Quick Summary: The California minimum wage in 2026 is $16.90 per hour, up from $16.50 in 2025. This statewide rate is effective January 1, 2026 and applies to all employers, but workers must be paid the highest applicable wage based on state law, local city or county ordinances, or any industry specific requirement. Source

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California employers face a new payroll reality in 2026, with the state minimum wage climbing to $16.90 per hour effective January 1st. If you’re managing payroll, overseeing HR compliance, or running a California business, this increase demands immediate attention to your compensation structures and budget planning.

But the $16.90 figure tells only part of the story. Depending on your industry, business location, and workforce composition, you may be legally required to pay significantly more. Understanding the complete California minimum wage landscape isn’t just about compliance, it’s about avoiding costly penalties, lawsuits, and damage to your business reputation.

Here’s your comprehensive guide to navigating California’s 2026 minimum wage requirements and keeping your business on the right side of the law.

California Minimum Wage 2026: What Employers Must Pay

The baseline California minimum wage for 2026 stands at $16.90 per hour for all employers, regardless of company size. This represents a $0.40 increase from 2025’s $16.50 rate.

This marks a significant shift from previous years when California applied different rates based on employer size. If you have 25 employees or 250, the requirement is now identical: $16.90 per hour minimum.

Don’t assume your small size exempts you from compliance. Even single-employee businesses must meet this threshold. The only exceptions are specific categories of workers explicitly exempted by law, which we’ll cover in detail below.

For most California employers, this means reviewing every employee’s compensation and adjusting as necessary before the January 1st deadline. Failure to pay the correct rate exposes you to wage claims, penalties, and potential litigation, expenses that far exceed the cost of compliance.

California Minimum Wage History

Effective Date	CA Minimum Wage
Jan 1, 2026	$16.90
Jan 1, 2025	$16.50
Jan 1, 2024	$16.00
Jan 1, 2023	$15.50
Jan 1, 2022	$14.00 / $15.00 (26+ Employees)
Jan 1, 2021	$13.00 / $14.00 (26+ Employees)
Jan 1, 2020	$12.00 / $13.00 (26+ Employees)
Jan 1, 2019	$11.00 / $12.00 (26+ Employees)
Jan 1, 2018	$10.50 / $11.00 (26+ Employees)
Jan 1, 2017	$10.00 / $10.50 (26+ Employees)

Source: Department of Industrial Relations Minimum Wage FAQs

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Industry-Specific Minimum Wages

If you operate in certain industries, the standard state minimum wage doesn’t apply. California has established higher mandatory rates for specific sectors, and employers in these industries must budget accordingly.

Fast Food Restaurants

Fast food employers are subject to a higher minimum wage of $20.00 per hour, which took effect April 1, 2024. This applies to limited-service restaurants that are part of a national chain with at least 60 locations nationwide.

This industry-specific rate covers most non-managerial employees, including workers who take orders, prepare food, serve customers, and perform cleaning or maintenance duties. If your business qualifies, you must apply the $20 per hour fast food minimum wage, not the standard $16.90 California minimum wage.

Misclassifying your business or paying the standard state rate when the fast food rate applies can create significant legal and financial exposure. Review the state’s fast food minimum wage FAQ carefully to confirm whether your operation falls under these rules and ensure your payroll practices are compliant.

Healthcare Facilities

Healthcare employers must navigate tiered minimum wage requirements that vary by facility type and follow a specific implementation schedule. These rates apply to workers providing patient care and support services across hospitals, clinics, dialysis centers, and other healthcare settings.

If you operate a healthcare facility, verify which tier applies to your organization and when rate increases take effect. The phased implementation means your payroll obligations may change mid-year, requiring careful planning and budget adjustments.

Agricultural Operations

If you employ sheepherders or goat herders working 24-hour shifts seven days a week, unique monthly compensation requirements apply that include mandatory overtime provisions. These specialized wage orders recognize the continuous nature of this work and establish compensation formulas that go beyond standard hourly calculations.

Local Minimum Wages

Here’s where California minimum wage compliance becomes genuinely complex: you may need to pay different rates for employees working in different cities or counties.

California law establishes a critical rule for employers: when federal, state, and local minimum wages conflict, you must pay whichever rate is highest. This “stricter standard” principle means local ordinances trump state law when they require higher compensation.

