10 years. The bill also prohibits employers from using   records in certain LC proceedings under Section 1174.1—such as payroll, time, and employment records required to be maintained at the place of employment or at a central location within the state—that were not provided timely to the LC pursuant to a written request, unless the employer proactively obtained a court order excusing production. These evidence prohibitions are applicable in administrative proceedings contesting a citation for retaliation or discrimination complaints. SB 1316 also extends these evidentiary preclusions to contractors and subcontractors in hearings under Labor Code Section 1742.

This bill amended Sections 98.2 and 1174.1 of, and added Section 1742.05 to, the Labor Code.

AB 1928 — Postsecondary education sex discrimination and harassment complaints: support person for grievance hearings.

AB 1928, signed into law on August 27, 2026, authorizes students at postsecondary educational institutions that receive state financial assistance and state student financial aid to have a support person and advisor of their choice with them at any stage of the grievance process related to a sexual harassment complaint arising under state law and Title IX.

This bill amended Section 66281.8 of, and adds Section 66281.10 to, the Education Code.

Bills On the Governor’s Desk

AI-Related Bills

SB 947 – “No Robo Bosses Act” Automated Decision Systems (ADS)

SB 947, beginning July 1, 2027, would prohibit employers from relying solely on an ADS when making employment-related decisions, and would require a human reviewer to conduct an independent investigation and compile corroborating information for disciplinary and termination decisions. If the ADS output cannot be corroborated, or a human reviewer concludes it is inaccurate or misleading, the employer would be prohibited from relying on it. The bill would also bar employers from using an ADS to (1) infer a worker’s protected status under FEHA, and (2) predict and take adverse action against a worker for exercising their legal rights. The bill would require post-use notice of ADS to affected employees, provide employees with a right to obtain a description of employee data primarily used by an ADS in a disciplinary or termination decision, and authorize enforcement through the Labor Commissioner, public prosecutors, and civil actions. “ADS” is defined as any computational process derived from machine learning, statistical modeling, data analytics, or artificial intelligence that issues simplified output, including a score, classification, or recommendation, that is used to assist or replace human discretionary decision-making.

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

SB 947 reintroduces some objectives of the broader SB 7 (vetoed in 2025). In other recent AI-related legislation, AB 1018 (2025) (which did not pass) 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.

SB 951 – Cal/WARN: AI technological displacement notice.

SB 951 would revise Cal/WARN to require a Cal/WARN notice of a mass layoff, relocation, or termination caused in whole or in substantial part by an AI system (or other automated technology replacing or automating employment positions). This notice would need to state at the top: “This notice is for a technology displacement,” and include: (A) the number, classification or occupation, and work location of layoffs substantially due to AI or other automated technology; (B) the job functions performed by those replaced workers that will be automated; and (C) The specific category or type of AI system or other automating technology resulting in the technological displacement.

The final version of the bill retains the 60-day advance notice period and Cal/WARN coverage thresholds. The bill would require the Employment Development Department (EDD) to publish a summary of the notices received on its website and to post a quarterly statewide summary of technological displacements reported.

This bill would amend Sections 1400.5 and 1401 of, and add and repeal Section 1402.7 of, the Labor Code.

SB 574 – Attorneys’ Use of Generative AI

SB 574 would impose several limitations on attorneys’ AI use, and require attorneys to disclose their use of generative AI in court filings. The attorney conduct the bill would prohibit includes: (1) entering confidential, personal identifying, and other nonpublic information into a generative AI system where access is not restricted to the attorney or authorized users with the obligation to keep the information confidential; and (2) including in any paper filed in any court citations that have not been personally verified. The bill also would require an attorney to take reasonable steps to verify the accuracy of generative AI outputs and to correct any erroneous or hallucinated output. In addition to attorney conduct, the bill would prohibit an arbitrator from (1) delegating any part of their decision-making process to a generative AI tool, and (2) relying on information from generative AI outside the record without making appropriate disclosures to the parties beforehand.

This bill would amend Section 6173 of, and add Section 6068.1 to, the Business and Professions Code, and amend Section 128.7 of, and add Sections 180 and 1282.1 to the Code of Civil Procedure.

Leaves of Absence & Anti-Discrimination

AB 1940 – Adding Menopause to FEHA Definition of “Sex”

AB 1940 would add perimenopause, menopause, post-menopause or other related medical conditions to FEHA’s definition of sex, making those condition a protected category under the FEHA. The bill would also require the Civil Rights Department (CRD), by July 1, 2027, to update the poster notifying women of their rights relating to perimenopause, menopause, and post-menopause.

This bill would amend Section 51 of the Civil Code and Sections 12926 and 12950 of the Government Code.

AB 2563 – Sex Discrimination Definition Harmonization

AB 2563 would create a consistent definition of “sex discrimination” across codes, to align the definition in FEHA, the Unruh Act, the Education Code, and more. The bill states it is declaratory of existing law, but would add menopause-related conditions to the definition of “sex” if AB 1940 is enacted and takes effect on or before January 1, 2027.

This bill would amend various sections of each impacted statute.

SB 1149 – Bereavement Leave for a “Designated Person”

Continuing the Legislature’s “designated person” theme for the fourth year in a row, SB 1149 would expand the persons for which an employee may take up to 5 days of unpaid (unless the employer’s policy provides for paid) bereavement leave to include the employee’s “designated person”. The designation would be made when the leave is taken. The bill would authorize an employer to limit an employee to one designated person per 12-month period.

This bill would amend Section 12945.7 of the Government Code.

AB 1803 – Mandating Anti-Hate Speech Training

AB 1803 would, beginning January 1, 2028, require that already-mandated sexual harassment training include, anti-hate speech training consisting of practical guidance on recognizing, reporting, and confronting workplace speech that vilifies, humiliates, or incites hatred against people based on FEHA protected characteristics.

This bill would amend Section 12950.1 of the Government Code.

AB 2495 – Unlawful Immigration-Related Practices

AB 2495 would expand Labor Code Section 1019 to include prohibiting retaliation against any person for exercising or attempting to exercise any right under federal, state, and local statutes and regulations applicable to employees. Also, AB 2495 would make it unlawful for an employer or any other person to engage in conduct, related to any person’s perceived immigration status, that would reasonably tend to dissuade anyone from engaging in conduct that the person has a legal right to engage in under any federal, state, or local statute or regulation (applicable to employees), or to induce a person to engage in conduct where the person has a legal right to abstain.  The bill would make an employer or other person who violates Section 1019 liable for a civil penalty not exceeding $10,000 per employee or person for each violation, to be awarded to the employee or person who suffered the violation. The $10,000 penalty is in addition to other remedies already provided by Labor Code Section 1019,

This bill would amend Section 1019 of the Labor Code.

