10 California Employment Law Changes Employers Should Prepare for in 2027

Quick look: California employers have several employment law changes to prepare for, most of which take effect January 1, 2027. The new requirements cover AI-driven layoffs, workplace surveillance, employee leave, workplace safety, and employment agreements. With some restrictions already in effect and others scheduled for next year, employers should review their policies, technology, and procedures now to identify where updates may be needed.

California continues to expand its employment regulations, introducing new responsibilities for employers across several areas of the workplace. Some changes will affect everyday human resource (HR) practices, while others may require coordination with IT teams, legal counsel, or outside technology vendors.

Here are 10 California employment law changes employers should understand, along with steps to help prepare for the requirements ahead.

AI, Automation, and Workplace Surveillance

1. AI-driven layoffs require additional WARN disclosures

Effective date: January 1, 2027 | SB 951

California is adding new disclosure requirements to notices issued under the state’s Worker Adjustment and Retraining Notification (WARN) law when artificial intelligence (AI) or other automated technology causes a mass layoff, relocation, or termination in whole or in substantial part.

Employers will need to include a statement about technology-related displacement, the number and types of affected positions and their locations, the job functions being automated, and the type of technology responsible.

The existing 60-day notice period and coverage thresholds remain unchanged. However, the law does not define what constitutes a “substantial part,” which may create uncertainty when determining whether the additional disclosures are required.

How employers can prepare:

• Document the business reasons behind planned workforce reductions and identify where AI or automated technology contributes to the decision.
• Map the roles and job functions affected by technology adoption.
• Review WARN notice templates and update them to include the required information.

Employers planning a reduction in force should consult legal counsel to determine whether the new disclosure requirements apply to their circumstances.

2. AI tools cannot be used to analyze employee emotions or neural data

Effective date: January 1, 2027 | AB 1883

California will prohibit employers from using AI workplace surveillance tools to detect or predict employees’ emotional states or collect neural data, subject to limited exceptions.

The restriction could affect features embedded in contact-center software, collaboration platforms, video meeting technology, and HR analytics tools. For example, certain products may use employee sentiment, mood, stress, focus, or fatigue indicators as part of their analysis.

Because the law leaves some terms undefined, employers may need to examine how their existing technology works to determine whether particular features fall within its scope.

How employers can prepare:

• Ask technology vendors whether their products include features that evaluate employees’ emotional states or collect neural data.
• Review the purpose and functionality of any relevant features with vendors and legal counsel.
• Update workplace technology policies and related HR procedures as needed.

Employers should not assume that a tool is exempt simply because it is marketed as a productivity or analytics solution. Understanding what the technology actually measures is an important first step.

3. Workplace surveillance faces new restrictions

Effective date: January 1, 2027 | AB 1331

The state is introducing additional limits on workplace monitoring in bathrooms. Employers generally may not monitor employees in these spaces, and employees may turn off or set aside employer-provided or employer-required devices before entering a bathroom, subject to limited exceptions.

The law also establishes penalties of up to $500 per violation.

Employers using electronic tracking devices or other monitoring technology will need to consider how these restrictions affect their existing practices, particularly when employees are expected to carry company-issued devices throughout the workday.

How employers can prepare:

• Identify monitoring devices employees may carry into bathrooms.
• Review device requirements and monitoring practices with legal counsel.
• Disable any access-control or management platforms that gather restroom dwell-time data or break-frequency reports.
• Update surveillance, timekeeping, and device policies to reflect the new restrictions.

Clear guidance can help managers understand what employees may do with required devices and prevent workplace practices that conflict with the law.

Discrimination, Retaliation, and Employee Leave

4. Immigration-related workplace retaliation carries greater risk

Effective date: January 1, 2027 | AB 2495

California is expanding protections against retaliation related to a person’s perceived immigration status. The law covers applicants, current employees, and former employees, regardless of their actual immigration status.

It also addresses conduct that would discourage someone from exercising a legal right. Penalties may reach $10,000 per person for each violation.

Employers should review how immigration-related matters are handled during recruiting and employment, including interactions involving employment eligibility documentation. Managers and HR staff need to understand the boundaries of permissible conduct and how to respond appropriately to employee concerns.

How employers can prepare:

• Review anti-retaliation policies and update them to reflect the expanded protections.
• Train managers, recruiters, HR personnel, and staff responsible for employment eligibility verification.
• Reinforce applicable workplace notice requirements, including mandated Know Your Rights notices.

Employers should ensure that employment eligibility procedures are handled consistently and that immigration-related information is not used as a basis for prohibited retaliation.

5. Bereavement leave expands to cover extended and chosen family

Effective date: January 1, 2027 | SB 1149

California’s bereavement leave eligibility will include a “designated person” option. This may be someone related to an employee by blood or someone with a family-like relationship, such as an aunt, uncle, cousin, or close friend.

The law applies to employers with five or more employees. Eligible employees may take up to five days of bereavement leave, which may be unpaid, within three months of the death. Employers may limit designated-person leave to one person in a 12-month period.

The expanded definition means employers may need to revisit handbook language and leave administration practices that currently focus on a narrower definition of family.

How employers can prepare:

• Update bereavement leave policies and employee handbook definitions.
• Review leave request procedures to account for designated persons.
• Train HR and leave administrators on the updated eligibility requirements.

Employers should make sure managers understand the revised policy and know when to refer leave questions to HR.

A related development to watch: Governor Gavin Newsom vetoed AB 1940, which would have expressly added perimenopause, menopause, postmenopause, and related conditions to the definition of sex under California law. The veto does not eliminate existing obligations involving applicable disability accommodations, leave, interactive processes, or nondiscrimination. Employers should continue handling related requests under their established procedures.

