New business laws from 2025

What the law currently requires

Existing law generally regulates social media platforms, including, among other laws, the Protecting Our Kids from Social Media Addiction Act that prohibits an operator of an addictive internet-based service or application, including a social media platform, from providing an addictive feed to a minor user, except as prescribed.

How the bill changes the law

This bill enacts the Social Media Warning Law that requires a “covered platform” to display a certain black box warning to certain users each day the user initially accesses the social media platform, again after three hours of cumulative active use, and thereafter at least once per hour of cumulative active use. The warning shall read: “The Surgeon General has warned that while social media may have benefits for some young users, social media is associated with significant mental health harms and has not been proven safe for young users.”

Pursuant to the bill, the definition of “covered platform” does not mean an internet website, online service, online application, or mobile application whose primary function is the sale of goods or services.

This bill specifies that its provisions shall not be interpreted to serve as the basis for a private right of action. The bill would make its provisions operative on January 1, 2027, and would declare these provisions severable.

Action items

This bill is directed at social media platforms such as Facebook, TikTok, YouTube and Instagram. Starting January 1, 2026, these platforms must display black box warnings to certain users, i.e. those under 17 years of age.

Together with AB 1043 (discussed below), this bill seeks to protect youths and adolescents from the potential mental health harm associated with prolonged use of social media.

What the law currently requires

Existing law, pursuant to the California Environmental Quality Act (“CEQA”), requires a lead agency to prepare, or cause to be prepared, and certify the completion of an environmental impact report (“EIR”) on a project that it proposes to carry out or approve that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect. CEQA also requires a lead agency to prepare a mitigated negative declaration for a project that may have a significant effect on the environment if revisions in the project would avoid or mitigate that effect and there is no substantial evidence that the project, as revised, would have a significant effect on the environment.

Existing law, pursuant to the Climate Corporate Data Accountability Act (“Act”), requires, on or before July 1, 2025, the State Air Resources Board to develop and adopt regulations to require a reporting entity, defined to mean a corporation, partnership, limited liability company, or other business entity with total annual revenues in excess of $1 billion, to annually disclose to the emissions reporting organization, or the state board all of the reporting entity’s Scope 1 emissions, Scope 2 emissions, and Scope 3 emissions. Existing law requires the state board to adopt regulations that authorize it to seek administrative penalties for nonfiling, late filing, or other failure to meet the requirements of the Act.

Existing law requires, on or before January 1, 2026, and biennially thereafter, a covered entity, defined to mean a corporation, partnership, limited liability company, or other business entity with total annual revenues in excess of $500,000,000, to prepare a climate-related financial risk report, and to make this report available to the public on its own internet website. Existing law requires the state board to adopt regulations that authorize it to seek administrative penalties from a covered entity that fails to make the report publicly available on its internet website or publishes an inadequate or insufficient report.

How the bill changes the law

The bill exempts the regulations related to climate corporate accountability from CEQA. This means that the implementation of these regulations will not require an environmental impact report, streamlining the process for corporations to comply the with new reporting requirements.

Action items

None at this time.

What the law currently requires

Existing law makes it unlawful for any person doing business in California and advertising to consumers in California to make any false or misleading advertising claim. Existing law makes various unfair competition practices unlawful, including any unlawful, unfair, or fraudulent business act or practice and unfair, deceptive, untrue, or misleading advertising.

Existing law regulates how a contract may be extinguished, and prescribes requirements for the formation and cancellation of certain contracts, including dating service contracts, weight loss contracts, and home equity sales contracts.

How the bill changes the law

This bill, for contracts entered into or modified on or after August 1, 2026, prohibits a seller that uses a fixed term installment contract from charging a fee to a consumer who terminates the fixed term installment contract unless, at the time of entering the initial contract, the initial contract includes a clear and conspicuous written disclosure of the total cost of the early termination fee or the formula used to calculate the early termination fee and the highest possible early termination fee under the contract.

