California Minimum Wage to Rise in 2026 Important Information for Employees

California workers can look forward to a pay rise starting January 1, 2026. The state’s Department of Finance recently revealed that at the start of next year, the state’s minimum wage will increase to $16.90 per hour. The current minimum wage in California is $16.50. This announcement came in the form of a letter, dated August 1, 2025, that was sent to Governor Newsom and Senate and Assembly leaders. The $0.40 increase might seem small, but it will significantly boost paychecks across many industries. Below is some vital information you need to know as a California employee regarding this upcoming change.

How Does California Calculate Minimum Wage Rates?

California’s minimum wage is subject to annual inflation-based adjustments tied to the Consumer Price Index (CPI), which measures cost-of-living changes. California law mandates that the state’s minimum wage be adjusted annually to incorporate these changes. The rate is adjusted up to a maximum of 3.5% per year.  

Therefore, the $0.40 per hour rise set to take effect at the beginning of 2026 is not arbitrary but rather mandated by the law. According to the letter sent to the Governor, the increase reflects a 2.49% increase in CPI.

Impact on Salaried Employees.

The new minimum wage will impact not only hourly employees but also salaried ones. In California, employees who are classified as “exempt” due to their duties must also satisfy a certain salary threshold, which is directly linked to the state minimum wage. Exempt employees must earn at least double the minimum wage (multiplied by 2080 hours per year) on a salaried basis.

With the minimum wage set to increase to $16.90 per hour on January 1, 2026, it means the minimum annual pay for exempt employees will increase to $70,304 on the same day. It is vital for you to be aware of this threshold if you are classified as an exempt employee. Knowing this threshold can help you determine if you are misclassified or underpaid.

Rules Governing Specific Industries

In California, not all employees are subject to the general state minimum wage. Workers in certain industries have specific pay standards. For example, the rates for healthcare workers currently range from $18.63 to $24 per hour. Over time, these rates are set to increase. Fast food workers also have different pay standards. In 2024, workers at limited-service chains with at least 60 locations nationwide saw a notable increase to $20 per hour. If you work in either of these industries, you need to confirm which wage scale applies to you.

Local Minimum Wage Ordinances

Because the state’s minimum wage only sets a baseline, many cities and counties across the state have established higher minimum wage rates. For instance, areas like Los Angeles, Berkeley, and San Francisco adopt higher minimum wages than the state’s requirement. Be sure to check your city’s or county’s minimum wage laws, as local ordinances usually override the state rate when higher. This means that if you work in an area with a higher minimum wage law, you are always entitled to the local higher minimum wage.

As 2026 approaches, it is vital that you stay informed about your rights, whether as an hourly or salaried employee. Mark your calendar and prepare to scrutinize your paychecks for violations.

Contact a California Employment Lawyer

Contact a California employment lawyer if you have questions or need help understanding whether your employer is paying you correctly.