A Guide to California’s 2026 Minimum Wage and Overtime Exemption Changes

In the coming year, workers in California will experience significant changes to wage laws that will affect paychecks throughout the state. Whether you are paid an hourly wage or a salary, it is crucial to understand these upcoming changes to ensure you are compensated fairly for your work. Here is a breakdown of what you need to know as 2026 approaches.

Increased Hourly Wages for Many Workers

Starting January 1, 2026, California’s minimum wage will increase from $16.50 per hour to $16.90. This increase is a positive move, but for many employees, the local minimum wage is even more important. In California, many local municipalities have established their own higher pay rates. If a city or county has a local minimum wage ordinance, workers are entitled to the higher local rate.

Here are some of the local minimum wages that will increase at the beginning of next year.

• West Hollywood (at the top): $20.25
• Mountain View: $19.70
• Sunnyvale: $19.50
• San Jose: $18.45
• Richmond: $19.18
• Palo Alto: $18.70

Additionally, it is vital to keep in mind that some industries have unique rules. If you are in the fast food industry, your current minimum wage is $20.00 per hour, which is expected to increase in the future. Healthcare workers have a different, higher-tiered minimum wage system, with the next increases set for July 1, 2026.

The Salary Threshold Change

For workers on a salary, an important change will come along with the hourly wage increase. In California, for a worker to be considered exempt from overtime laws (meaning they don’t receive overtime pay regardless of how many hours they work), their position must not only pass a certain duty test but also meet a specific salary threshold.

In 2026, the minimum annual salary for most exempt executive, administrative, and professional employees will rise from $68,640 to $70,304. This amount is calculated as double the state minimum wage for a full-time worker.

A vital thing to note is that California law specifies even higher pay limits for certain specialized professions to qualify for exemption from overtime. Effective January 1, 2026, and in accordance with Labor Code Section 515.5(a)(4), for computer software employees to be considered exempt from overtime pay, these workers must earn at least $58.85 per hour or an annual income of $122.573.13. And for some licensed physicians and surgeons, the minimum hourly rate will be $107.17.

Preparing for 2026

With California’s minimum wage and overtime exemption changes set to take effect in 2026, it is essential for employees to prepare and ensure they are fairly compensated. For example, if you are a non-exempt worker, start by checking your city or county’s minimum wage rate, as local laws may provide higher rates than the statewide minimum rate. By staying informed and prepared, you can ask your employer questions, clarify expectations, and avoid surprises when the changes take effect. Understanding the upcoming changes and taking proactive steps will help you protect your rights and ensure your paycheck reflects the compensation you deserve.

Contact a California Employment Lawyer

If you have questions about the upcoming minimum wage and overtime exemption changes or need help with a wage-related matter, contact a California employment lawyer.