HR Corner: What C-Suiters Are Asking (Or Should Be Asking) Their HR Teams Today

HR is no longer viewed simply as the department responsible for hiring, benefits and compliance. It has become one of the most strategic functions in the organization, helping executives navigate a rapidly changing labor market while minimizing legal risk and protecting profitability.

For Los Angeles-area businesses in particular, three major developments are converging at once:

1. California’s new restrictions on “stay-or-pay” agreements under AB 692
2. An increasingly mobile workforce, with many professionals planning to seek new opportunities
3. Rising wage thresholds for exempt employees and continued increases to state and local minimum wages

Individually, each presents a challenge. Together, they are forcing executive teams to rethink compensation strategies, retention programs and workforce planning before the end of the year.

Are Our Employment Agreements Still Legal?

Perhaps the biggest immediate question executives are bringing to HR concerns California’s new AB 692, which places significant restrictions on so-called “stay-or-pay” agreements.

Historically, many employers offered signing bonuses, relocation assistance or company-funded training with provisions requiring employees to repay those costs if they left within a specified period. While intended to protect employer investments, these agreements are now under much greater legal scrutiny.

For HR leaders, the message is clear: Every employment agreement should be reviewed.

Questions executives should be asking include:

• Which bonus or repayment agreements could now create legal exposure?
• Are relocation packages compliant with current law? Do training reimbursement provisions need to be rewritten?
• Are employment contracts unintentionally discouraging employee mobility?

Employment attorneys generally recommend companies audit existing agreements rather than waiting until a dispute arises. A policy that was considered standard practice only a year ago may now require significant revision.

Why Is Retention Becoming More Expensive?

The second big conversation revolves around talent retention.

Multiple workforce surveys suggest that more than half of Los Angeles professionals are considering changing jobs this year. At the same time, certain skilled professions – including accounting, finance, cybersecurity and experienced technology roles – continue to experience exceptionally tight labor markets.

When unemployment hovers near historic lows in specialized fields, employees gain negotiating leverage. For executive teams, that means replacing a departing employee often costs substantially more than retaining one.

HR leaders are increasingly advising CEOs to move beyond annual raises as their primary retention strategy. Instead, companies are investing in:

• Flexible work arrangements
• Career development programs
• Leadership training
• Internal mobility opportunities
• More transparent compensation planning
• Improved manager coaching

Many employees leave because they don’t see a future inside the organization rather than because of salary alone. That makes career pathing just as important as compensation.

The best retention strategies begin long before an employee submits a resignation.

Are We Paying Enough to Keep Exempt Employees?

Another pressing issue involves California’s exempt employee salary threshold.

The annual salary minimum has increased again, reaching $70,304 for many exempt employees, requiring employers to reevaluate numerous positions. For organizations employing supervisors, managers or professional staff whose salaries sit near the threshold, executives now face difficult decisions.
Should employees receive salary increases to preserve exempt status? Or should certain positions be reclassified as non-exempt? Neither option is inexpensive. Maintaining exempt status increases payroll costs. Reclassification introduces overtime requirements, meal and rest break compliance, scheduling changes and additional administrative oversight.

HR departments are working closely with finance teams to model both scenarios before making organizational decisions.

HR Has Become a Strategic Business Partner

The common thread connecting all of these issues is that they extend well beyond traditional human resources. Every compensation adjustment affects budgets. Every compliance issue affects legal risk. Every resignation affects productivity. Every hiring delay affects revenue.
For these reasons, HR conversations are increasingly becoming executive conversations.

The organizations best positioned for success heading into the fourth quarter will be those that treat HR not as an administrative function but as a strategic advisor capable of helping leadership balance compliance, workforce stability and long-term growth.

California’s evolving employment landscape shows little sign of slowing. Businesses that proactively review employment agreements, modernize retention strategies, reassess compensation structures and prepare managers for changing workplace expectations will be better equipped to compete for talent while avoiding costly legal and operational surprises.

In today’s labor market, the most valuable question a CEO can ask may no longer be “Can we afford these HR changes?” It may instead be “Can we afford not to?”