The bill also prohibits a seller that uses a fixed term installment contract from charging an early termination fee or any similar fee in an amount greater than 30% of the total sum for which the consumer is obligated under the contract.

The bill deems certain broadband internet providers to be in compliance with these provisions.

The bill provides that its provisions do not apply to a fixed term installment contract that is regulated by state or federal law providing greater protections to consumers, or to a home improvement contract.

The bill also declares that waivers of the disclosure requirement are void.

In essence, the bill bans companies from hiding early termination fee disclosures within fine print or obscured hyperlinks and limits the total fee amount to a maximum of 20 percent of the total contract cost. According to the sponsors, the goal is to make it easier for Californians to take these fees into account when comparing between services and lessen the financial burden if they need to end their contract early.

Action items

The bill has significant impact on businesses that enter into fixed term installment contracts with their customers. The failure to comply with the new bill could subject businesses to costly litigation, including class actions, for violation of various California statutes including the Unfair Competition Law and the False Advertising Law. As such, businesses should ensure that early termination fee disclosures are conspicuous within the contract and/or are set forth in a separate document signed by the customer.

What the law currently requires

Existing law, the Contractors State License Law, establishes the Contractors State License Board (“Board”) within the Department of Consumer Affairs and sets forth its powers and duties relating to the licensure and regulation of contractors. Existing law requires the Board, with the approval of the Director of Consumer Affairs, to appoint a registrar of contractors to serve as the executive officer and secretary of the board.

Existing law requires a licensee who is subject to a bonding provision under the law to maintain a bond as executed by an admitted surety insurer or as deposited with the registrar. Prior existing law authorized certain deposits to be given instead of the bond. Existing law requires all alternatives in lieu of a bond that had been filed with the registrar to be replaced for a surety bond or the deposit of lawful money or a cashier's check, by January 1, 2020. Existing law prohibits the Board from charging legal fees against those deposits.

How the bill changes the law

The bill changes the law as follows:

• Exempts the Board from liability for legal fees in actions against contractor deposits.
• Requires contractors to maintain bonds through approved surety insurers or specific deposits with the registrar.
• Establishes a three-year deadline for filing claims against contractor deposits.
• Sets a six-month window to file wage-related claims after discovering payment issues.

Action items

For contractors and licensees, the bill maintains existing bond requirements and claim processes, including the three-year statute of limitations for most actions and shorter timelines for wage-related claims. The primary impact of the bill is to exempt the Board from liability for legal fees in actions against contractor deposits, which may pose a barrier to such actions depending on the amount at issue. According to sponsors of the bill, this protection allows the Board to continue its oversight and regulatory work without unnecessary legal exposure.

What the law currently requires

The Outdoor Advertising Act (“Act”), a violation of which is a crime, provides for the regulation by the Department of Transportation of advertising displays within view of public highways. Existing law exempts from certain provisions of the Act advertising displays located in specific geographic areas in the City of Los Angeles if those displays meet prescribed conditions and requirements, including the condition that the advertising display is authorized by, or in accordance with, an ordinance adopted by the City of Los Angeles that regulates advertising displays by identifying the specific displays or establishing regulations that include, at a minimum, specified restrictions, as provided.

How the bill changes the law

This bill authorizes the ordinance adopted by the City of Los Angeles to authorize a framework of allowable signage that preserves flexibility in the ultimate placement, sizing, and scope of advertising displays, and define a range or maximum signage capacity. The bill also authorizes the City of Los Angeles to adopt implementing ordinances that sequence or phase the authorization of advertising displays over time. Specifically, the bill provides for the following:

• Establishes Los Angeles’ exemption framework with flexible signage cap and phased rollout.
• Requires state certification and minimum standards compliance before placement.
• Mandates federal review; FHWA approval if needed; bans tobacco, firearms, and explicit ads.
• Imposes 500-foot spacing, on-site exemptions, and 30-day compliance with indemnity.

