ARE YOU READY FOR THE NEW MINIMUM WAGE INCREASE IN CALIFORNIA?
Effective January 1, 2026, the State of California’s minimum wage will increase to $16.90 per hour. This increase applies to all employers, regardless of size.
This change also impacts the salary threshold for exempt employees. To qualify for the administrative, professional, or executive exemptions, employees must not only meet the duties test but also earn a salary equivalent to twice the state minimum wage. With the minimum wage rising to $16.90 per hour on January 1, 2026, the minimum annual salary for exempt employees will increase to $70,304.
Employers should be aware that many cities and counties in California have enacted their own minimum wage ordinances, often setting rates higher than the state minimum. In such cases, the higher local minimum wage takes precedence for work performed within that jurisdiction. For a comprehensive list of local minimum wages, visit the California Department of Industrial Relations website: Berkeley Labor Center – Local Minimum Wage Ordinances.
Additionally, there are specific minimum wage requirements depending on the job performed, including ordinances for those who work in the fast-food industry and healthcare industry which have higher minimum wage requirements than the state/local ordinances. Employers must comply with all ordinances applicable to their industry.
In addition to the State’s increase in minimum wage, the City of San Diego will raise its minimum wage to $17.75 per hour, effective January 1, 2026, under its Earned Sick Leave and Minimum Wage Ordinance. All employers must pay each employee, for each hour worked within the geographic boundaries of San Diego City, wages not less than $17.75. If a work location is outside San Diego city limits but within San Diego County, the state minimum wage and earned sick leave laws apply.
As such, it is important to understand that the location of the workplace or job site determines the requirements for the minimum wage for non-exempt employees.
Employers need to ensure that their payroll system is updated with the new minimum wage requirements before July 1, 2026, to make sure they do not violate minimum wage laws. Additionally, employers must update their posters with the new minimum wage requirements.
If you have any questions or need guidance on wage and hour compliance in California, please contact us.