California Governor Gavin Newsom’s Executive Order N-6-26, signed on May 21, 2026, directs California agencies to study the impact of artificial intelligence on the workforce and recommend potential updates to labor and employment laws. Although the order does not create any immediate compliance obligations for employers, it signals the state’s growing focus on AI-related job displacement and could serve as the foundation for future legislation or regulations. One key area of review is the California WARN Act, with state officials tasked with evaluating whether layoff notification requirements should be expanded to address workforce reductions caused by AI and automation.

California employers and businesses relying on independent contractors continue to face sustained enforcement and litigation risk under the state’s ABC test framework established by AB5 and subsequent case law. In 2026, enforcement actions by state agencies and private plaintiffs have increasingly focused on industries such as logistics, healthcare staffing, construction, and professional services, where worker classification issues remain highly contested. Courts continue to evaluate whether businesses have properly classified workers as independent contractors or whether they should be deemed employees entitled to wage-and-hour protections.

On June 4, 2026, the Equal Employment Opportunity Commission (EEOC) released its new National Enforcement Plan, outlining the agency’s priorities for workplace discrimination investigations and litigation. The Plan signals a notable shift in enforcement strategy, with increased scrutiny of employment practices that may involve race- or sex-based decision-making, including certain diversity, equity, and inclusion (DEI) initiatives. The EEOC indicated that hiring, promotion, internship, fellowship, and other employment programs that consider protected characteristics may receive heightened attention. The Plan also reflects a significant departure from prior enforcement efforts by largely moving away from pursuing disparate impact claims and instead focusing on

California employers continue to face significant wage-and-hour litigation risks as employee lawsuits remain one of the most active areas of workplace litigation across the state. Recent reports indicate that wage-and-hour claims have become the most frequently filed type of complex employment litigation, with disputes involving unpaid wages, meal and rest breaks, overtime compensation, and wage statement violations driving substantial settlements and judgments. Employers are increasingly finding that even minor compliance errors can result in costly class actions and representative claims under California's Private Attorneys General Act (PAGA).