Fractional COO

Artificial intelligence is changing how businesses operate, but it is also creating new legal issues. California lawmakers are examining how AI and automation may affect employees, layoffs, privacy, and workplace rights. Governor Gavin Newsom has directed state agencies to study how existing employment laws, including Cal-WARN, may need to change as businesses increasingly use AI and automated technology. Proposed legislation could also create additional requirements for companies when technology contributes to large-scale layoffs.

California employers considering layoffs, business closures, mergers, or operational restructuring must carefully evaluate their obligations under the California Worker Adjustment and Retraining Notification (Cal-WARN) Act. Recent updates and increased enforcement attention have made workforce reductions a higher-risk area for employers. Even when layoffs are necessary for legitimate business reasons, failing to follow proper notice requirements can expose companies to significant financial liability and employment-related disputes.

California businesses continue to navigate a changing legal landscape as new laws and regulatory developments take effect in July 2026. Some of the most significant changes are expanded corporate reporting requirements, evolving consumer protection regulations, and increased scrutiny of business practices involving privacy and emerging technologies.

California employers are adjusting to a new labor law aimed at increasing employee awareness of workplace rights. Under Senate Bill 294, which is also known as the Workplace Know Your Rights Act, employers must now provide workers with an annual notice explaining key labor protections. It must include information regarding several workplace rights, including protections relating to immigration enforcement, labor organizing, workers’ compensation, constitutional rights when interacting with law enforcement in the workplace, and protections against unfair employment practices. Officials are saying that the measure is designed to improve transparency and ensure employees understand the legal protections available to them.

California employers should prepare for another round of local minimum wage increases taking effect on July 1, 2026. While the statewide minimum wage increased to $16.90 per hour on January 1, many cities and counties continue to require higher local minimum wages based on inflation and local ordinances. Employers must pay the highest applicable minimum wage, whether required by state law, a local ordinance, or an industry-specific wage requirement.