California Widens Sex Discrimination Protections in 2027: Update Your Handbook

Starting January 1, 2027, AB 2563 makes California’s sex discrimination protections expressly cover gender category, stereotype conformity, gender identity and expression, gender-affirming care, pregnancy and related decisions, sexual orientation and variations in sex characteristics. Update your equal employment opportunity statement, anti-harassment policy and training slides to match.

I am Mac Malbrough. I hold a J.D. and an MS-HRM, I am not an attorney, and this is general information, not legal advice. I read AB 2563, Chapter 952 of the Statutes of 2026, on the California Legislative Information site on November 6, 2026. It was approved on September 30, 2026. This post is written for employers of 10 to 150 people who maintain a handbook and run a yearly training, and it is a short list of what to change, not a full legal analysis.

What does AB 2563 change?

The bill is long because it adds a definition to dozens of California codes, but the employment pieces are short. It adds Section 12.3 to the Labor Code, and it amends the California Fair Employment and Housing Act’s definition of “sex” in Government Code Section 12926 so that it includes the same list. The Labor Code section says any provision that prohibits discrimination based on sex, gender or similar grounds “shall also be interpreted as prohibiting sex discrimination, as defined in this section.” If another Labor Code provision defines the scope differently, the one that gives greater protection prevails.

The bill’s text says it reflects existing protections in the California Constitution, and that it should be liberally construed. For an employer, the practical meaning is that the definitions you used in the past may be too narrow, and that a plain list now exists to check against.

What does the new definition of sex discrimination include?

The definition is not limited to this list, and it covers actual or perceived characteristics or actions. The Labor Code section names these, and the Fair Employment and Housing Act now incorporates the same ones:

1. Assigned sex or gender category, including female, male or nonbinary.
2. Degree of conformity to sex or gender stereotypes.
3. Gender, including gender identity, gender expression, and access to and use of gender-affirming care and other related health care.
4. Pregnancy or related medical conditions, which the section says include childbirth, abortion, lactation, miscarriage, fertility and contraception.
5. Decisionmaking, access to care, or potential or actual use of a drug, device, product or service related to pregnancy or related medical conditions.
6. Sexual orientation.
7. Variations in sex characteristics, including intersex traits or differences in sex development.

The section also says “discrimination” includes harassment, so each item applies to your harassment policy as well as to hiring, pay, promotion and discipline. Existing California law already protected many of these. What is new is that one list now names them together, including reproductive-health decisions and sex characteristics, which most handbooks do not mention.

When does it take effect, and who does it reach?

The bill has no urgency clause that I found, so it follows the usual January 1, 2027 start for 2026 bills. It reaches the same employers the Fair Employment and Housing Act already reaches. Discrimination rules apply to employers with five or more employees, and harassment rules apply to employers of any size, so a ten-person company is covered and a four-person company is covered for harassment. The employers most likely to be behind are those whose handbook was written years ago and has only been patched since, so start with the date on yours.

What about menopause?

You may see summaries that list perimenopause and menopause. In the text I read, that addition only operates if AB 1940 was enacted and took effect, and my earlier post on AB 1940 and the veto explains why it did not. I left menopause out of the list above on purpose. Existing law on sex, disability and medical condition may still apply to a particular situation, so ask an employment attorney about a specific case.

Which handbook lines should you update?

Start with three sections.

• Equal employment opportunity statement: replace a short list such as “sex, race, religion” with language that names gender identity, gender expression, sexual orientation and pregnancy or related medical conditions, and says the policy covers perceived characteristics.
• Anti-harassment and anti-retaliation policy: add that harassment includes conduct based on stereotypes about how a person should look or act, and add a reporting path that does not run through the person’s direct manager.
• Pregnancy, lactation and leave policies: confirm they cover miscarriage, fertility treatment and decisions about contraception or abortion without asking an employee to explain, and point to your existing leave rules. My guide on how California leave laws fit together shows the pieces.

A sample sentence for the equal employment opportunity statement: “The company prohibits discrimination and harassment based on sex, including gender, gender identity, gender expression, sexual orientation, pregnancy or related medical conditions, variations in sex characteristics, and the actual or perceived degree of conformity to sex or gender stereotypes.” The handbook gap checker and my handbook requirements guide will tell you which other sections to open while the document is on your screen.

What should training cover?

The bill does not add a new required training topic that I found. Your harassment prevention training still follows its current rules. But a training that gives examples only of one kind of conduct will leave managers unsure about the rest. Add three scenarios to your slides: a manager who criticizes an employee for how they dress or speak because it does not match a stereotype, a co-worker who comments on another person’s pregnancy decisions or use of fertility treatment, and a supervisor who uses the wrong name or pronoun repeatedly after being corrected. My guide to harassment prevention training for small employers has the baseline rules.

What should managers be reminded of?

Give your managers one short note before January:

1. Protected characteristics include ones you only think someone has. Treat perceived characteristics the same as actual ones.
2. Do not ask about an employee’s health care, medications or reproductive decisions. If an accommodation or leave is needed, send the employee to HR.
3. Do not decide anything based on how well a person fits your idea of how a man or woman should look or behave.
4. Report any complaint to HR the same day, whether or not the employee uses the word “discrimination.”

What should you do this week?

Open the equal employment opportunity statement in your handbook and compare it with the seven items above. Rewrite it once, with the sample sentence, and put the new version date on the page. Then add the three training scenarios to your next session. If you want a full review of the handbook, the HR compliance check-up covers it, and the California employee handbook template includes policy language you can adapt.

Sources

• AB 2563 (Pacheco), Chapter 952, Statutes of 2026, approved September 30, 2026, read November 6, 2026
• Labor Code Section 12.3 and Government Code Section 12926, as added and amended by AB 2563, in the chaptered text above

McKinley holds a J.D. but is not a licensed attorney. Articles here are general information, not legal advice. For your specific situation, talk with an employment attorney.