New California Employment Laws Taking Effect in 2027

New California employment laws taking effect in 2027 will change how employers pay, monitor, discipline, and terminate workers across the state. On September 30, 2026, Governor Gavin Newsom signed the final bill of his last legislative session as governor, closing out a year in which the Legislature sent him more than a thousand bills. Several of the bills he signed directly affect California workplaces, and unless otherwise noted, they take effect on January 1, 2027.

This year’s package focuses heavily on artificial intelligence, workplace surveillance, discrimination protections, leave rights, and steeper penalties for employers who fall behind on compliance. Whether you are an employee in Los Angeles who wants to understand your rights or a business owner updating your employee handbook, this guide explains what is changing and what you should do before the new year.

California Minimum Wage Rises to $17.40 per Hour in 2027

The California minimum wage for 2027 increases to $17.40 per hour for all employers, regardless of size. Many cities and counties, including the City of Los Angeles and unincorporated Los Angeles County, set their own higher local minimum wages, and many of those local rates also increase on January 1, 2027. When a local rate is higher than the state rate, employers must pay the higher amount.

The minimum wage increase also raises the salary floor for exempt employees. Under California law, employees classified as exempt under the executive, administrative, or professional exemptions must earn at least twice the state minimum wage. Beginning January 1, 2027, that means a minimum annual salary of $72,384, or $6,032 per month, for a full-time exempt employee. Salaried workers paid less than this amount are generally entitled to overtime, meal and rest breaks, and the other protections that apply to non-exempt employees, regardless of their job title.

Certain professions have their own salary thresholds. According to the Department of Industrial Relations figures reported by CalChamber, the minimum hourly rate for exempt computer software employees rises to $61.03, with a minimum annual salary of $127,108.34. The minimum hourly rate for exempt licensed physicians and surgeons rises to $111.14.

Artificial Intelligence and Workplace Surveillance: New Limits for 2027

The most significant theme of the 2027 employment laws is the regulation of artificial intelligence in the workplace. As more California employers use software to screen applicants, track productivity, and flag employees for discipline, the Legislature has stepped in to make sure a human being remains responsible for decisions that affect a worker’s livelihood.

SB 947: No Firing by Algorithm Alone

Senate Bill 947 prohibits employers from relying solely on an automated decision system, often called an ADS, to discipline or terminate an employee. If an employer uses the output of an AI tool when deciding to discipline or fire someone, a human must independently corroborate that decision. The affected employee must receive a separate written notice when they are told about the decision, and they may request a description of their own data that the system used.

For employees, this is an important new right. If you were disciplined or fired and suspect that software played a role, you can ask what information about you the system relied on. That information may become valuable evidence in a wrongful termination, discrimination, or retaliation claim. The new rules also prohibit employers from using an ADS in ways that prevent compliance with labor, health and safety, employment, or civil rights laws.

Limits on AI Surveillance, Neural Data, and Emotion Recognition

The new laws also restrict how employers can monitor workers. Employers may not use AI-powered workplace surveillance tools to collect employees’ neural data or to recognize their emotional state. In practical terms, technology that claims to read a worker’s mood, stress level, or brain activity is off limits as a workplace monitoring tool.

AB 1331: Privacy Protections in Workplace Bathrooms

Assembly Bill 1331 generally prohibits employers from using workplace surveillance tools to monitor employees in bathrooms. It also allows employees to leave carried surveillance devices, such as tracking badges or wearables, behind when they enter a restroom. Employers that issue location-tracking badges, smartwatches, or other wearable devices should review those programs now.

SB 951: Layoff Notices When AI Replaces Workers

Senate Bill 951 adds new disclosure requirements to the California WARN Act. When a mass layoff, relocation, or termination results wholly or substantially from artificial intelligence or other automation technology replacing employee positions, the employer must make additional disclosures in its WARN notice. The Employment Development Department will publish summaries of these notices, giving the public a clearer view of how automation is affecting California jobs.