Action items

This is another bill relating to advertising. Businesses that have billboards or advertising displays in the City of Los Angeles will need to review the bill to ensure compliance.

What the law currently requires

Existing law generally provides protections for minors on the internet, including the California Age-Appropriate Design Code Act that, among other things, requires a business that provides an online service, product, or feature likely to be accessed by children to do certain things, including estimate the age of child users with a reasonable level of certainty appropriate to the risks that arise from the data management practices of the business or apply the privacy and data protections afforded to children to all consumers and prohibits an online service, product, or feature from, among other things, using dark patterns to lead or encourage children to provide personal information beyond what is reasonably expected to provide that online service, product, or feature or to forego privacy protections.

How the bill changes the law

This bill, known as the Digital Age Assurance Act will, beginning January 1, 2027, require an operating system provider to provide an accessible interface at account setup that requires an account holder to indicate the birth date, age, or both, of the user of that device for the purpose of providing a signal regarding the user’s age bracket to applications available in a covered application store and to provide a developer who has requested a signal with respect to a particular user with a digital signal via a reasonably consistent real-time application programming interface regarding whether a user is in any of several age brackets, as prescribed. The bill will require a developer to request a signal with respect to a particular user from an operating system provider or a covered application store when the application is downloaded and launched.

The bill is aimed at adult account holders providing computer and mobile devices to others, including minors. “Account holder” under the law means an individual who is at least 18 years of age or a parent or legal guardian of a user who is under 18 years of age in the state.

Action items

Together with AB 56 (discussed above), this bill seeks to protect youths and adolescents from the potential mental health harm associated with prolonged use of social media.

What the law currently requires

Existing law requires the Department of Technology to conduct, in coordination with other interagency bodies as it deems appropriate, a comprehensive inventory of all high-risk automated decision systems that have been proposed for use, development, or procurement by, or are being used, developed, or procured by, any state agency.

Existing law defines “automated decision system” as a computational process derived from machine learning, statistical modeling, data analytics, or artificial intelligence (“AI”) that issues simplified output, including a score, classification, or recommendation, that is used to assist or replace human discretionary decisionmaking and materially impacts natural persons. Existing law defines “artificial intelligence” as an engineered or machine-based system that varies in its level of autonomy and that can, for explicit or implicit objectives, infer from the input it receives how to generate outputs that can influence physical or virtual environments.

Existing law, the Generative Artificial Intelligence Accountability Act, among other things, requires the Department of Technology, under the guidance of the Government Operations Agency, the Office of Data and Innovation, and the Department of Human Resources, to update the report to the Governor, as required by Executive Order No. N-12-23, as prescribed, and requires the Office of Emergency Services to perform, as appropriate, a risk analysis of potential threats posed by the use of generative AI to California’s critical infrastructure, including those that could lead to mass casualty events.

How the bill changes the law

This bill, entitled the Transparency in Frontier Artificial Intelligence Act (“TFAIA”), declares the intent of the Legislature to enact legislation that would establish safeguards for the development of AI frontier models and that would build state capacity for the use of AI, that may include, but is not limited to, the findings of the Joint California Policy Working Group on AI Frontier Models established by the Governor.

In particular, many AI policy bills have emerged at the state level, but only a few are designed to address potentially catastrophic risks from advanced AI systems. SB 53 is the first to make it into law.

SB 53 establishes four major obligations, dividing some responsibilities between all frontier developers and the narrower subset of “large frontier developers.”

