California Minimum Wage Increasing January 1, 2026
Starting January 1, 2026, California’s statewide minimum wage will increase to $16.90 per hour for all employers, regardless of size. This annual adjustment, based on the Department of Finance’s Consumer Price Index, will have ripple effects on pay structures, exemptions, and compliance requirements — even in cities with higher local wage ordinances.
Why This Matters
This increase impacts more than just hourly rates. Employers will also see:
Higher exempt employee salary thresholds.
Adjusted calculations for overtime, split shifts, and meal/rest period penalties.
Possible updates to sick leave accrual and wage statements.
Overlap with local minimum wage rules that may exceed the state rate.
The need to review employee classifications for compliance.
Five Key Facts
Applies to All Employers – No exceptions based on headcount.
Exempt Salary Thresholds Increase – Most exempt roles must meet $70,304/year or $5,858.67/month.
Special Pay Structures Affected – Inside sales, piece-rate, and tool reimbursement policies may need review.
Premium Pay Adjustments – Split shifts, reporting time, and certain violation penalties must use the new hourly rate.
Local Ordinances Still Apply – Cities such as San Francisco, Los Angeles, San Diego, Santa Monica, and Berkeley may require higher pay.
What Employers Should Do Now
Review wages and employee classifications for compliance.
Update payroll systems with the new rates.
Revise policies and replace required workplace postings.
Train HR and payroll teams on updated thresholds and calculations.
Monitor any city or industry-specific wage changes.
This update is provided as a general resource for our clients and does not constitute legal advice. For guidance specific to your organization, please contact HR Advisors.