As 2026 winds down, California employers have an opportunity to strengthen compliance, reduce workplace risk, and prepare for changes coming in 2027. JorgensenHR recommends reviewing compensation practices, policies, payroll procedures, and employee documentation before the new year.
PREPARE FOR HIGHER WAGE AND SALARY REQUIREMENTS
Effective January 1, 2027, California’s statewide minimum wage is scheduled to increase from $16.90 to $17.40 per hour. Some cities and counties require higher rates, so employers should confirm the rules for every work location.
The minimum annual salary identified for most California exempt employees will rise from $70,304 to $72,384. Meeting the salary threshold alone does not establish exempt status; employees must also satisfy the applicable duties test.
Review classifications, manager pay, budgets, contracts, and reimbursement practices now rather than waiting until January.
REVIEW PAYROLL REPORTING AND EMERGING LAWS
The One Big Beautiful Bill Act introduces reporting considerations involving qualified overtime and tips on Forms W-2. Employers should work with their payroll providers to distinguish qualifying federal overtime from overtime required only under state law and confirm reporting procedures.
Other legislative developments highlighted for employers include workplace artificial intelligence, bereavement leave involving a designated person, and protections against threats tied to perceived immigration status. Verify final requirements and effective dates before implementing changes.
REFRESH POLICIES AND AUDIT HR PRACTICES
Review employee handbooks, arbitration and confidentiality agreements, job descriptions, workplace postings, and wage orders. Examine wage statements for California Labor Code section 226(a) compliance, review time records for meal and rest break issues, and confirm required training is complete.
Employers should also evaluate time-rounding practices, consider a broader HR compliance audit, and review whether employment practices liability insurance is appropriate. A proactive review can uncover gaps before they become costly employee complaints or litigation.
MAKE PERFORMANCE REVIEWS MEANINGFUL
Year-end evaluations should be candid, consistent, and supported by specific examples, not just numerical scores. Start with the previous review, document performance concerns, establish measurable goals, and discuss potential raises or promotions.
Ask employees what they accomplished, which skills they want to develop, how they supported colleagues, and where communication can improve. Involve HR when appropriate, consider a third person for sensitive discussions, and keep evaluations separate from holiday celebrations.
CELEBRATE RESPONSIBLY
Holiday gatherings can create workplace liability, particularly when alcohol or inappropriate conduct is involved. Managers remain responsible for professional behavior at company-sponsored events. Circulate conduct and anti-harassment reminders in advance and reinforce expectations for everyone attending.
REVISIT IMPORTANT 2026 REQUIREMENTS
Confirm compliance with the Workplace Know Your Rights Act’s annual notice requirement. Review AI-based hiring and promotion assessments for potential discrimination risks under the Fair Employment and Housing Act and applicable record-retention obligations.
Also revisit CalSavers coverage for employers with more than one employee, protections for crime victims, “stay or pay” arrangements, and job postings that must provide a good-faith pay range. Check personnel-file education and training records, changes affecting wage claims, and additional WARN Act notice information.
THE JORGENSENHR BOTTOM LINE
A strong year-end compliance review is more than a checklist. It helps employers protect their organizations, support employees, and enter 2027 with confidence. JorgensenHR can assist with HR audits, handbook updates, compensation reviews, training, and ongoing compliance support.
Attend our annual Labor Law Update Webinar on Tuesday December 8th at 10 AM Pacific Time to learn about all the new labor laws and court cases that may affect you.
HOW JORGENSENHR HELPS
At JorgensenHR, we help employers identify HR risks before they become lawsuits.
The best time to fix an HR problem is before it becomes a legal problem. If you’re unsure where your organization stands, JorgensenHR is here to help.
JorgensenHR — Results Oriented, Driven by Passion, Guided by Expertise.
Recent Comments