News

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 evidence of intentional discrimination. At the same time, the agency identified several additional priority areas, including religious accommodation, anti-American national origin discrimination, retaliation, systemic harassment, and protections for vulnerable workers. The EEOC further signaled its intent to pursue cases that may clarify unsettled areas of employment law, particularly those involving DEI programs, religious accommodations, workplace policies related to sex-based classifications, and the Pregnant Workers Fairness Act.

Employers should take this opportunity to review employment policies, hiring and promotion practices, accommodation procedures, compensation decisions, and workplace training programs. Maintaining clear documentation, applying policies consistently, and ensuring employment decisions are based on legitimate, lawful criteria will be critical in minimizing risk as the EEOC implements its new enforcement priorities.

If you would like more information on this topic, please contact us at info@mnklawyers.com.

This material is provided for informational purposes only. It is not intended to constitute legal advice, nor does it create a client-lawyer relationship between MNK Law and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material.

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).

The U.S. Department of Labor’s Wage and Hour Division recently released a proposed joint employer rule that could significantly impact the PEO industry. The proposal outlines a four-factor test used to determine when two businesses may be considered joint employers under the FLSA, FMLA, and MSPA. No single factor is determinative — instead, the analysis looks at whether a business

California Pay Transparency Law: Employer Requirements Under SB 1162

California has implemented pay transparency requirements through California Senate Bill 1162, which amended Labor Code § 432.3. These provisions impose specific obligations on employers regarding pay scale disclosures and recordkeeping.

Pay Scale Disclosure Requirements

Under California Senate Bill 1162, employers with 15 or more employees must include the pay scale for a position in any job posting. This requirement also applies to job postings made through third parties on behalf of the employer.

In addition:

Employers must provide the pay scale for a position to a current employee upon reasonable request
Employers are required to provide pay scale information to third-party recruiters engaged to post jobs

California’s Assembly Bill 692 (AB 692), effective January 1, 2026, significantly limits the use of employee repayment and “stay-or-pay” provisions. Employers should review their agreements now to ensure compliance with the new requirements.

What the Law Changes
AB 692 generally prohibits employers from requiring employees to agree to provisions that impose financial consequences when employment ends. This includes terms that:
• Require repayment of a debt upon separation
• Allow or accelerate collection of an alleged debt
• Impose fees, penalties, or costs tied to leaving employment

As of March 31, 2026, Occupational Safety and Health Administration (OSHA) announced it will no longer cite employers for failing to record COVID‑19 cases or report COVID‑19 hospitalizations or fatalities under 29 CFR 1904. This aligns OSHA’s COVID-19 policy with cases involving the common cold and flu, both of which are exempt from recordkeeping obligations.