• Frontier AI Framework: Large frontier developers must publish an annual Frontier AI framework describing how catastrophic risks are identified, mitigated, and governed. Among other items, the framework must include documentation of governance structures, mitigation processes, cybersecurity practices, and a developer’s alignment with national/international standards. The framework must also assess catastrophic risk from internal use of models, raising the scope of compliance obligations. Frontier developers may make redactions to the framework to protect trade secrets, cybersecurity, and national security.
• Transparency Report: Before deploying a frontier model, all frontier developers (not only “large” developers) must publish a transparency report. Reports must include model details (intended uses, modalities, restrictions), as well as summaries of catastrophic risk assessments, their results, and the role of any third-party evaluators.
• Disclosure of Safety Incidents: Frontier developers are required to report critical safety incidents to the Office of Emergency Services (“OES”). OES must also establish a mechanism for the public to report critical safety incidents. Covered incidents include unauthorized tampering with a model that causes serious harm, the materialization of a catastrophic risk, loss of control of a frontier model that results in injury or major property damage, or a model deliberately evading developer safeguards. Frontier developers are required to report any critical safety incident within 15 days of discovery, shortened to 24 hours if the incident poses imminent danger of death or serious injury.
• Whistleblower Protections: SB 53 prohibits retaliation against employees or contractors who report activity from catastrophic risks. Employers must provide notice of employee rights and maintain anonymous reporting channels.

Action items

The new law is directed at developers of advanced AI systems, but it’s impact could be far-reaching for those businesses who rely on AI platforms.

If you are a founder of a tech startup, it is not likely that this law applies directly to you. However, SB 53 may still materially impact your startup business. In particular, SB 53 introduces regulatory, commercial, and reputational dynamics that are likely to extend well beyond California.

What the law currently requires

The Outdoor Advertising Act (“Act”) regulates placement of advertising displays adjacent to and within specified distances of highways that are part of the national system of interstate and defense highways and federal-aid highways. The Act prohibits a person, as defined, from placing an advertising display within the areas affected by the act without a permit. The Act authorizes the Director of Transportation to adopt regulations for the enforcement of the Act. Pursuant to that authority, existing regulations only require the Department of Transportation (“DOT”) to process an application for placing a new advertising display along a new alignment of an interstate or primary highway if the application is accepted on or after the date that the department accepts the highway project for the new alignment as complete.

How the bill changes the law

This bill prohibits the DOT from denying or delaying the acceptance of a permit application for a new advertising display along a portion of a new alignment of an interstate or primary highway on the basis that the highway project has not been accepted as complete if the section of highway is open to the use of the public for vehicular travel within 1,000 feet of the location specified in the permit application.

This change modifies existing regulations under the Act, which previously allowed the DOT to delay or deny permits based on the incomplete status of a highway project. The bill makes it easier for advertisers to place billboards and other advertising displays near newly constructed or realigned interstate and primary highways by removing bureaucratic barriers that could slow down the permit process.

Action items

If your business seeks to place billboards or other advertising displays on or near newly constructed interstate or primary highways, this bill makes the permit application process easier and smoother

What the law currently requires

Existing law requires an individual or a business that conducts business in California, and that owns or licenses computerized data that includes personal information, to disclose a breach of the security of the system following discovery or notification of the breach in the security of the data to a resident of California whose unencrypted personal information was compromised, and requires that disclosure to be made in the most expedient time possible and without unreasonable delay, consistent with the legitimate needs of law enforcement, or any measures necessary to determine the scope of the breach and restore the reasonable integrity of the data system.

Existing law also requires an individual or business that is required to issue the security breach notification described above to more than 500 California residents as a result of a single breach of the security system to electronically submit a single sample copy of that security breach notification, excluding any personally identifiable information, to the Attorney General.

How the bill changes the law

This bill requires that data breach disclosures to be made within 30 calendar days of discovery or notification of the data breach but would authorize a business to delay the disclosure to accommodate the legitimate needs of law enforcement, or as necessary to determine the scope of the breach and restore the reasonable integrity of the data system.

This bill also requires that submission to the Attorney General to be made within 15 calendar days of discovery or notification of the security breach.