Other Bills

AB 1697 – Stay-or-Pay Contract Provisions

AB 1697 would amend 2025’s trend-setting Anti-Trap law to make the bill’s restrictions on contracts effective for stay-or-pay contracts entered into on or after January 1, 2027, rather than January 1, 2026. The bill has an urgency clause such that it will go into effect immediately upon signing, but as it still sits on the Governor’s desk, employers have not received the immediate relief from the January 1, 2026 deadline for which they had hoped. The bill would also establish new exceptions to the stay-or-pay prohibition for (1) contracts entered into pursuant to a recruitment and retention program funded by a federal, state, or local government agency grant if the employee repayment obligations comply with the requirements of the grant and do not exceed the service obligations required by the grant; (2) repayment obligations arising from advanced paid time off upon voluntary separation (if conditions are met); and (3) contracts for the receipt of a discretionary or unearned monetary payment from the employer to induce the worker to be affiliated with the employer or to maintain a relationship with the employer between a securities broker-dealer, insurance producer, or investment adviser and its agents or representatives that are registered and licensed (if the contract satisfies certain conditions.)

This bill would amend Section 16608 of the Business and Professions Code, and amend Section 926 of the Labor Code.

AB 1331 & 1883 – Workplace Surveillance

AB 1331 would prohibit an employer from using a “workplace surveillance tool” for monitoring or surveilling employees in a workplace bathroom and allow employees to leave behind workplace surveillance tools when entering a workplace bathroom unless an employee is required to remain available during meal or rest periods, the employer has a policy requiring possession of the device for identification or safety reasons or for access to locked or secure areas if  the device (a) does not detect or record audio or video and (b) does not have physically embedded or attached artificial intelligence.

“Workplace surveillance tool” is defined as a “system, application, instrument, or device that collects or facilitates the collection of employee data, activities, communications, actions, biometrics, or behaviors by means other than direct observation by a person, including, but not limited to, video or audio surveillance, continuous incremental time-tracking tools, geolocation, electromagnetic tracking, photoelectronic tracking, a photo-optical system, or other means.” Smoke or carbon monoxide detectors and metal detectors are excluded.  

AB 1883 would prohibit certain employers, including governmental entities, universities, labor contractors and their clients, from using a workplace surveillance tool that uses AI to collect neural data (such as gait analysis) or recognize an individual’s emotional state. There are exceptions for employers engaged in (1) the development of aircraft for use in the national airspace; and (2) the development of products or services for national security, military, space, or defense purposes where the use of a workplace surveillance tool is reasonably necessary to comply with a federal statute, a regulation, or binding federal contract.

Both bills would authorize the Labor Commissioner or a public prosecutor to enforce their provisions, and civil actions seeking injunctive relief, punitive damages, and reasonable attorney’s fees and costs. In addition, employers who violate the bills’ provisions are subject to a civil penalty of up to $500 for each violation.

AB 1331 would add Part 5.8 (commencing with Section 1560) to Division 2 of the Labor Code, and AB 1883 would add Part 5.8 (commencing with Section 1580), to Division 2 of the Labor Code.

Restraining Order Bills

AB 2179 – Workplace Violence Restraining Orders

AB 2179 would, beginning on January 1, 2028, allow any party or witness to a petition for a restraining order to appear remotely at a hearing and would prohibit any fee for appearing remotely. The bill would require the court of each county to develop rules and instructions for such remote appearances and post them on its website. The bill would also, commencing on January 1, 2028, require courts to allow filings related to such protective orders to be submitted electronically, as specified. The bill would make conforming changes.

The bill would amend Section 527.8 of the Code of Civil Procedure and Section 6103.2 of the Government Code.

AB 1753 – Protective Orders: Firearms; Notice and Procedures

AB 1753 would require the petitioner for a TRO to provide prior notice to the respondent only if the court determine that requiring prior notice would not likely endanger the petitioner, proposed protected parties, or other persons. It would also require the applicant’s attorney to certify to the court under oath that providing notice to the party to be restrained in advance of filing the petition would likely endanger the safety of the petitioner or other persons, and require courts to permit a party or witness to appear remotely at a hearing for a workplace violence restraining order at no cost.

This bill would amend Sections 527.6, 527.8, 527.85 of the Code of Civil Procedure.

AB 1961 – TRO: Protecting A Group of Employees

AB 1961 would permit an employer to seek a such a TRO on behalf of a reasonably identifiable group of employees by their workplace or location – without having to identify an individual employee – if a credible threat of violence is generally directed at the employer’s workplace or at a group of employees.

This bill would amend Section 527.8 of the Code of Civil Procedure.

Workplace Solutions

We will continue to keep you apprised through the September 30, 2026 bill signing deadline. Stay tuned for our end of session blog and sign up for our October 5, 2026 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.

Seyfarth Synopsis: On August 14, 2026, Cal/OSHA released a revised discussion draft of proposed changes to California’s heat illness prevention standards included in Section 3395 (Outdoor Heat Illness Prevention) and Section 3396 (Indoor Heat Illness Prevention). The proposal continues Cal/OSHA’s effort to implement AB 2243, which was signed into law in 2022, while making California’s indoor and outdoor heat standards more consistent in structure and terminology. Although many of the revisions are intended to harmonize the two standards, the draft also contains substantive changes that could significantly affect compliance obligations, including an expansion of outdoor high-heat procedures and new acclimatization requirements for newly-assigned and returning employees. Comments on the discussion draft are due September 21, 2026. Some like it hot—but Seyfarth is here to prepare employers for the rising temperatures. Keep reading for everything employers need to know about the August 2026 draft.

Background

It’s been a long, hot summer, or really summers, as Cal/OSHA continues to modify its proposed revisions to California’s heat illness prevention regulations. As we previously discussed, in May 2025, Cal/OSHA released its first proposed revisions as part of its effort to implement AB 2243. Among other things, AB 2243 directed Cal/OSHA to consider revisions relating to heat illness prevention plans and acclimatization requirements. Although AB 2243 focused primarily on the outdoor heat standard, Cal/OSHA elected to review both the outdoor and indoor regulations. Following stakeholder comments and advisory committee discussions, Cal/OSHA released a substantially revised draft on August 14, 2026.