According to UC Berkeley’s Labor Center, dozens of California jurisdictions have enacted minimum wages exceeding the state rate. If a local ordinance applies, employers must pay the higher local rate. See table below.

City / County	Local Minimum Wage	Effective Date
Alameda	$17.46	7/1/2025
Belmont	$18.95	1/1/2026
Berkeley	$19.18	7/1/2025
Burlingame	$17.86	1/1/2026
Cupertino	$18.70	1/1/2026
Daly City	$17.50	1/1/2026
East Palo Alto	$17.90	1/1/2026
El Cerrito	$18.82	1/1/2026
Emeryville	$19.90	7/1/2025
Foster City	$17.85	1/1/2026
Fremont	$17.75	7/1/2025
Half Moon Bay	$17.91	1/1/2026
Hayward	$17.79 (26+ Employees)	1/1/2026
Los Altos	$18.70	1/1/2026
Los Angeles (City)	$17.87	7/1/2025
Los Angeles County (uninc.)	$17.81	7/1/2025
Malibu	$17.27	7/1/2024
Menlo Park	$17.55	1/1/2026
Milpitas	$18.20	7/1/2025
Mountain View	$19.70	1/1/2026
Novato	$17.46 (26-99) $17.73 (100+)	1/1/2026
Oakland	$17.34	1/1/2026
Palo Alto	$18.70	1/1/2026
Pasadena	$18.04	7/1/2025
Petaluma	$18.31	1/1/2026
Redwood City	$18.65	1/1/2026
Richmond	$19.18	1/1/2026
San Carlos	$17.75	1/1/2026
San Diego	$17.75	1/1/2026
San Francisco	$19.18	7/1/2025
San Jose	$18.45	1/1/2026
San Mateo	$18.60	1/1/2026
San Mateo County (uninc.)	$17.95	1/1/2026
Santa Clara	$18.70	1/1/2026
Santa Monica	$17.81	7/1/2025
Santa Rosa	$18.21	1/1/2026
Sonoma (City)	$17.38 (<25) $18.47 (26+)	1/1/2026
South San Francisco	$18.15	1/1/2026
Sunnyvale	$19.50	1/1/2026
West Hollywood	$20.25	1/1/2026

For employers, this creates several compliance challenges:

• Multi-location businesses must track and apply different rates depending on where each employee physically works. Your San Francisco location might require a significantly higher minimum wage than your Sacramento office, even though both operate under the same company umbrella.
• Mobile workforces present particular difficulties. If employees work in multiple jurisdictions, you must pay the applicable local rate based on where they perform services each day. This requires careful time tracking and payroll system capabilities to handle variable rates.
• Annual adjustments vary by jurisdiction. While the state adjusts its rate on January 1st, some cities implement changes on July 1st or other dates. You need systems to track multiple effective dates and ensure timely compliance across all locations.
• Failure to apply local rates represents one of the most common minimum wage violations. Don’t assume that paying the state minimum satisfies your obligations. Research your specific city and county requirements, and if you operate multiple locations, verify compliance for each one.

While the table above provides a comprehensive resource for identifying local ordinances, you should verify current rates through the official city and county sources (links in table).

Remote and Hybrid Work: Which Minimum Wage Applies?

Remote and hybrid arrangements can create minimum wage compliance problems, especially when employees live in one city but work (even occasionally) in another. The simplest way to think about it is this:

Minimum wage typically follows where the work is actually performed.

That means the applicable minimum wage can change depending on the employee’s physical work location on a given day.

Common Remote/Hybrid Scenarios

• Employee works from home full-time:
  Use the minimum wage that applies to the employee’s home work location (city/county), if a higher local rate exists.
• Employee splits time between home and an office in a different city:
  Pay the applicable minimum wage based on where they worked those hours. If Tuesday and Wednesday were in a higher-wage city, those hours should be paid at the higher rate.
• Employee travels to multiple sites (mobile workforce):
  Track work location by day (or shift) and apply the correct minimum wage to the hours worked in each jurisdiction.

Practical Compliance Tips for Remote/Hybrid Teams

• Update your timekeeping process so employees record work location (not just hours).
• Set a simple policy for how location is reported (home, client site, office address).
• Audit pay after rate changes (especially if your workforce crosses city/county lines).
• Don’t assume the “headquarters city” rate applies to remote employees who perform work elsewhere.