Discrimination and Harassment Law Changes for 2027

AB 2563: A Broader, Consistent Definition of Sex Discrimination

Assembly Bill 2563 establishes a broad and consistent interpretation of sex discrimination across California statutes, including the Fair Employment and Housing Act (FEHA) and the Labor Code. Under the law, sex discrimination covers discrimination based on conformity to sex stereotypes, gender identity and expression, access to or use of gender-affirming care, sexual orientation, intersex traits, pregnancy-related conditions, and reproductive health care decisions. The law also makes clear that harassment is a form of discrimination.

The Legislature describes AB 2563 as declarative of existing law, meaning it clarifies protections that already apply rather than creating entirely new ones. Even so, employers should confirm that their anti-discrimination and anti-harassment policies reflect the full list of protected characteristics.

AB 1803: Anti-Hate-Speech Training Begins in 2028

Assembly Bill 1803 requires covered employers to add anti-hate-speech instruction to their existing sexual harassment prevention training. This requirement starts on January 1, 2028, which gives employers a full year to prepare. The training must offer practical guidance on recognizing, reporting, and responding to workplace speech that vilifies, humiliates, or incites hatred based on protected characteristics.

AB 2039: Whistleblower Protection for Reporting Attorney Misconduct

Assembly Bill 2039 prohibits employers, law firms, and attorneys from retaliating against people who make good-faith reports of suspected attorney misconduct. Its protection reaches beyond current employees to applicants, former employees, contractors, vendors, clients, and others who have a professional relationship with an attorney or law firm. This law adds to California’s existing whistleblower protections, including Labor Code section 1102.5.

Arbitration Agreements and Workplace Safety

AB 2155: New Limits on Employment Arbitration

Many California employees sign arbitration agreements as a condition of being hired. Assembly Bill 2155 makes those agreements unenforceable under the California Arbitration Act to the extent they are unenforceable under the Federal Arbitration Act. The law expressly incorporates the federal exclusions for transportation workers and for claims covered by the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act.

In practice, this means employers can no longer fall back on California arbitration law to force these types of claims into arbitration when federal law would not allow it. For truck drivers, delivery workers, and other transportation employees, and for employees with sexual harassment or sexual assault claims, AB 2155 strengthens the right to bring a case in court.

AB 2321: Criminal Penalties for Interfering with Cal/OSHA

Assembly Bill 2321 makes willful interference with certain Cal/OSHA investigative duties a misdemeanor. Violations can be punished by up to six months in jail, a fine of up to $5,000, or both. Employers should make sure managers understand that obstructing a workplace safety inspection now carries criminal exposure.

Expanded Bereavement Leave Under SB 1149

Senate Bill 1149 expands California’s bereavement leave law to cover the death of a “designated person.” A designated person can be someone related to the employee by blood or someone whose relationship with the employee is the equivalent of a family relationship. The employee may identify that person when requesting leave, and the employer may limit employees to one designated person in any 12-month period.

This change recognizes that many workers have close family-like relationships that fall outside the traditional definition of family. Employers should update their bereavement leave policies and train supervisors so that requests involving a designated person are handled correctly.

Pay Data Penalties and “Stay-or-Pay” Agreements

SB 1237: Penalties for Missing Pay Data Reports Increase Fivefold

California requires covered employers to submit annual pay data reports to the Civil Rights Department, broken down by demographic categories. Senate Bill 1237 raises the maximum court-imposed penalty for a subsequent failure to file a required report from $200 to $1,000 per employee. For an employer with 200 employees, a repeat failure could now expose the business to as much as $200,000 in penalties. Employers that have missed a filing in the past should treat this deadline as a top priority.

AB 1697: A One-Year Delay on Stay-or-Pay Restrictions

Last year, Assembly Bill 692 restricted employment contracts that require workers to repay training costs, bonuses, or other amounts if they leave their job, commonly called “stay-or-pay” provisions. Those restrictions were originally set to take effect January 1, 2026. Assembly Bill 1697, which took effect immediately when it was signed on September 30, 2026, postpones the restrictions so that they apply to most contracts entered into on or after January 1, 2027.