It’s Getting Hot Out There: Expanded Outdoor High-Heat Procedures

Perhaps the most scorching proposal in the August 2026 draft is the elimination of an existing limitation on Section 3395’s outdoor high-heat procedures, which currently only apply to employers in specified industries, including agriculture, construction, landscaping, oil and gas extraction, and certain transportation operations. The August 2026 proposal extends high-heat requirements to a broad range of outdoor employers whenever temperatures reach 95 degrees Fahrenheit. For employers previously not subject to California’s high-heat requirements, this change could have a significant practical impact.

Soak Up the Sun (Slowly): Expanded Acclimatization Requirements

The August 2026 proposal adds more well-defined acclimatization requirements. Under California’s current regulations, employers must closely observe newly assigned employees during specified periods of elevated heat exposure. The August 2026 draft retains and expands concepts first introduced in the May 2025 proposal by addressing both newly assigned employees and employees returning to work after an absence exceeding 14 days.

Under the proposal, employers would have two options when assigning unacclimatized employees to covered heat conditions. Employers could:

  • Implement enhanced protective measures and close observation procedures; or
  • Phase employees into heat exposure through prescribed exposure schedules.

California isn’t walking on the sun alone. The proposed changes mirror acclimatization provisions in Oregon’s heat illness rule as well as federal OSHA’s proposed heat illness rule.

Although the precise details may continue to evolve during the rulemaking process, the broader message from Cal/OSHA is clear: employers should anticipate greater scrutiny of acclimatization practices.

Clear Instructions Even During a Cruel Summer: Distribution of Heat Illness Prevention Plans

The August 2026 draft retains one of the most notable additions from the May 2025 proposal: affirmative requirements for distributing Heat Illness Prevention Plans (HIPPs).

Cal/OSHA wants every employee to have their own pocketful of sunshine—a HIPP within arm’s reach. Under the proposed language, employers would be required to distribute HIPPs to employees upon hire, during heat illness prevention training, and at least once annually. The proposal clarifies that employers would not be required to distribute the plan to the same employee more than twice each year and would permit electronic posting and distribution in certain circumstances.

Heating Up The Focus on Heat Illness Recognition

The August 2026 draft also continues Cal/OSHA’s effort to align definitions and terminology between the indoor and outdoor standards. Among other changes, the proposal includes rhabdomyolysis within the definition of heat illness, adds supplements and recreational drugs to the list of personal risk factors, and creates a more detailed and consistent description of heat illness signs and symptoms across both regulations. Although these revisions may not dramatically alter day-to-day compliance obligations, employers may ultimately need to update training materials, written programs, and educational resources if the August 2026 proposal moves forward substantially as drafted.

More Heat on the Horizon?

Just like a California summer, Cal/OSHA’s efforts aren’t cooling down anytime soon. Additional revisions may be made to the August 2026 proposal following the public comment period before Cal/OSHA initiates formal rulemaking under California’s Administrative Procedure Act. Interested stakeholders have until September 21, 2026 to submit comments.

Workplace Solutions

If adopted as-is, the August 2026 proposal would significantly expand employers’ existing heat-related obligations and create additional requirements. But don’t sweat it, the authors, your favorite Seyfarth attorney, or any member of the Workplace Safety and Environment Team are here to advise on the August 2026 draft and any future iterations.

Edited By: Catherine Feldman

Seyfarth Synopsis: San Francisco just delivered a bundle of joy for new parents. The city reduced the employment tenure requirement under its Paid Parental Leave Ordinance from 180 days to 90 days, meaning eligible employees can start accessing employer-paid supplemental compensation benefits faster. Covered employers may want to start baby-proofing their policies now, ahead of phased-in compliance beginning January 1, 2027.

New parents in San Francisco have a reason to celebrate. On August 7, 2026, the mayor signed Ordinance 162-26, reducing the amount of time an employee must be on the job before qualifying for supplemental compensation benefits under the city’s Paid Parental Leave Ordinance (“SF PPLO”). Instead of waiting 180 days, employees can qualify after 90 days, bringing the ordinance in line with the city’s Paid Sick Leave Ordinance.

As a quick refresher, the SF PPLO requires employers with 20 or more employees (located anywhere) to “top up” an eligible employee’s California Paid Family Leave (“CA PFL”) benefits during new child bonding leave. In other words, the ordinance helps bridge the gap between what the State pays and an employee’s regular wages (up to a maximum cap), ensuring parents can focus less on finances and more on midnight feedings, diaper changes, and everything else that comes with welcoming a new family member. For 2026, the combined maximum weekly benefit amount from CA PFL benefits and employer-paid supplemental compensation is $2,522.

This amendment may be taking its first steps, but it is not changing much else. Employees still must work at least eight hours per week in San Francisco, perform at least 40% of their total weekly hours in the city, and otherwise qualify for CA PFL benefits for new child bonding leave. Like many toddler developments, the ordinance’s rollout will happen in stages rather than all at once. Employers with 100 or more employees must comply with the new 90-day eligibility threshold beginning January 1, 2027. Employers with 20 to 99 employees get a little more time to crawl before they walk, with compliance delayed until January 1, 2028. Employers with fewer than 20 employees remain exempt.

Workplace Solutions

Covered employers should not sleep on this update, even if new parents might not be getting much sleep themselves. Now is the time to revisit paid parental leave policies, update eligibility procedures, and monitor the SF PPLO webpage for updated guidance, posters, and forms. With the shortened waiting period, more employees will be eligible for benefits sooner. The authors or your favorite Seyfarth attorney are here to help make sure your policies are ready before this amendment leaves the crib and starts walking.

Also, please consider this your friendly reminder that handbook season is just around the corner. Whether your handbook needs a quick checkup or a full nursery-to-college makeover, Seyfarth’s Handbook Team is ready to help. Additionally, be on the lookout for details about Seyfarth’s Employee Handbook Update Webinar, where we’ll cover the latest developments. After all, when it comes to workplace policies, it’s always better to baby-proof now than scramble later!

Edited By: Catherine Feldman

Seyfarth Synopsis:  For California employers, compliance with the Fair Chance Act (FCA) is not a game. In recent years, the California Civil Rights Department (CRD) has stepped up its investigations into complaints of FCA violations, and employers who don’t know the rules risk landing on a chute at every turn. Read on for our guide to navigating compliant background check practices and staying ahead of CRD enforcement.