Note: Some local ordinances have specific coverage definitions and enforcement rules. When a city/county rate is higher than the state rate, verify the local requirements using the official ordinance links.

Understanding Future Minimum Wage Calculations

For business planning purposes, you need to anticipate how the California minimum wage will evolve in coming years.

California’s automatic adjustment system ties annual increases to the national Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This means wage increases track inflation, providing some predictability while ensuring workers maintain purchasing power.

The adjustment formula includes provisions that affect your long-term budgeting:

Annual increases are capped at 3.5 percent, limiting maximum year-over-year jumps. From the current $16.90 rate, this means the highest possible 2027 increase would be approximately $0.59, bringing the rate to around $17.49. However, actual increases depend on real CPI-W data.

• The rate cannot decrease, even during deflationary periods. This floor protects workers but means your minimum payroll costs will never drop below current levels. Budget accordingly for a one-way ratchet effect.
• The governor has no pause authority, eliminating uncertainty about political intervention in scheduled increases. What the formula dictates is what you’ll pay.
• Accelerated increases are possible if CPI-W exceeds seven percent in adjustment years, though this mechanism hasn’t yet been triggered.

For employers, this system means building annual wage increases into your financial projections. While you can’t know exact amounts years in advance, the 3.5 percent cap provides a reasonable upper bound for planning purposes.

Related: Workforce Planning: The Strategy Behind Strategic Staffing

Context for Current Rates

Understanding how California reached $16.90 helps contextualize future trajectory:

From 2017 through 2021, California implemented a split-track system where larger employers (26+ employees) reached $15 per hour faster than smaller businesses. By January 1, 2022, all larger employers hit $15. On January 1, 2023, the state unified at $15.50 per hour, marking the first inflation adjustment.

Subsequent increases brought rates to $16.00 (2024), $16.50 (2025), and the current $16.90 (2026). This steady climb reflects California’s commitment to maintaining wage purchasing power against inflation.

Critical Compliance Rules

California’s minimum wage laws include several provisions that differ from other states and federal requirements. Misunderstanding these rules leads to violations even among employers who believe they’re compliant.

No Tip Credit Allowed

Unlike many states, California prohibits using tips as a credit toward minimum wage obligations. If you operate a restaurant, bar, or other tipped establishment, you must pay employees the full minimum wage before any tips they receive.

This substantially increases labor costs compared to states that allow tip credits. Your servers, bartenders, and other tipped employees must receive $16.90 per hour (or the applicable local rate) as base pay, with tips coming entirely on top of this amount.

Plan your pricing and staffing models accordingly. Service charges and tips are separate from your minimum wage obligations and cannot reduce what you must pay from your own funds.

Employees Cannot Waive Minimum Wage Rights

No employee can legally agree to work for less than the applicable California minimum wage, and any such agreement is void. This applies even if an employee volunteers to accept lower pay, signs a contract agreeing to reduced wages, or negotiates compensation as part of a hiring discussion.

The minimum wage is a mandatory obligation that supersedes individual agreements and even collective bargaining contracts. You cannot avoid compliance by obtaining employee consent or documenting their willingness to accept less.

This rule protects workers from being pressured into accepting below-minimum compensation, but it also means you cannot rely on employee agreements as a defense if violations occur. The law establishes a non-negotiable floor regardless of individual circumstances.

Age-Based Pay Distinctions Are Prohibited

California doesn’t allow you to pay minors less than adults for the same work. Teenage employees must receive the full minimum wage applicable to their position, with no youth subminimum wage or training rate based on age.

If you employ workers under 18, budget for full minimum wage compensation from day one. The only relevant consideration is whether the learner exception applies (discussed below), which depends on experience level rather than age.

Exemptions: Who You Can Pay Less Than Minimum Wage

While California’s minimum wage laws are broad, specific exemptions allow below-minimum compensation for narrowly defined categories.

Outside Salespersons

Outside salespersons who spend more than half their working time away from your business location making sales or obtaining orders are exempt from minimum wage requirements. This exemption recognizes that these workers typically earn commission-based compensation that exceeds minimum wage equivalents.

