California employment laws bring a range of new requirements in 2025 that will directly affect how manufacturers manage their workforce. From wage adjustments to expanded worker protections, understanding these changes is key to avoiding compliance risks and maintaining smooth operations.
Key updates include:
Let’s begin with the latest wage updates...
As of January 1, 2025, California’s minimum wage is $16.50 per hour for all employers, regardless of size. This represents a modest increase but still requires payroll adjustments and clear communication with affected employees.
Employers operating in multiple jurisdictions should also account for local minimum wage ordinances, which may exceed the state baseline. You can find the latest local wage rates here: UC Berkeley Labor Center Minimum Wage Ordinances.
The minimum annual salary for exempt employees is now $68,640. This threshold must be met to maintain exempt status under California employment laws. Failing to properly classify employees can lead to wage and hour violations and significant penalties.
When minimum wage increases, it often narrows the pay gap between lower-tier and mid-level employees. This wage compression can affect morale and retention. Employers should reassess pay scales across the board to maintain fair and competitive compensation structures.
To avoid any speed bumps associated with changing wage laws:
Failure to comply with wage laws in California can trigger lawsuits, audits, and costly back pay. Now is the time to double-check that your wage practices align with 2025 standards.
Here’s what you need to know about California employment law changes to benefits, including paid family leave (PFL), retirement plans, and the CalSavers Retirement Savings Program…
California’s Paid Family Leave program has been updated to improve employee access. As of 2025, employers can no longer require workers to use accrued vacation time before receiving PFL benefits. This change simplifies the claims process and removes a common barrier to accessing benefits.
Employers offering retirement benefits face several new federal mandates in 2025:
These rules aim to expand access to retirement savings, especially for part-time and older workers. However, they also require employers to revisit their plan documents and enrollment processes.
California’s CalSavers Retirement Savings Program now applies to the smallest employers. As of December 31, 2025, employers with as few as one employee must register with CalSavers if they do not already offer a qualified retirement plan.
Failure to comply can result in penalties of $250 per eligible employee, increasing to $500 per employee if non-compliance extends beyond 180 days.
If you already offer a plan such as a 401(k) or 403(b), no action is required — but it’s still a good time to confirm that your documentation is up to date and your plan is properly administered.
New Cal/OSHA regulations now require indoor heat illness protections in workplaces where temperatures reach 82°F or higher. These rules apply to most manufacturing environments, including warehouses, production floors, and assembly areas.
Additional requirements apply when temperatures reach 87°F or when employees wear heat-retaining PPE.
Check out our workplace safety eBook for more information on developing and implementing a workplace safety plan.
There are four major compliance updates to know about…
California’s Private Attorneys General Act (PAGA) has undergone significant reform aimed at reducing frivolous lawsuits:
However, penalties for malicious or fraudulent conduct have increased; and the employee share of recovered penalties has risen from 25% to 35%.
These changes reward good-faith employers while maintaining accountability for bad actors. Businesses should proactively audit their practices and document corrective actions to demonstrate compliance.
SB 399 prohibits employers from requiring workers to attend meetings that involve political or religious topics, including union-related discussions.
This rule applies to all employers regardless of size. Review any team meetings or internal communications involving opinion-based content to ensure compliance.
Employers are now required to post a model notice outlining employee whistleblower protections.
While straightforward, non-compliance can still lead to penalties or scrutiny. Annual poster reviews — and digital distribution for remote teams — are now a basic compliance expectation.
Protections for victims of domestic violence, sexual assault, and stalking have expanded. Employers must now provide:
This law applies to all employers and is enforced under the Fair Employment and Housing Act (FEHA), increasing the potential for liability. Employers should incorporate these policies into onboarding, training, and handbook materials, and coordinate closely with HR and legal teams when responding to incidents.
There are additional California employment laws changes to driver’s license requirements, freelance worker protections, and social compliance audits…
Employers may now require a driver’s license only if driving is an essential function of the job. Blanket license requirements, especially in job postings, are no longer permitted.
Review job descriptions and remove unnecessary license language to avoid claims of discrimination tied to immigration status or disability.
Hiring entities must now pay freelance workers within 30 days if no payment date is specified and use written contracts that outline services and compensation. Records must be kept for four years. Freelancers also gain the right to pursue legal action for nonpayment or retaliation.
California now permits voluntary social compliance audits to assess adherence to labor laws, including child labor protections. Employers who participate must publicly post audit results on their website. While optional, these audits can help demonstrate a proactive commitment to ethical labor practices and transparency.
California’s 2025 employment law updates cover a wide range of topics, from wage increases and benefit mandates to expanded worker protections and new safety rules. For manufacturers, staying compliant means not only understanding these changes but also adjusting internal policies, systems, and communications accordingly.
Navigating California’s regulatory environment can be challenging, but you don’t have to do it alone. Schedule a no-cost consultation with CMTC to assess your compliance posture and get expert support tailored to your business.
Also, be sure to check out CMTC’s upcoming webinars and resources for continued guidance throughout the year.