The stakes are getting higher for California employers, who are seeing an increase in charges filed with the California Civil Rights Department (CRD) alleging violations of the California Fair Chance Act (FCA). This trend follows the CRD’s expanded regulations governing the use of criminal history in employment decisions, which became effective October 1, 2023, and reflects the agency’s heightened focus on FCA compliance in response to complaints filed by applicants and employees. Make no mistake, the CRD is not handing out Get Out of Jail Free cards.

Continue reading for an overview of the rules of the game, including the FCA legal framework, compliance areas the CRD typically examines when FCA charges are filed, and steps employers can take to prepare for and defend against these inquiries.

The Fair Chance Act Rulebook and the 2023 Regulatory Clarifications

The FCA generally requires California employers to:

  • Delay inquiry into or consideration of criminal history until after a conditional offer of employment—this includes ordering a criminal history background report;
  • Conduct an individualized, job‑related assessment before rejecting an applicant based on criminal history; and
  • Follow a two‑step notice process—a preliminary determination notice and a final determination notice—when taking action based on criminal history, regardless of how the information is obtained.

Regulatory amendments approved in 2023 clarified and expanded several key compliance obligations, including:

  • Expanding the definition of “applicant” to include certain current employees whose criminal history is reviewed due to changes in ownership, management, policies, or practices.
  • Reaffirming that employers may not include language in job advertisements or postings suggesting that individuals with criminal histories will not be considered.
  • Prohibiting employers from considering voluntarily disclosed criminal history prior to a conditional offer.
  • Clarifying that exemptions for legally mandated background checks apply only when the employer itself is required by law to conduct the check.
  • Requiring an initial individualized assessment before issuing a preliminary decision notice.
  • Expanding the categories of mitigating and rehabilitative evidence employers must consider, including trauma, disability‑related circumstances, and evidence of rehabilitation.

Time to Show Your Cards: What the CRD Looks for When a Charge Lands

When an applicant or employee files a charge alleging an FCA violation, the CRD’s investigation commonly extends beyond the narrow factual allegation to examine whether the employer complied with related FCA requirements across the board. In those investigations, the CRD typically focuses on the following areas:

1. Timing of Criminal‑History Inquiries

    The CRD routinely evaluates whether the employer rolled the dice before their turn and made any inquiry—directly or indirectly—into criminal history before making a conditional offer of employment, including:

    • Questions on employment applications
    • Interview conversations
    • Informal recruiter or hiring‑manager inquiries
    • Reliance on information volunteered too early in the application process

    1. Individualized Assessments

      The FCA does not require an employer to document its assessment. But, like a game of Clue, the CRD expects employers to show their winning strategy, and frequently requests documentation demonstrating that the employer:

      • Conducted the required initial individualized assessment before issuing a preliminary decision notice;
      • Considered each of the three statutory factors (i.e., the nature and gravity of the offense or conduct, the time that has passed since the offense, conduct, or completion of sentence, and the nature of the job sought or held)s; and
      • Connected the assessment to the actual duties and risks of the position.

      2. Notice and Response Procedures

        The CRD commonly examines whether:

        • The preliminary and final determination notices included all required materials, including the conviction‑history report and a statement that the individual has the right to file a complaint with the CRD;
        • The applicant or employee was afforded the full response period required by regulation; and
        • The employer refrained from making a final decision before the response period expired.

        3. Consideration of Mitigating or Rehabilitative Evidence

          When an applicant plays a new card—submitting mitigating or rehabilitative evidence—employers must factor it into their next move. Investigators often assess whether the employer:

          • Accepted and evaluated all mitigating or rehabilitative information submitted;
          • Conducted and documented a meaningful reassessment; and
          • Considered trauma‑related, disability‑related, or other mitigating factors where applicable.

          4. Consideration of Convictions Older than Seven Years

            Although California law permits employers to consider convictions older than seven years—outside the City and County of San Francisco and unincorporated areas of Los Angeles County—doing so can be a risky gambit as the CRD frequently asks whether the employer relied on older convictions.

            These inquiries reflect the CRD’s publicly stated position, including guidance posted on its website, prohibiting reliance on older criminal records. Employers should be prepared to articulate and document why consideration of an older conviction was job‑related and consistent with business necessity. The CRD will expect a heightened showing of job-relatedness.

            Your Next Move: Getting Ahead of the Charge

            The best defense is a good strategy. Employers facing an FCA charge—or seeking to reduce future exposure—should consider the following moves:

            1. Check the Board: Audit Criminal‑History Decision‑Making Processes

              Review job postings, applications, interview materials, recruiter scripts, conditional offer letters, and pre-adverse (preliminary determination) and adverse action (final determination) templates to ensure compliance with FCA requirements.

              2. Play the Right Cards: Strengthen Documentation of Individualized Assessments

                Use job‑specific assessment tools that address the three required factors and prompt decision‑makers to consider rehabilitation and mitigation evidence.

                3. No Skipped Turns: Ensure Compliance with Notice and Timing Requirements

                  Confirm that notices include required attachments and language, response deadlines are properly calculated, and reassessments are documented.

                  4. Teach the Rules: Train Recruiters, HR, and Hiring Managers

                    Training should focus on prohibited inquiries, handling volunteered information, and the required assessment and notice procedures.

                    The Endgame

                    An FCA charge can trigger searching inquiries into how an employer evaluates criminal history and implements required assessment and notice procedures. Don’t wait until the other player sits down at the board. Employers should ensure their practices are well‑documented, consistently applied, and aligned with the current regulatory framework — before the CRD takes a look first.

                    Workplace Solutions

                    Don’t roll the dice and hope to avoid scrutiny of your background check practices.If you need help navigating FCA compliance or an FCA CRD charge, the author of this article or your favorite Seyfarth lawyer are here to help employers develop a winning strategy.

                    Edited By: Catherine Feldman

                    By: Heather Frisch, Christopher Bouquet, and Ashley Stein

                    Seyfarth Synopsis:  As of January 1, 2026, AB 889 bulldozed California’s Prevailing Wage law, which impacts public works employers—including public agencies, the contractors that work for them, and private owners and developers whose projects may be subject to public works requirements. The amended law reframes the calculation of fringe benefits for individuals who work on public works project and mandates annualization of such benefits, demolishes the practice of frontloading these benefits, and requires employers to maintain inspection-ready records of compliance.   

                    This year, AB 889 significantly revised California’s prevailing wage law, codified at Labor Code section 1773.1, to clarify the state’s prevailing wage regulations and streamline enforcement. Accordingly, as of January 1, 2026, California public works employers are required to annualize employees’ fringe benefits and maintain specific documentation demonstrating statutory compliance. These new obligations impact public agencies and their contractors, as well as private owners and developers whose projects may be subject to public works requirements. Continue reading for the blueprint of how to comply with the state’s amended prevailing wage law.