Workplace Safety and Violence Prevention

6. Cal/OSHA gains additional enforcement authority

Effective date: January 1, 2027 | AB 2321

California is expanding the enforcement authority of the Division of Occupational Safety and Health (Cal/OSHA) following certain serious workplace incidents.

The agency’s Bureau of Investigations must review serious injuries, illnesses, or exposures that result in a willful citation. Police, fire, and Cal/OSHA must also promptly notify prosecutors of serious workplace accidents.

The changes expand potential criminal consequences for certain willful safety violations. A willful violation that causes serious injury, illness, or exposure may now be prosecuted as a crime, not just one that results in death or permanent impairment. Willfully interfering with a Cal/OSHA inspection or investigation will also become a misdemeanor, potentially punishable by up to six months in jail, a fine of up to $5,000, or both.

These updates make it important for employers to understand how to respond when a serious incident occurs or an inspector arrives at the workplace.

How employers can prepare:

• Establish a written inspection-response plan that identifies responsible personnel.
• Review procedures for reporting serious incidents and preserving relevant evidence.
• Train managers on escalation procedures and how to respond to workplace safety investigations.

Employers should work with legal counsel to develop appropriate inspection-response protocols, including procedures for handling disputes about access during an inspection.

7. Employers may seek workplace-wide violence restraining orders

Effective date: January 1, 2027 | AB 1961

California employers’ ability to petition for workplace violence restraining orders is expanding. Under the new law, employers may seek an order covering all employees at a workplace, or at a location where a group of employees primarily works, when harassment, unlawful violence, or a credible threat of violence is directed at that location.

Employers will no longer need to identify one individual employee as the specific target to pursue this type of workplace-wide protection.

The change may affect how businesses document threats and determine when a workplace safety concern warrants further action.

How employers can prepare:

• Review workplace violence prevention procedures and threat-reporting protocols.
• Establish clear responsibilities for documenting and escalating incidents.
• Consult legal counsel before pursuing a restraining order petition.

Having a consistent reporting process can help employers evaluate concerning behavior and respond appropriately when workplace safety is at risk.

Hiring, Employment Agreements, and Litigation Risk

8. Employers have more time to prepare for stay-or-pay restrictions

Effective date: Restrictions apply to agreements entered into on or after January 1, 2027 | AB 1697

California has revised and delayed restrictions on certain “stay-or-pay” agreements, which may require employees to repay employer-provided costs if they leave their jobs before a specified period.

The restrictions do not apply during 2026, and pending claims based on conduct in 2026 are moot under the provisions described in the new law. The changes also include exceptions for certain retention payments, grant-funded programs, employee-requested advances of up to 40 hours of paid time off, and some financial services agreements.

Each exception has specific conditions, so employers should not assume that every repayment arrangement is permitted simply because it falls into one of these categories.

How employers can prepare:

• Inventory agreements covering tuition reimbursement, retention bonuses, sign-on bonuses, and paid time off advances.
• Review agreements intended for use in 2027 against the updated requirements and applicable exceptions.
• Consult legal counsel before entering into new repayment agreements.

Employers can use the additional preparation time to identify affected agreements and determine which arrangements may need to be revised before the new restrictions apply.

9. A new law limits certain website-tracking lawsuits

Effective date: January 1, 2027 | SB 690

The state is narrowing private litigation involving certain website and app tracking practices under the California Invasion of Privacy Act (CIPA).

The new law removes the private right of action for certain claims involving “pen register” and “trap-and-trace” technology. For those claims, only the California Attorney General may bring an action against private businesses. The change also applies to certain pending claims in lawsuits filed on or after January 1, 2025.

However, the law does not eliminate all private CIPA claims. Other claims involving wiretapping and recording remain available to private plaintiffs.

Although this mandate is primarily relevant to website, app, and technology practices rather than day-to-day HR administration, employers should understand how it may affect their organization’s digital operations and legal exposure.

How employers can prepare:

• Continue reviewing website and app tracking practices with web development and IT teams.
• Evaluate consent and disclosure practices with legal counsel.
• Consult counsel about any pending demand letters or lawsuits involving tracking technology.

Employers should not interpret the change as a blanket exemption from California privacy laws. The specific technology and legal basis of a claim still matter.

10. More agencies may issue work permits for certain minors

Effective date: January 1, 2027 | AB 2524

County probation departments and child welfare agencies will be authorized to issue work permits to certain minors under juvenile court jurisdiction. This update helps provide permits to eligible young people who may not be able to obtain one through their school.

This includes certain foster youth and justice-involved youth.

Employers that hire minors should make sure their hiring procedures account for permits issued through these additional channels. HR teams may also need to update internal guidance so that staff can recognize and appropriately document the permits.

How employers can prepare:

• Review procedures for hiring minors and verifying work permits.
• Train HR staff to recognize permits issued by authorized probation or child welfare agencies.
• Maintain the required documentation in accordance with applicable recordkeeping rules.

Employers should confirm that the permits they accept meet the applicable requirements and continue to follow California’s other rules governing the employment of minors.

Preparing for California’s upcoming employment law changes

With several new California employment laws set to take effect January 1, 2027, employers should start reviewing current policies and practices to identify where updates may be needed.

For SMBs without a large internal team, keeping pace with evolving employment laws can be particularly challenging. A professional employer organization (PEO) like ExtensisHR can provide ongoing HR guidance and support with policy updates, helping businesses stay informed as requirements change. With the right support in place, businesses can maintain compliance with greater clarity and keep their day-to-day operations moving forward.

Employment law disclaimer: This article is intended for informational purposes only and does not constitute legal advice. Employment laws and regulations can change and evolve, and requirements may vary based on an employer’s circumstances. Employers should consult qualified legal counsel to understand their obligations and confirm compliance with applicable laws.