May 2026 Labor Law Updates for San Francisco, California
May 2026 brought important California labor law developments involving arbitration, disability discrimination, workers’ compensation, workplace safety, and collective bargaining. This May 2026 employment update from HKM Employment Attorneys highlights key developments for employees, HR professionals, compliance leaders, and California employers. Agency proposals are identified below as proposals—not final rules.
California workplace rights and employer obligations continue to change through court decisions, workers’ compensation policy, workplace-safety action, and collective bargaining. For questions about discrimination, retaliation, wage-and-hour claims, arbitration agreements, workplace safety, or workers’ compensation issues, contact HKM Employment Attorneys. This roundup is general information, not legal advice.
Vela v. Harbor Rail Services of California, Inc. (B344723) — Court Ruling
Date: May 1, 2026
Summary: A California Court of Appeal held that a railcar repair technician’s wage-and-hour claims were subject to arbitration. The court concluded that repairing out-of-service freight cars did not make the worker a transportation worker directly engaged in interstate commerce for purposes of the Federal Arbitration Act’s transportation-worker exemption. It upheld the order compelling individual arbitration and striking the proposed class claims.
Implications: For California workplace rights disputes involving transportation-related jobs, an employee’s actual duties—not simply the industry in which the employer operates—can determine whether an arbitration agreement is enforceable. Employers should ensure arbitration agreements clearly identify their scope and comply with applicable California limitations.
Proposed Qualified Medical Evaluator Rules — Workers’ Compensation Rulemaking
Date: May 4, 2026
Summary: The Division of Workers’ Compensation (DWC) published proposed changes to its Qualified Medical Evaluator (QME) regulations. The draft addressed physician eligibility, QME examination timing, retired-physician participation, Medical Unit response times, remote office listings, online panel selection in certain uninsured-employer cases, and replacement-panel standards.
Implications: These proposals were not final regulations in May, but they signaled potential operational changes for injured workers, physicians, claims administrators, and employers that rely on the QME process to resolve medical-legal disputes.
Toothman v. Redwood Toxicology Laboratory (A171567) — Court Ruling
Date: May 5, 2026
Summary: The California Court of Appeal refused to require arbitration of Labor Code class claims brought by a worker who had first worked through a staffing agency and later became a direct employee of the client company. Although the worker signed an arbitration agreement with the staffing agency, the court found that the direct employer was not a party, affiliate, or third-party beneficiary of that agreement, and could not enforce it through equitable estoppel.
Implications: California employers should not assume that an arbitration agreement signed with a staffing agency will automatically cover a later direct-employment relationship. Employers hiring former temporary workers should review whether they need a separate, properly drafted arbitration agreement.
Proposed MTUS Updates for Ankle, Foot, Hip, and Groin Care — Workers’ Compensation Rulemaking
Date: May 5, 2026
Summary: DWC issued a notice of public hearing and comment period for proposed updates to California’s Medical Treatment Utilization Schedule (MTUS). The proposal would incorporate updated American College of Occupational and Environmental Medicine guidelines for ankle and foot disorders and hip and groin disorders.
Implications: Because the MTUS is central to workers’ compensation treatment decisions, updates can affect medical-necessity reviews and treatment authorization. Employers, insurers, providers, and injured workers should distinguish between a proposal and an adopted guideline when evaluating a claim.
UC and AFSCME Reach Tentative Agreement, Averting Strike — Labor Relations
Date: May 14, 2026
Summary: The University of California and AFSCME reached a tentative contract agreement shortly before a planned systemwide open-ended strike. UC reported that the tentative deal included wage increases, health care caps and stipends, ratification bonuses, equity pools intended to address pay disparities, and longevity bonuses.
Implications: The agreement temporarily resolved a major California public-sector labor dispute involving university and health-system operations. It also illustrates the continued importance of compensation, health care costs, and internal pay equity in collective bargaining.
California Releases 2025 Independent Medical Review Data — Workers’ Compensation Report
Date: May 19, 2026
Summary: DIR and DWC released their annual report on California’s Independent Medical Review program. The report showed 201,037 applications and 152,351 final determination letters in 2025, with decisions issued an average of six to seven days after all required medical records were received; treatment denials were overturned 10.2% of the time.
Implications: The report reinforces the practical role of the MTUS in California workers’ compensation disputes, as the guidelines remained the primary reference for medical-necessity determinations. Claims administrators and employers should ensure treatment decisions are thoroughly documented and supported by applicable guidelines.
Husband v. Target Corp. (B342334) — FEHA Disability-Discrimination Ruling
Date: May 21, 2026
Summary: The California Court of Appeal upheld summary judgment for an employer in a disability-discrimination case. The employee had not disclosed a bipolar-disorder diagnosis or requested an accommodation before termination, and the court found insufficient evidence that the employer knew of the disability when it acted on workplace-conduct concerns.
Implications: The decision underscores that employer knowledge is central to many disability-discrimination and accommodation claims under California law. At the same time, employers should train managers to recognize and elevate clear disclosures or accommodation requests rather than treating the case as permission to disregard known disability-related needs.
DWC Releases RAND Study on the QME System — Workers’ Compensation Research
Date: May 21, 2026
Summary: DWC released a RAND study examining the effectiveness and long-term sustainability of California’s medical-legal process and QME system. The study considered QME supply by specialty and region, reimbursement changes, report quality, telehealth evaluations, and the timely delivery of medical records.
Implications: This was not a new legal requirement, but it provides a foundation for future workers’ compensation policy decisions. Employers and claims professionals should watch for future reforms tied to evaluator availability, delays, and the quality of medical-legal reporting.
Standards Board Advances Possible Artificial-Stone Silica Restrictions — Workplace Safety Action
Date: May 22, 2026
Summary: California’s Occupational Safety and Health Standards Board unanimously granted a petition beginning the process to prohibit the fabrication and installation of artificial stone products containing more than 1% crystalline silica. The Board asked Cal/OSHA to prepare for emergency rulemaking and convene advisory committees to assess potential protections.
Implications: This action did not itself create a new ban, but it signals potentially significant future obligations for artificial-stone fabricators, installers, and related businesses. Employers in these sectors should maintain compliance with existing silica-safety requirements while preparing for stricter controls.
Conclusion: Looking Back on California’s Labor Law Updates from May 2026
With California’s latest court rulings strengthening protections around wrongful termination, wage and hour violations, discrimination, contract enforcement, and whistleblower claims, having local legal counsel is indispensable. At HKM Employment Attorneys in San Francisco, our team has recovered over $250 million for employees since 2003 and represents workers across a full range of employment law—including harassment, ethics investigations, and data breach issues—with our fearless, locally-rooted approach. If recent court decisions in San Francisco have hit close to home, reach out to our San Francisco office to explore how we can help enforce your workplace rights and pursue justice.
