On October 13, 2025, California Governor Gavin Newsom signed Senate Bill 261 (SB 261) into law, strengthening enforcement of unpaid wage judgments obtained through the Division of Labor Standards Enforcement (DLSE). The DLSE, under direction of the Labor Commissioner, enforces California’s labor laws by investigating employee complaints and, where appropriate, conducting hearings through which an employee may recover wages, penalties and other demands for compensation. The bill went into effect on January 1, 2026.

SB 261 introduces mandatory fee-shifting, and enhanced penalties for employers who fail to timely satisfy wage judgments. Under the law, courts must award prevailing judgment creditors reasonable attorneys’ fees and costs incurred in the enforcement of unpaid wage judgments for work performed in California.

If a final judgment remains unpaid 180 days after the appeal period ends, the court may impose a civil penalty up to three times the outstanding balance, including interest. These penalties are in addition to, and not in lieu of, other fines or penalties available under the law. SB 261 also extends liability to successors of a judgment debtor, including successor employers under Labor Code § 200.3. Such successors may be held jointly and severally liable for penalties assessed on an unpaid wage judgment.

Employers should carefully monitor deadlines for satisfying wage judgments issued through Labor Commissioner proceedings. Prompt payment or timely settlement of wage judgments is critical to avoid the additional penalties established under SB 261.

Stokes Wagner will continue to monitor updates and will provide additional updates as they become available. If you have any questions, do not hesitate to contact a Stokes Wagner attorney.

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THIS DOCUMENT PROVIDES A GENERAL SUMMARY AND IS FOR INFORMATIONAL/EDUCATIONAL PURPOSES ONLY. IT IS NOT INTENDED TO BE COMPREHENSIVE, NOR DOES IT CONSTITUTE LEGAL ADVICE. PLEASE CONSULT WITH COUNSEL BEFORE TAKING OR REFRAINING FROM TAKING ANY ACTION.