Steps Employers Can Take Now to Stay Compliant in 2026

Employment law compliance is a moving goal post, especially in California. With new 2026 laws to consider, employers that wait to react may find themselves scrambling to update policies, retrain managers, and correct compliance gaps under tight deadlines.

Is your business ready for the new 2026 laws to take effect? Consider these practical steps you can take now to stay compliant and protect yourself.

Monitor Legislative and Regulatory Changes

There are many new 2026 laws that can impact your business. For example, SB 590 amends who is eligible for paid family leave benefits to include a “designated person,” meaning that eligible employees can take time off work to provide caregiving services to seriously ill family members.

California continues to lead the nation in employment regulation, with several new 2026 laws set to take effect this year. Other laws focus on areas like these:

• Division of Labor Standards Enforcement (DLSE) enforcement of wage judgments
• Vehicle business expenses for employees and contractors
• Workplace Know Your Rights Act
• Personnel record requirements
• Worker Adjustment and Retraining Notification (WARN) Act updates
• Recall and reinstatement rights
• A ban on stay-or-pay contracts

Make sure you are familiar with these upcoming changes. If you’re not sure which new 2026 laws apply to your business, speaking to a lawyer for employers can be helpful.

Conduct a Comprehensive Audit of Your Policies

Once you’ve made a list of the legal changes that are coming, you and your HR team will need to take a closer look at your policies to identify areas where you may be falling short. Handbooks drafted even a few years ago may already be outdated, due largely to how quickly California makes changes to its work-related laws.

Key policies to review include:

• Wage and hour compliance
• Anti-harassment and discrimination
• Leave of absence policies
• Accommodation and interactive process procedures

An employer-side counsel can help with this review process to identify gaps and recommended updates that align with anticipated legal trends. The review process can be extensive and tedious, so start soon.

If the deadline to a specific legislative change is looming, begin your audit with any policies relevant to that law. Then, circle back to other policies and procedures.

Review Pay Practices and Classification Decisions

Pay equity and worker classification remain high-priority enforcement areas. Therefore, your HR team should evaluate the following:

• Exempt vs. non-exempt classifications
• Independent contractor relationships
• Overtime calculations and timekeeping practices

Wage and hour violations continue to result in significant penalties for employers each year. Addressing these issues now can reduce your risk of audits or class-action exposure when new 2026 laws take effect.

In recent years, California lawmakers have placed a notable emphasis on classification issues. You and your HR team will need to accurately determine whether a person should be classified as a contractor or an employee.

Strengthen Training for Managers and Supervisors

While compliance is a top-down issue, the efficacy of your overall compliance efforts hinges heavily on frontline leadership. Managers are often responsible for implementing the policies you create, especially those related to scheduling, accommodations, and leave.

When updating your training programs, make sure that managers understand these elements:

• Risks of retaliation
• Documentation expectations
• How complaints should be escalated
• Legal boundaries regarding performance management

With new 2026 laws on the horizon, now is the time to invest in training and education for your mid-level management team. They need the skills, knowledge, and support to comply with these regulations and effectively implement them in their day-to-day lives.

Evaluate Complaint and Investigation Procedures

Regulators increasingly scrutinize how employers respond to internal complaints. You’ll want to make sure your business has all of the following to address this important area:

• A clear procedure for filing complaints
• Designated reporting channels
• A timely investigation process
• Neutral investigators
• Consistent disciplinary protocols

If not, it’s time to revamp how you respond to complaints and launch investigations. Make sure that employees know how to file a complaint and how to circumvent their direct supervisor when necessary. Otherwise, minor complaints that could have been resolved in-house may trigger harsh scrutiny from regulatory officials.

Prepare for Increased Enforcement and Litigation

Typically, state officials crack down on businesses right after new laws take effect. The goal is to show that the state is serious about enforcing the recently enacted legislation and push companies to comply.

In 2026, your business should be prepared for:

• More agency audits
• Expanded employee rights enforcement activities
• Increased class and representative actions

Thorough documentation and sound policies are two of your greatest allies in the midst of these changes. Partnering with an experienced employer-side counsel helps you anticipate how these enforcement trends may impact your business, as well as how you can be more resilient when regulators come knocking.

Medium- and large-sized businesses probably won’t be able to avoid audits altogether. If your business falls into one of these categories, the goal is to come out the other side unscathed.

Build Compliance With New 2026 Laws Into Business Planning

Compliance cannot be reactive. HR teams should be involved in strategic discussions about growth, restructuring, remote work, and compensation models. Early legal input allows your business to adapt smoothly as new 2026 laws reshape its obligations and duties to employees.

A forward-looking approach also reduces the risk of disruption while insulating your leadership team. Additionally, you can strengthen long-term workforce stability by providing clear guidelines for employees and management.

Work With a Lawyer Who Focuses on Employers

California employment law is complex and rapidly changing. Businesses that regularly consult counsel are better positioned to implement compliant policies and defend against claims of wrongdoing.

A legal team that focuses on employment litigation for employers is particularly useful as you prepare. Find a partner who has represented employers in California’s litigious environment so that you know they can deliver the necessary experience and insights.

Even if you think that your business is well-positioned to face these changes, proactively partnering with an employment law attorney is a wise move that can allow you to uncover any hidden gaps in your compliance posture. Addressing these deficiencies now can help you avoid finding yourself on the receiving end of litigation that could damage your reputation and lead to thousands in fines later.

Partner With Pearlman, Brown & Wax to Prepare for 2026

Staying compliant with California’s evolving employment laws requires foresight, planning, and experienced legal guidance. The attorneys at Pearlman, Brown & Wax focus exclusively on representing employers and understand how new legislation, enforcement trends, and litigation risks impact businesses of all sizes. Whether you need a policy audit, classification review, or strategic advice as 2026 laws approach, our team can help you prepare with confidence. Contact Pearlman, Brown & Wax today to schedule a consultation and take a proactive step toward protecting your business.