USA – CALIFORNIA Trends and Developments Contributed by: Dawn Newton and Hayley M. Lenahan, Donahue Fitzgerald
requirements for tracking meal and rest breaks and documenting these. In the absence of such careful, constant tracking, an employer might easily be subject to a “PAGA action”, a claim by a single employee under the Private Attor - neys General Act on behalf of all similarly situated employees, looking back years. PAGA claims are unique to California; although other states have pro - posed similar laws, no substantially similar law has been passed. They are notoriously complex, expen - sive to defend and easy to lose because most employ - ers have at least a few lapses in record-keeping or compliance with respect to their wage and hour obli - gations. Because a successful employee plaintiff is entitled to their attorneys’ fees and costs, this type of claim is extremely popular with plaintiff’s side employ - ment firms. Thousands of PAGA claims are filed each year. California has some high minimum wage requirements, in some areas meeting or exceeding USD20 per hour. The state’s hourly minimum for 2026 is USD16.90, and many cities impose a higher minimum. In addi - tion, California’s law regulating fast food franchises imposes a minimum USD20-per-hour wage (regard - less of where in the state the business operates) as long as the business has 60 or more total units under the brand across the USA. Finally, California’s public policy against non-compe - tition agreements makes it difficult to keep employees captive to a single brand or a single business unit. This is by design, intended to enhance employee mobility and ability to negotiate higher pay either by changing jobs or threatening to change jobs. This is popular among employees, and areas such as Silicon Valley thrive because talented employees can be lured from one company to another. At the same time, this can be challenging for businesses that are used to being able to enforce prohibitions against an employee moving from one business to another, and against employees working in the same field or for a direct competitor after they quit. Health and environmental laws California has a ballot initiative system in which any - one who obtains enough signatures may introduce a
state-wide proposition onto the ballot. Propositions that obtain enough votes become law. The popularly styled “Prop 65”, also known as the Safe Drinking Water and Toxic Enforcement Act of 1986, requires all businesses to warn employees or customers if they may be exposed to a substance that has been deter - mined to cause cancer, birth defects or reproductive harm. There are now over 1,000 chemicals on the list maintained by the relevant state agency, and although there is a legal exception for incidences of chemicals when the amount is too small to pose a significant risk, it is common for certain plaintiff groups to file suit against hundreds or thousands of businesses related to what many businesses argue are extremely small or dubious exposures. In 2026, a recent trend is a lawsuit over thermal receipt paper, commonly used in many point-of-sale printers. Because the cost to settle the claim for nuisance value is much lower than to fight it, a significant portion of named defendants pay to settle these claims. Plastic packaging and single-use items are also highly regulated. In some areas of the state, these are pro - hibited entirely, or restricted so that a customer must ask for a single-serve item such as a coffee stirrer or creamer packet from behind the counter. Alternative packaging that is compostable or recyclable can be more expensive, increasing business costs, although it is healthier for the environment. Privacy In 2020, the California Consumer Privacy Act (CCPA) brought a General Data Protection Regulation (GDPR)- style regulation to California businesses’ use of cus - tomer and employee data. It applies to businesses that interact with California residents and that meet one of three thresholds: • they have annual revenue of at least USD26,250,000; • they process at least 100,000 California residents’ information per year; or • they earn 50% or more of their revenue from the sale of personal information. Many franchisors meet the second threshold as a result of their operation of a system-wide loyalty
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