Action items

All 50 states and several cities have breach notification laws, as well as notification requirements under federal law, such as HIPAA and banking regulations. Over the years, many of those laws have been updated in several respects – notification deadlines, definitions of personal information, requirements to provide ID theft services and credit monitoring, etc. It is imperative to stay on top of these legal and compliance obligations in order to help maintain preparedness.

SB 446 takes effect January 1, 2026, giving businesses a few months to review and update their incident response plans. Organizations handling California residents’ personal information should act now to ensure they can meet the 30-day notification requirement. This includes establishing clear internal procedures for breach detection, assessment, documentation, and notification.

What the law currently requires

Existing law, known as the Cartwright Act (“Act”), generally regulates trusts, which the Act defines as a combination of capital, skill, or acts by two or more persons for certain purposes, including to create or carry out restrictions in trade or commerce. If a violator of the Act is a corporation, the Act punishes the violator by a fine of the greater of an amount not more than $1,000,000 and an amount related to the pecuniary gain from the violation or the pecuniary loss to another by the violation. If a violator of the Act is an individual, the Act punishes the violator by imprisonment of 1-3 years in a state prison or county jail, imprisonment of not more than one year in a county jail, by a fine of not more than the greater of $250,000 and an amount related to the pecuniary gain from the violation or the pecuniary loss to another by the violation, or by both a fine and imprisonment.

How the bill changes the law

This bill increases the fine described above with respect to corporate violators to $6,000,000. The bill also increases the fine described above with respect to an individual violator to $1,000,000. The bill imposes an additional civil penalty of $1,000,000 on a person, corporation, or business entity for violating the Act.

Sponsors of the bill emphasized the importance of state-level enforcement, especially in light of uncertainties regarding federal antitrust enforcement under the current administration. According to the sponsors, if federal authorities reduce their efforts, California must be prepared to take a more active role in regulating corporate behavior.

Action items

None at this time.

What the law currently requires

Existing law contains various provisions relating to contracts for the performance of private works of improvement, including provisions applicable to a retention withholding by an owner from a direct contractor or by a direct contractor from a subcontractor.

How the bill changes the law

This bill, entitled the Private Works Change Order Fair Payment Act, establishes, until January 1, 2030, for contracts entered into on or after January 1, 2026, a claim resolution process applicable to any claim by a contractor or subcontractor in connection to a work of improvement or site improvement, except as specified. The bill defines a claim for these purposes as a separate demand by the contractor or subcontractor sent by registered mail or certified mail with return receipt requested, for, among other things, a time extension for relief from damages or penalties for delay assessed by an owner under contract for a work of improvement or site of improvement.

Owners are required to meet and confer with contractors in response to such claims within thirty (30) days of receipt and identify the disputed and undisputed claims within ten (10) days of that meeting. Failure to respond within ten days is treated as the equivalent to having disputed the claim.

The undisputed portions of any claim must be paid within sixty (60) days, or they become subject to interest at a rate of two percent (2%) per month. Disputed claims which are later found to have been owed are assessed interest, in the same amount.

SB 440 provides a dispute resolution process, which includes nonbinding mediation, for any disputed claim. Owners that fail to conform to the timelines established under SB 440, or that refuse to engage in mediation, may be issued a stop work notice by contractors. Contractors can stop work forty (40) days after the issuance of a stop work notice.

Owners and contractors, under SB 440, can negotiate contracts which contain “reasonable change order, claim, and dispute resolution procedures and requirements” which are in addition to those established in SB 440, so long as those contracts do not interfere with the timeframes and procedures established under SB 440.

Action items

General contractors and owners in the construction industry will need to conduct a review of the change order procedures contained in their construction contracts, prior to January 1, 2026, to ensure that the contracts comply with SB 440.

Contractors should determine how to use SB 440 to improve their collection procedures.

It is important to craft claim resolution language that provides you with as much protection as possible from undue and unauthorized claims.

General contractors must ensure that their contracts clearly lay out expectations regarding the handling of subcontractors’ claims against owners.