New California laws on tap that impact auto repair

Hundreds of new laws are enacted every year that impact California automotive repair dealers. Here’s a brief summary of what’s ahead.

Sacramento, Calif.—Every year, hundreds of new laws are enacted that impact California automotive repair dealers. Below is a brief summary compiled by California Autobody Association and the Automotive Service Councils of California legislative advocate Jack Molodanof of key measures taking effect January 1, 2026, unless otherwise noted.

• Minimum Wage Increase. Effective January 1, 2026, the statewide minimum wage will increase to $16.90 per hour for all employers, regardless of size. This change is based on a cost-of-living provision in the state’s minimum wage law. Note: Local minimum wage ordinances may be higher.

• BAR Tear Down and Towing Regulations. Effective as of July 1, 2025, these regulations impose new requirements on automotive repair dealers (ARDs), including but not limited to: disclosing third-party payor amounts to be paid in the estimate or providing specific written notice if the amount is unknown; following requirements for preparing an estimate based on one provided by a third-party payor; and, when a shop arranges towing on behalf of a customer, listing towing fees on a separate document rather than including them in the repair estimate. Due to concerns raised regarding the towing fee documentation, the Bureau of automotive Repair (BAR) has indicated that it plans to make changes to the towing documentation requirements. See link for full regulatory text.

• Mobile Repair, Referral Services and Internet-Based Advertising. These new regulations took effect on October 1, 2025, and require a mobile ARD must provide physical address where repairs are performed. A brick and mortar ARD that offers mobile services may only conduct repairs within 50 miles of the shop location (50-mile exemption). Otherwise, a mobile ARD registration is required and these regulations require all shops to clearly display in any internet-based advertising the following: 1) the business name; 2) the ARD registration number and 3) the phone number registered with BAR. Due to some questions with regard to the new internet-based advertising requirements, BAR has indicated that they were going to provide further clarification through FAQs and examples to the industry. See link for full regulatory text.

• Remedial Training for BAR Citation and Fines Extension. This new law extends the current remedial program which allows an ARD to avoid public disclosure of BAR citations if they successfully complete a BAR-accepted 8-hour remedial training course. Originally set to expire on July 1, 2026, this remedial program will now remain in effect until January 1, 2028, aligning with the BAR Sunset Review process and allowing for evaluation and potential adoption as a permanent program. (SB 774)

• Readiness Monitor Limits. These new regulations require all OBD-II readiness monitors to be set before a vehicle can pass a Smog Check inspection. This change aims to strengthen emissions compliance and improve air quality. Exceptions may be granted for specific vehicles with unique issues, subject to Bureau and Air Resources Board approval. The amendment applies to gasoline vehicles from model year 1996 and newer and diesel vehicles from model year 1998 and newer. It will also eliminate outdated provisions from the regulation. See link for full regulatory text. 

• Towing and Storage. This new law expands the scope of existing towing and storage fees deemed unreasonable for any tow, including: additional towing fees exceeding 10% of the normal towing rate when the call originates after normal business hours and gate fees are reasonably assessed; storage fees charged for state holidays that exceed the posted standard daily storage rate; storage fees assessed after a vehicle owner requests release and pays all fees due for any day the facility fails to release the vehicle; and storage fees exceeding 50% of the daily storage rate when a vehicle is recovered within the first four hours of storage. (AB 987)

• Ignition Interlock Devices. This law would extend the operation of the ignition interlock device provisions until January 1, 2033, and would instead reinstate the law to how it read prior to January 1, 2019, on January 1, 2033. (AB 366)

• California Combating Auto Retail Scams Act. The law sets new requirements for motor vehicle dealers including customer disclosures, document retention, and a 10-day right to cancel for customers. (SB 766)

• Workplace Know Your Rights Act. Requires by February 1, 2026, employers to provide a written notice annually to each employee, and upon hire, informing them of their rights under state and federal law, as specified. It directs the Labor Commissioner to develop a template notice, as well as videos for employers and employees informing them of their responsibilities and rights; requires employers, if authorized by an employee, to contact an employee’s designated emergency contact if the employee is arrested or detained. The state’s Dept. of Labor Standards Enforcement is expected to post a template notice by January 1, 2026. (SB 294)

• Prohibition of Stay-or-Pay Provisions. This new law will make it unlawful to include contract clauses that require an employee to pay the employer penalties or fees if they terminate their employment. The ban will not apply to some of the common arrangements, such as tuition reimbursement and retention bonus repayment, so long as employers stay within new statutory guardrails. (AB 692)

• Victim Leave Expansion. Employees can use sick or unpaid leave to attend judicial proceedings as a victim of certain crimes or if a family member is a victim. (AB 406)

• Paid Family Leave Benefits to Care for Designated Persons. Starting July 1, 2028, this new law will allow eligible individuals to receive paid family leave benefits to care for a seriously ill “designated person,” which means any blood relative or individual who is the equivalent of family, even if the individual is not biologically or legally related to the employee. (SB 590) 

• Job Posting Requirements and Equal Pay Act Updates. This new law will update the requirements to provide pay scales in job postings by redefining “pay scale” to mean “a good faith estimate of the salary or hourly wage range that the employer reasonably expects to pay for the position upon hire.” The law also makes changes to Equal Pay Act, including extending the statute of limitations for pay discrimination claims to three years and allowing for lost wages up to six years. (SB 642)

• Cal-WARN Notice Updates.  California’s Worker Adjustment and Retraining Notification Act (the Cal-WARN Act) requires that layoffs, facility closures, and employee relocations may trigger an employer’s duty to give employees advance notice of a layoff or certain other workplace events. The new law also expands what must be included in those notices. An employer is considered a “covered establishment” if it employs at least 75 people at the time of the layoffs or applicable workplace event. (SB 617)

• Unsatisfied Wage Judgments. This new law significantly increases the risks for employers with unpaid wage judgments by introducing triple penalties, mandatory attorneys’ fees, and broader prosecutorial authority for the Labor Commissioner’s Office. (SB 261)

• Employer Pay Data Disclosures. This law changes annual pay data reporting requirements. Existing law requires private employers with more 100 or more employees to submit annual pay data reports to the California Civil Rights Depart. Beginning January 1, 2027 employers will be required to classify employees in one of 23 job categories from the Standard Occupations Classification system. (SB 464)