                    The Foundation: What is the Prevailing Wage?

                    “Prevailing wage” consists of the minimum per‑hour wage rate and the fringe benefit rate set by the Department of Industrial Relations (DIR) that must be paid to qualifying workers. Fringe benefits can be credited to employees only if they meet the requirements of section 1773.1, which includes contributions for health, pension, vacation, travel, and apprenticeship benefits.

                    The Workforce Roster: Who is Entitled to the Prevailing Wage?

                    All workers employed on public works projects must be paid the DIR-determined prevailing wage for the areas in which the project is located.

                    The Specs: What is a “Public Work” Under California Law?

                    The Labor Code broadly defines “public works” as including: construction, alteration, demolition, installation, or repair work done under contract and paid in whole or part from public funds. But, this definition can be misleading because the definition of “public funds” encompasses more than monetary payments.

                    “Public funds” include not only direct payments, but also fee waivers, land conveyed below market value, tax credits, and government loans or grants. Thus, even indirect forms of public support can trigger prevailing wage requirements. For example, developer-funded projects may qualify as public works if the project is tied to a public agency requirement (e.g., conditions of approval), and public-private partnerships may also qualify if the public agency retains control or provides financial assistance to the private company.

                    The Renovation: What Prevailing Wage Requirements Did AB 889 Change?

                    California’s amended law retrofitted the state’s prevailing wage practices as follows:

                    1. Mandatory Annualization of Fringe Benefits
                      Prior to January 1, 2026, the annualization calculation applied only to certain benefits. AB 889 mandated that all employer-paid fringe benefits credited toward the prevailing wage be computed on an annualized basis, using any consistent 12-month period, and account for employee’s public and private hours worked for the same employer. This is the same method adopted by the federal Department of Labor in enforcing the Davis-Bacon Act for crediting contributions made to fringe benefit plans.

                      Contractors may still choose whether or not to provide fringe benefits on prevailing wage jobs, and there are a few narrow exceptions to the amount of credit an employer may seek for fringe benefit payments that are included in the annualization requirement. However, the most critical exception has been retroactively revoked. Prior to January 1, 2026, the Director of the DIR was authorized to waive an annualization calculation method if it was deemed not to serve the purpose of the law. AB 889 not only removed this exemption, but immediately revoked any exemptions issued by the Director prior to the bill’s effective date.
                    2. Prohibition of Frontloading Fringe Benefits
                      Some employers previously allocated 100% of fringe benefit contributions to employees’ public project hours to maximize the fringe benefit credit. AB 889 eliminated this practice.
                    3. Recordkeeping and Document Production Requirements
                      Covered employers must maintain records of each worker’s total annual hours across public and private projects, benefit contribution schedules, and employee-specific annualized calculations. This documentation must be produced to the Division of Labor Standards Enforcement (DLSE) upon request. Failure to comply with such a request could lead to denial of the employer credit.

                    The Inspectors: How are the DIR and DLSE Enforcing the Prevailing Wage Law?

                    Recently, the DIR and DLSE have significantly expanded prevailing wage enforcement efforts. These agencies’ audits tend to focus on underpayment, employee misclassification, improper apprentice ratios, and inaccurate certified payroll. Penalties for noncompliant practices can include withholding contract funds and issuing civil wage and penalty assessments.

                    Contractors can also face other collateral consequences, including but not limited to California Contractors State Licensing Board disciplinary actions and/or debarment for willful violations or apprenticeship misuse or ratio violations

                    The Winning Blueprint: Start Building Compliance from the Ground Up!

                    The amended requirements under AB 889 create new job site hazards for public works employers in California relating to cash wage obligations, unbudgeted labor cost overruns, subcontractor non-compliance, and possible DLSE enforcement actions.

                    The following early compliance efforts can help protect employers from prevailing wage potholes:

                    • Conduct internal fringe-benefit audits;
                    • Update payroll systems to perform annualization automatically;
                    • Train payroll and field supervisors on proactive compliance;
                    • Ensure that the compliance clauses in applicable construction contracts and subcontracts are strong, and include flow-down obligations;
                    • Review public funding triggers, including fee waivers, land conveyances, or tax credits that might subject a project to public works requirements; and
                    • Restructure benefits to ensure that only bona fide contributions receive prevailing wage credit. 

                    Workplace Solutions

                    If you have questions about AB 889 compliance, or other construction industry employment issues, contact the authors of this article or your favorite Seyfarth lawyer for more information.

                    Edited by Catherine Feldman

                    Seyfarth Synopsis: As the world turns its eyes to California this weekend for Super Bowl LX, employers doing business in California may not only think of warm weather and great football, but also the Labor Commissioner, aka the Division of Labor Standards Enforcement (DLSE), a division of the Department of Industrial Relations (DIR) tasked with investigating wage and hour practices, which can result in significant citations or settlements.

                    Employers doing business in California are well aware of the DLSE, aka the Labor Commissioner’s Office, which, among other things, investigates wage and hour practices and adjudicates employees’ wage theft claims. With Superbowl LX on our minds, we thought it appropriate to take a time out for a recap of the 2025 DLSE season’s expansive impact on employers.

                    DLSE Investigations and Enforcement

                    In 2025 alone, the Labor Commissioner’s Bureau of Field Enforcement (BOFE) threw a flag on the play and issued more than 3,600 notices to discontinue wage and hour violations, including the following settlements and citations:

                    • $1.2 million settlement against a Newport Beach luxury carwash for wage violations, with payments to the 23 affected workers ranging from $8,500 to $92,800.
                    • $2.3 million citation against Los Angeles-based developers at four construction sites for violations impacting 124 construction workers involving unpaid minimum wages and overtime compensation, wage statement violations, and paid sick leave.  
                    • $680,000 citation against a Los Angeles-based restaurant for failure to pay 48 employees all wages owed, meal and rest break violations, and wage statement violations.

                    The DLSE undertakes enforcement actions in response to worker complaints, and on its own accord strategically targeting certain industries that it assumes will have high rates of wage violations. The genesis of these high value citations can be Labor Commissioner investigations involving payroll and sick leave audits, employee interviews, and site visits. Their goal is to uncover systemic violations—such as unpaid overtime, missed meal and rest breaks, minimum wage or paid sick leave violations, or inaccurate wage statements.