If you signed an agreement requiring you to repay your employer if you quit, the date you signed it matters. Employers should use this additional time to review their bonus, tuition, and training repayment agreements before the restrictions apply to new contracts.

How to Prepare for the 2027 California Employment Laws

What Employees Should Know

Start by checking your paycheck in January. If you earn the minimum wage, your hourly rate should be at least $17.40, or higher if your city or county has a higher local minimum wage. If you are paid a salary and classified as exempt, confirm that you earn at least $72,384 per year. If you earn less, you may be owed overtime and meal and rest break premiums.

If you are disciplined or fired in 2027 and believe an AI system or tracking software played a role, ask your employer for the written notice and a description of the data the system used about you. Keep copies of performance reviews, emails, and any monitoring reports. These records can be critical evidence if you later pursue a claim for wrongful termination, discrimination, or retaliation.

What Employers Should Do Now

California employers should use the remaining weeks of 2026 to update payroll for the new minimum wage and exempt salary thresholds, and to confirm any applicable local minimum wage rates. Employers that use AI tools for hiring, performance management, discipline, or termination should map where those tools are used, build in human review, and prepare the written notices SB 947 requires.

Employers should also review wearable devices, tracking badges, and monitoring software against the new surveillance limits; update anti-discrimination, harassment, and bereavement leave policies in the employee handbook; confirm that pay data reports are filed on time; and review arbitration and repayment agreements before using them with new hires. A compliant employee handbook and properly drafted agreements are among the most effective ways to avoid costly wage-and-hour and PAGA claims.

Frequently Asked Questions About California Employment Laws in 2027

What is the California minimum wage in 2027?

The statewide California minimum wage is $17.40 per hour beginning January 1, 2027. Many cities and counties, including Los Angeles, have higher local minimum wages, and employers must pay whichever rate is highest.

What is the minimum salary for exempt employees in California in 2027?

A full-time exempt employee under the executive, administrative, or professional exemption must earn at least $72,384 per year, or $6,032 per month, in 2027. This equals twice the state minimum wage for full-time work.

Can my employer fire me based on an AI decision in California?

Under SB 947, an employer cannot rely solely on an automated decision system to discipline or terminate an employee. A human must corroborate the decision, and the employee must receive a separate written notice and may request a description of the data the system used.

When do the new California employment laws take effect?

Most new California employment laws take effect January 1, 2027. AB 1697 took effect immediately when it was signed on September 30, 2026, and the anti-hate-speech training requirement in AB 1803 begins January 1, 2028.

Do I need an employment lawyer if my employer is not following the new laws?

If your employer fails to pay the new minimum wage, misclassifies you as exempt, uses AI to fire you without human review, or retaliates against you for asserting your rights, an experienced California employment lawyer can evaluate your claim and explain your options.

Speak with a Los Angeles Employment Lawyer About the 2027 Changes

The new California employment laws for 2027 give workers stronger protections against algorithm-driven firings, invasive surveillance, and discrimination, while raising the cost of noncompliance for employers. Understanding these changes now can help employees protect their rights and help businesses avoid expensive mistakes.

Attorney Thomas M. Lee has represented employees and employers in California employment and labor law matters since 2000, including claims for unpaid wages, overtime, meal and rest break violations, wrongful termination, discrimination, and retaliation. He also helps employers prepare compliant employee handbooks, arbitration agreements, and other required workplace documents.

Legal Disclaimer and Contact Information

The information provided in this article is for educational and informational purposes only and does not constitute formal legal advice. Reading this material does not create an attorney-client relationship. Every case involves unique facts, and individuals seeking guidance on their case should consult an experienced attorney for legal advice. For a free phone consultation with Attorney Thomas Lee, please call (213) 251-5533