California Increases Minimum Wage Effective January 1, 2026
California’s minimum wage rate will increase for all employers, regardless of size, to $16.90 per hour from the current $16.50 per hour, based on the recently released minimum wage adjustment calculated by the state’s director of finance. You can find the calculation adjustment notice here.
This 2026 increase follows California voters rejecting a ballot proposition in November 2024 that would have raised the state minimum wage rate for all employees to $18.00 per hour by January 1, 2026.
In April 2024, a $20.00 minimum wage rate has applied to workers at most fast-food restaurants in California under the California Food Accountability and Standards Recovery Act (FAST Recovery Act). Additionally,many local jurisdictions in California have their own minimum wage rates that exceed the state requirement – and which are usually adjusted annually in July.
For more information, please see our July newsletter.
Increased Hourly Wage Impacts Other Employees
Exempt Employee Minimum Salary Increases
The minimum wage increases will also cause an increase in the minimum salary payable to certain exempt employees under California wage laws. The new minimum salary will rise to an annualized $70,304 from $68,640 per year (an increase of $1,664).
Other Wage Related Increases
The hourly minimum wage increase also effects the amount paid for wage-related premiums for missed meals and breaks, split shift premiums, reporting time pay, and for sick leave, and must be reflected on the non-exempt hourly employees’ wage statements.
Employers should also consider the impact on inside sales exemptions, tool reimbursements, and certain piece-rate compensation arrangements as they may need recalibration based on the new wage.
What Should I do Now?
In preparation for the January 1 minimum wage increase, employers should:
- Audit employee compensation to ensure compliance with new minimum wage and exemption thresholds.
- Update payroll systems to reflect the new rate for both hourly and salaried workers.
- Revise policies and workplace postings to ensure they align with the updated wage requirements.
- Train HR and payroll personnel on the impact of the wage hike on overtime eligibility, premiums, and pay stub accuracy.
This Newsletter is intended as a brief summary of employment law. While every effort has been made to ensure the accuracy of the information contained herein, it is not intended to serve as “legal advice,” or to establish an attorney-client relationship. If additional information is needed on any of the topics contained herein, please contact our office. All rights reserved. ©2025