                    If a business receives notice of a DLSE investigation, it is important to take the following steps:

                    • Immediately reach out to outside counsel experienced in these investigations to guide you through the process.
                    • Timely contact the assigned investigator to discuss the scope of the investigation;
                    • Ensure the requested materials have been preserved and are available for production;
                    • Have legal counsel review the relevant records before production to assess potential weaknesses; and
                    • Discuss with counsel a plan to correct any non-compliant practices before the conclusion of the DLSE’s investigation. 

                    The DLSE Calls For An Audible With Municipal Prosecutors

                    The Labor Commissioner has recruited some new players for the 2026 season, from municipal law enforcement authorities. On July 23, 2025, the DLSE announced that it was awarding grants under the Workers’ Rights Enforcement Grant Program, established in 2023, to 16 public prosecutors to pursue civil and criminal cases for wage theft, unlawful business practices, and Labor Code violations. The benefitting cities include Alameda, Fresno, Los Angeles, Oakland, Orange County, San Diego, and San Francisco, which received grant awards ranging from $600,000 to $750,000 per city.

                    With this additional funding, local agencies are expected to expand their investigations into potential Labor Code violations. These local investigations are often conducted in a similar manner to the DLSE’s investigations, and employers should follow similar steps when provided with a notice of investigation.

                    Individual DLSE Claims Can Take The Game Into Overtime

                    Large investigations aren’t the only way the DLSE blocks and tackles potential wage theft violations. The Labor Commissioner also receives thousands of individual wage claims each year. Employers can defend against or resolve these claims at an initial settlement conference and the subsequent formal hearing. These claims can also go into overtime, if either party appeals the DLSE’s decision to the California Superior Court, which will review the matter de novo, or to the Director of the DIR.

                    For a guide on how to avoid fumbling an individual claim, read all about the DLSE and the appeal process here. Like the game of football, this process has remained largely the same over the years, but with one recent notable exception. As the California Supreme Court held in the 2025 Iloff v. Cynthia LaPaille decision, an employee can raise additional claims during the appellate process.

                    Workplace Solutions

                    To limit exposure to any of the Labor Commissioner’s enforcement actions, employers should ensure good wage and hour hygiene so as to comply with California law. Here are some steps employers should consider taking to get game day ready:

                    • Review your wage and hour policies annually to ensure compliance with California’s ever-evolving requirements;
                    • Train your managers and HR team on compliance issues;
                    • Conduct internal audits to identify and correct problems early; and
                    • Respond promptly to employee complaints or questions about wage and hour practices.

                    Seyfarth is here to help employers navigate a path to California compliant practices and assist with defending against state and local agency enforcement efforts should they occur. Check out the CalPeculiarities Blog for other legal developments affecting California employers.

                    Edited By: Kristina Launey

                    By:  Heather E. Horn & Jonathan L. Brophy

                    Seyfarth Synopsis: It’s the most wonderful time of the year—until someone spikes the punch and your company lands on a naughty list. Holiday parties are great for spreading cheer, but they can lead to liability faster than the bartender can pour eggnog at an open bar. Here’s how to keep your celebration festive and compliant with California law.

                    Festive Celebrations for Everyone!

                    All employees should feel included in celebrations during the most festive time of the year. California’s Fair Employment and Housing Act and federal laws such as Title VII of the Civil Rights Act of 1964 prohibit religious discrimination. Avoid skating on thin ice with these laws, and plan a neutral party that does not favor one holiday or religion over another. For example:

                    • Use neutral themes like “Winter Celebration” or “Year-End Appreciation.”
                    • Avoid religious décor and music.
                    • Offer diverse food options to respect various dietary restrictions and preferences.

                    Sleigh the Alcohol Risks

                    Alcohol is the ultimate Grinch when it comes to holiday party liability. Under California law, employers can be held responsible if an intoxicated employee causes harm even after leaving the party. In Purton v. Marriott International, Inc., 218 Cal.App.4th 499 (2013), the Court of Appeal found that an employer could be liable for an employee’s DUI accident after a company party because the employee consumed alcoholic beverages at the party, which the court held was within the scope of employment.

                    Here are a few tips to keep employees’ spirits bright (but not too bright):

                    • Communicate expectations for responsible drinking before the event.
                    • Limit drinks with tickets or cap open bar hours.
                    • Hire licensed bartenders trained to cut off service.
                    • Serve plenty of food and non-alcoholic options.
                    • Put a “last call” time on alcoholic drinks towards the end of the event and switch to nonalcoholic beverages.
                    • Provide rideshare vouchers or shuttles.
                    • Consider hosting the event during the day (or as a lunch).

                    Employment Policies Don’t Take a Holiday

                    Even if your party is off-site and after work hours, FEHA and Title VII’s harassment and discrimination laws still apply. Employers can be liable for misconduct at work-related social events because these events are considered extensions of the workplace.

                    One area where issues can arise is employees’ disregard for a company dress code. Employers may decide to relax dress code policies (if one exists) during holiday parties to allow employees to don festive attire. However, even if a policy is temporarily revised or relaxed, employees still need to dress appropriately and avoid offensive clothing.

                    To ensure your entire workforce can enjoy the holiday season:

                    • Before the event remind employees that anti-harassment policies apply at company parties.
                    • Avoid mistletoe, risqué games, inappropriate photo booth accessories, or any party activities that might create discomfort.
                    • Ensure party entertainment (comedians, musicians, magicians) is workplace appropriate.
                    • Ensure company leaders model appropriate conduct.
                    • Investigate any complaints arising from a company event promptly and thoroughly.

                    Remember to Pay Your Employees all the Gelt They Earned at the Party

                    If attendance is mandatory, non-exempt employees must be paid for their time even if the party is after hours.

                    If the party occurs during work hours, don’t forget California’s meal and rest break rules. A mandatory party during the workday does not count as an off-duty meal period for non-exempt or hourly employees. Employers may owe an extra hour of pay to these employees as a meal period premium.

                    • Make attendance voluntary and clearly state this in the event invitations.
                    • Plan off-duty breaks for non-exempt employees if the party overlaps with work hours.
                    • Remind non-exempt employees not to clock-out for a holiday party that occurs during work hours.

                    Workplace Solutions

                    Make your list and check it twice! With a little planning, employers can create parties that are winter wonderlands rather than litigation snowstorms. Employers should set employee expectations before the festivities begin—including alcohol limits and transportation options, reinforce company policies, be aware of wage and hour implications, and plan an inclusive celebration. The authors or your favorite Seyfarth attorney are here to help you navigate holiday party pitfalls.

