California’s minimum wage will increase again on January 1, 2026, affecting non-exempt pay, exempt classifications, and system setup across HR, payroll, and timekeeping.
The statewide minimum wage will rise to $16.90 per hour, but many cities, counties, and certain industries (including fast food and health care) will have higher minimum wage requirements.
Statewide Minimum Wage in 2026
Effective January 1, 2026:
- The statewide minimum wage will be $16.90 per hour for most non-exempt employees.
- This rate applies to employers of all sizes, unless a higher local or industry-specific minimum wage applies.
- Piece-rate, commission, day-rate, and similar pay structures must still result in at least the applicable minimum wage for all hours worked.
Exempt Salary Threshold
California’s “white-collar” exemptions (executive, administrative, and professional) require that employees:
- Meet the applicable duties test, and
- Be paid a salary of at least twice the state minimum wage based on full-time employment.
Using the 2026 statewide minimum wage, the exempt salary threshold becomes:
- $70,304 per year, or
- $5,858.67 per month
Employers may want to identify exempt employees working in California whose salaries fall below this level and decide whether to increase pay or reclassify those roles as non-exempt.
Higher Industry Rates: Fast Food and Health Care
Some industries are subject to state minimum wages above $16.90:
- Fast food: Certain large-chain fast food workers must be paid at a higher statewide minimum wage that already sits above the general rate and may be adjusted annually.
- Health care: Many covered health care workers are subject to separate minimum wage schedules that exceed the general statewide rate, with specific amounts that depend on facility type and other factors.
Fast food and health care employers should confirm which industry schedule applies and use those higher rates (and any related salary floors) when reviewing pay.
Local Minimum Wage Examples for 2026
Many jurisdictions have local minimum wage ordinances that exceed the statewide rate. Selected examples in effect on January 1, 2026 include:
- West Hollywood: $20.25 per hour (among the highest general local minimum wages for private employers).
- Emeryville: $19.90 per hour.
- Mountain View: $19.70 per hour.
- Sunnyvale: $19.50 per hour.
- Berkeley: $19.18 per hour.
- San Francisco: $19.18 per hour.
- Richmond: $19.18 per hour.
- Oakland: $17.34 per hour.
Other cities and counties with local minimum wages above the statewide rate include, among others, Alameda, Daly City, Cupertino, Fremont, Hayward, Los Angeles, Menlo Park, Novato, Palo Alto, Pasadena, Petaluma, Redwood City, San Diego, San Jose, Santa Clara, Santa Monica, Santa Rosa, Sonoma, South San Francisco, and unincorporated areas of certain counties.
Some ordinances also have employer-size splits (for example, different rates for smaller vs. larger employers). Because local rules can change, employers should confirm the most recent postings for each location where employees perform work.
Key Items for Employers to Review
Before January 1, 2026, employers with California employees may want to:
- Validate Pay Rates
Compare current hourly rates (and effective hourly pay for piece-rate/commission roles) against the correct statewide, local, and industry-specific minimum wages.
- Review Exempt Classifications
Identify exempt employees earning less than $70,304 annually (and, in fast food or health care, below any higher industry-based salary floors) and decide whether to adjust salaries or reclassify.
- Update Systems and Calculations
Configure HRIS, payroll, and time & attendance with updated statewide, local, and industry-specific minimum wage tables, including any small/large-employer splits.
- Refresh Postings and Communication
Post current state and local minimum wage notices (and any required industry-specific notices) and consider sending a short communication to employees summarizing key changes.
How VertiSource HR Can Support Employers
VertiSource HR provides HR outsourcing, HRIS, payroll, benefits administration, workers’ compensation and risk management, and time & attendance services. In connection with
California minimum wage updates, VertiSource HR can help employers:
- Use HRIS and payroll data to identify employees whose pay falls below applicable statewide, local, or industry-specific minimum wages.
- Configure system rule sets so that minimum wage rates and exempt salary thresholds are correctly applied by location, industry, and employer size.
- Coordinate wage changes across HR, payroll, and time & attendance to support consistent, compliant implementation.
Employers who would like assistance with these updates can contact VertiSource HR to discuss how these services may fit their specific situation.
General HR guidance only: This article provides general HR and compliance information and is not legal advice. Employers should consult legal counsel or a qualified advisor regarding specific circumstances.