                    Edited by: Catherine Feldman

                    Seyfarth Synopsis: The Los Angeles County Board of Supervisors recently passed a Hotel Worker Protections Ordinance for the unincorporated areas of Los Angeles. Beginning April 1, 2026, covered employers will need to comply with new safety mandates, housekeeping workload caps, and overtime limitations. The Ordinance’s training requirements will take effect October 1, 2026. This is the latest effort to regulate the hospitality industry within the greater Los Angeles area. Similar ordinances are already in effect in the cities of Los Angeles, Santa Monica, and West Hollywood.

                    Hotels in the unincorporated areas of Los Angeles County will need to prepare for more than guests checking in when the County’s Hotel Worker Protections Ordinance (HWPO) takes effect on April 1, 2026. The County joins Los Angeles, Santa Monica, and West Hollywood in requiring safety measures for covered hotel employees, workload and overtime limitations, and mandatory training.

                    Who’s Covered?

                    The HWPO broadly applies to all hotels in the unincorporated areas of the County with two limited exceptions:

                    1. County Waiver: Hotel employers can seek a limited one-year waiver from the Los Angeles County Department of Consumer and Business Affairs if compliance with the HWPO would require the hotel, in order to avoid bankruptcy or closure of the hotel, to reduce its workforce by more than 20% or reduce hotel workers’ total hours by more than 30%.
                    2. CBA Waiver: A collective bargaining agreement can waive the HWPO if the waiver is explicitly set forth in clear and unambiguous terms.

                    All workers employed by a covered hotel are entitled to the HWPO’s protections except for managerial, supervisory, or confidential employees.

                    Protections From Violent or Threatening Conduct

                    Covered hotels must provide personal security devices at no cost to employees assigned to work alone in guest rooms or restroom facilities. The devices are intended to be used by employees in the event of conduct involving physical violence or the threat of physical violence that is, or will imminently occur in the employee’s presence. With this purpose in mind, the devices must include a panic button that can summon designated hotel security officers, managers, or other supervisory hotel staff who must be available at all times to provide immediate assistance when a device is activated.

                    If an employee alerts the hotel of a guest’s violent or threatening conduct, the hotel must:

                    1. Allow the employee paid time off to report the conduct and consult with a counselor or advisor of the employee’s choosing.
                    2. Upon request, provide a reasonable accommodation to the employee including a modified work schedule, reassignment to a vacant position, or other reasonable adjustment.

                    Covered hotels must also (1) post notices in guest rooms and restroom facilities that the hotel provides personal security devices to its employees; and (2) annually train employees on how to use and respond to the devices.

                    Housekeeping Workload Limitations

                    Like its neighboring jurisdictions, Los Angeles County caps the amount of space room attendants may clean each day without triggering double-time:

                    1. Hotels with at least 40 guest rooms: a 3,500 sq. ft. cap per 8-hour workday.
                    2. Hotels with less than 40 guest rooms: a 4,500 sq. ft. cap per 8-hour workday

                    These square footage calculations must be prorated for employees who work fewer than eight-hour shifts and for overtime worked. Additionally, the calculations can be impacted by the type of room a room attendant is assigned to clean, including if it has a cot or rollaway bed or is being cleaned due to the guest checking out.

                    Overtime Limitations

                    Under the HWPO, covered employees cannot work more than 10 hours in a single workday without the employee’s written consent. Employers must give employees at least seven days’ notice before seeking the consent that they can refuse to work greater than 10-hour workdays without fear of retaliation.

                    Training Requirements Beginning October 1, 2026

                    Beginning October 1, 2026, covered hotel employees must complete at least six hours of live, interactive training from a County-certified training organization addressing:

                    1. Rights and obligations under the HWPO;
                    2. Responding to suspected trafficking, domestic violence, or threatening conduct;
                    3. Cleaning and disease-prevention best practices;
                    4. Identifying/Avoiding pest infestations; and
                    5. Recognizing and responding to signs of criminal activity.

                    After completing the training program, covered employees must take an exam administered by the training organization to obtain a Public Housekeeping Certificate. Employees will be unable to work as a room attendant for more than 120 days without this certification.

                    Notice and Record Keeping Obligations

                    Beginning April 1, 2026, covered employers must provide notice to all employees and new hires of the HWPO’s requirements. The HWPO also requires covered employers to maintain records for three years of: (1) incident reports for personal safety device activations; and (2) each room attendant’s name, rate of pay, pay received, rooms cleaned or total square footage cleaned each workday, overtime hours worked for each workday, and any written consents obtained.

                    Additionally, hotel employers must keep records demonstrating compliance with the training requirements. However, the three-year duration does not apply to these records.

                    Available Remedies

                    The HWPO authorizes the County and private individuals to bring civil actions for noncompliance. Available remedies include damages, injunctive relief, and attorneys’ fees and costs for a prevailing plaintiff.

                    Workplace Solutions

                    Just like planning for a vacation at your favorite hotel, employers subject to the HWPO should make a compliance plan early. Covered employers may want to consider reviewing personal security device options, updating workplace violence and reporting policies, revising recordkeeping practices, and auditing square-footage and workload capacities of room attendants, among other things. The authors or your favorite Seyfarth attorney are here to help you prepare and advise on compliance with this Ordinance.

                    By: Kristina Launey and Martha Gates

                    Seyfarth Synopsis: As swashbuckling trick or treaters are donning their swords, and fearing getting trapped in a Halloween haunted house or corn maze, employers operating in California are navigating the mental maze of deciphering a path to compliance with AB 692. Read on for our summary of the tricks and treats (exceptions) to this new “stay-or-pay” prohibition law, which goes into effect January 1, 2026.

                    On Halloween, it’s not ghosts or witches that are concerning employers operating in California, but rather California’s AB 692, which goes into effect January 1, 2026. This is one of many legislative efforts nationwide purporting to protect employees from employers “trapping” (TRAP an acronym for Training Repayment Assistance Programs) them into continued employment by paying for training programs in exchange for the employee remaining employed for a certain period of time. Like the trick or treaters who can convince their parents to visit a few more houses on a Halloween night graced with our California weather, the Golden State’s new law goes far beyond other states’ efforts. Subject to narrow carveouts for certain “stay-or-pay” agreements, it will void contracts that require employees, upon separation of employment, to pay the employer for benefits the employee received during employment, such as training programs, immigration costs, signing or retention bonuses, relocation costs, and more.

                    Employers that do business in California are rightly scrambling to review their employment agreements and benefit programs to ensure compliance with the new law by January 1, 2026. Keep reading for our summary of how employers can avoid being spooked by these upcoming restrictions.

                    Trick or Treat! Which Contracts Are Covered?

                    Within the scope of the law: Contracts that require employees, upon separation of employment, to pay the employer for any “debt,” or benefits afforded to the employee during employment.

                    Outside the scope of the new law: Two key types of contracts for benefits that many employers currently provide, if specific requirements are met:

                    1. Tuition assistance payments for a transferable credential, and
                    2. Any discretionary or unearned monetary payment, including bonuses, that is provided at outset of employment and is not tied to specific job performance.

                    The law also carves out contracts for loan repayment assistance/forgiveness program by a government agency, State Department of Apprenticeship Standards apprenticeship program enrollment, and residential property leasing or purchase assistance, without specific conditions.

                    Don’t Get A Fright When Exploring The Exceptions

                    Like a haunted house, the contracts excluded from this law are filled with spooky and specific conditions to gain access.

                    Employers only get the treat of the tuition exception if the agreement satisfies strict conditions:

                    1. The  repayment agreement must be a standalone contract, separate from the employment agreement.
                    2. It must provide written advance notice of the repayment amount, and that amount cannot exceed the employer’s actual cost for the credential.
                    3. Obtaining the transferable credit cannot be a condition of employment, and while the law does not specify a retention period for tuition assistance, any repayment obligation must include a prorated schedule for early termination.
                    4. The agreement cannot require repayment if the employer terminates the employee, except in cases of misconduct.

                    Similarly, the discretionary/unearned monetary payment or bonuses exception only applies if those payments are made at the outset of employment, not tied to job performance, and are:

                    1. In a separate agreement from the primary employment contract;
                    2. Advise the employee of the right, to consult an attorney before signing, and give the employee five days to do so;
                    3. Prorate (presumably immediately) any repayment obligation for early separation based on the remaining retention period (which is expressly limited to a maximum of two years) and not accrue interest;
                    4. Provide the employee the option to defer receipt of the payment until the end of the retention period without repayment obligation (this will require some mechanism for them to select deferral and could raise issues under federal employee benefit laws); and
                    5. Require repayment only if the employee leaves voluntarily or is terminated for misconduct.

                    The discretionary/unearned monetary payment or bonuses category could include relocation payments, signing bonuses, retention bonuses, stock grants, and more.

                    Offering relocation benefits after AB 692 could be a trick in and of itself. Relocation assistance, often administered through third-party vendors with capped budgets, is designed to cover upfront costs. Deferring such assistance until after a retention period undermines its purpose entirely, leaving employees to front expenses that the benefit was meant to alleviate. Similarly, retention bonuses, which could also include relocation benefits offered to existing employees, are seen as critical tools for maintaining workforce stability during mergers, layoffs, or transitions, are not even included in the exception. Because AB 692 only permits repayment agreements tied to payments made at the start of employment, it excludes retention strategies deployed mid-employment, leaving employers with fewer lawful options to retain key talent during high-risk periods, making traditional retention tools far less viable.

                    Additionally, many employers use promissory notes with interest as “repayment agreements” when offering bonuses or other benefits to secure repayment if employees leave before the retention periods. AB 692 outlaws this approach.

                    Non-Compliance Is No Treat

                    Like the candy collected after a long night of trick or treating, the damages and penalties for non-compliance with AB 692 can really pile up. The law provides employees with a private right of action and allows recovery of $5,000 per employee or actual damages, whichever is greater, as well as injunctive relief, and recovery of attorneys’ fees and costs.

                    How To Survive The “Stay-or-Pay” Maze

                    If this makes your head spin, you’re not alone. Here are your action items toward compliance:

                    1. Survey your employee retention and incentive benefits programs. This includes reviewing offer letters, and identifying any benefits that are offered in exchange for an employee’s agreement to repay the benefit if the employee leaves within a specified period.
                    2. Review your tuition assistance programs. For tuition payments, is the payment for a transferable credential?  If so, make sure you have a separate contract that fits within the requirements of the exception, outlined above.
                    3. If you promise or provide signing, retention, or bonus payments at the outset of employment, make sure you comply with the exception requirements, outlined above.  If you cannot comply with the exception requirements, or if the payment is not promised or provided at the start of employment, consider other options.

                      For example, AB 692 is not triggered if you offer the bonus but do not pay it until the end of a retention period. Employers can also consider making pro-rata payments phased to occur at specified times during employment if the employee remains employed, rather than requiring repayment if the employee leaves employment. The Assembly Judiciary committee condoned this practice in its April 18, 2025 analysis.
                    4. Update all existing contracts to comply with the new requirements. Even though contracts entered into pre-January 1, 2026 will not yet bear these requirements, you do not want your managers, recruiters, or HR team accidentally reusing (or extending) non-compliant contracts into 2026.

                    It’s Spooky Out There

                    AB 692 builds upon existing state and federal prohibitions on employee non-complete agreements, and addresses what is perceived as an employer “work-around” to California’s non-compete prohibition impacting employees’ career mobility.

                    While AB 692 is by far the most comprehensive ban on “stay-or-pay” agreements, other states have taken steps to impose similar limits. For example, Wyoming law limits certain incentive agreements. Unlike California, Wyoming provides a timeframe within which the employee must remain employed before the repayment prohibition applies, and even after that, it is prorated. Indiana, Ohio, Colorado have repayment prohibitions specific to training in the healthcare industry (one of the industries and practices at which AB 692 is targeted). Other states, including New York, have seen similar legislative activity. 

                    This anti-TRAP/“stay-or-pay” trend was bolstered by a now-rescinded 2024 NLRB Memorandum that opined stay-or-pay provisions generally violate Sections 7 and 8 of the NLRA in many of the same ways as non-compete agreements. Unlike other states’ legislation, AB 692 appears to exceed the scope of this Memo, which did not exclude retention bonuses offered after the start of employment.

                    Workplace Solutions

                    California’s AB 692 marks a significant shift in the legal landscape surrounding employee retention and incentive agreements, effectively dismantling many traditional “stay-or-pay” arrangements. While the law aims to promote employee mobility and prevent coercive repayment obligations, it also introduces substantial challenges for employers, particularly those relying on these benefits to attract and retain talent. In complying with the restrictions under this law, employers should rethink how they structure benefits and address any resulting culture shifts. Those who adapt thoughtfully will not only avoid costly penalties but may also have the competitive edge. The authors or your favorite Seyfarth lawyer are here to advise on compliance with these new requirements.

                    Edited by: Catherine Feldman