To claim this exemption, carefully track where outside salespersons spend their time. If they regularly work in your office or facility, they may not qualify for exempt status.

Immediate Family Members

Immediate family members of the employer, specifically your spouse, parent, or child, don’t receive minimum wage protections. This exemption acknowledges unique family business dynamics but applies only to these specific relationships. Siblings, in-laws, and other relatives don’t qualify.

Registered Apprentices

Registered apprentices indentured under the State Division of Apprenticeship Standards follow their own compensation schedules tied to training progression rather than minimum wage requirements.

The Learner Exception: Limited Subminimum Wage

You may pay learners 85 percent of the minimum wage (rounded to the nearest nickel) during their first 160 hours of employment in occupations where they have no previous similar or related experience.

For 2026, this means you could pay approximately $14.35 per hour to qualifying learners during their initial 160 hours before increasing to the full $16.90 rate.

However, this exception requires careful application. The worker must truly be learning a new occupation without relevant prior experience. You cannot repeatedly use the learner exception by hiring the same worker for different positions or by cycling workers through 160-hour periods.

Document the basis for applying the learner exception, track hours carefully, and implement automatic increases to full minimum wage at the 160-hour mark. Misapplying this exception exposes you to wage claims for the difference between what you paid and what you owed.

Expired Exemptions You Can No Longer Use

If you previously employed disabled workers under special licenses allowing subminimum wages, note that these licenses expired January 1, 2025. California no longer issues or renews such licenses, ending subminimum wage practices for disabled workers.

All disabled employees must now receive at least the applicable minimum wage for their work. Adjust your compensation structures accordingly if you previously relied on this exemption.

What Happens When Employees File Wage Claims

Understanding the wage claim process helps you assess risks and respond appropriately if employees allege minimum wage violations.

The DLSE Investigation Process

When employees believe they’re underpaid, they typically file wage claims with the Labor Commissioner’s Division of Labor Standards Enforcement (DLSE). Once filed, a Deputy Labor Commissioner investigates and determines how to proceed.

The first step is usually a settlement conference where you and the employee attempt to resolve the dispute. This informal process allows for negotiated resolution without formal proceedings. Many claims settle at this stage, saving both parties the time and expense of hearings.

If the conference doesn’t resolve the matter, the case proceeds to a formal hearing where both sides present evidence and witnesses testify under oath. The proceeding is recorded, and afterward the Labor Commissioner issues an Order, Decision, or Award (ODA).

Either party can appeal the ODA to civil court, triggering a completely new trial with fresh evidence presentation. The court doesn’t defer to the Labor Commissioner’s findings; instead, it conducts an independent review of all facts.

Alternative Dispute Paths

Employees aren’t limited to the Labor Commissioner process. They can also:

• File lawsuits directly in court without going through DLSE, which may happen in complex cases or when employees seek damages beyond unpaid wages.
• Pursue arbitration if employment agreements require this alternative dispute resolution method.
• File class or collective actions on behalf of multiple employees if violations affected numerous workers similarly.

The True Cost of Wage Claims

Beyond unpaid wages themselves, California law allows recovery of:

• Waiting time penalties equal to the employee’s daily wage for up to 30 days if you willfully failed to pay all wages due upon termination.
• Interest on unpaid amounts from the date they should have been paid.
• Attorney’s fees and costs if the employee prevails, which can exceed the underlying wage claim value.
• Penalties under the Private Attorneys General Act (PAGA) allowing employees to collect civil penalties on behalf of the state, potentially reaching hundreds of dollars per pay period per affected employee.

A seemingly small minimum wage violation affecting multiple employees over extended periods can generate liability far exceeding the original underpayment. The math becomes particularly painful when you factor in penalties, interest, and attorney’s fees.

Retaliation Claims Compound Your Exposure

California strictly prohibits retaliation against employees who raise wage concerns, file complaints, or exercise their rights under wage laws. If you terminate, demote, reduce hours, or take other adverse action against employees who complain about minimum wage violations, you face separate retaliation claims.

Retaliation claims often prove more costly than underlying wage violations because they involve subjective employment decisions that juries may view skeptically. Train supervisors never to take adverse action against employees who raise wage concerns, even if the underlying complaint lacks merit.

Document legitimate, non-retaliatory reasons for any adverse employment decisions involving employees who have raised wage issues. The temporal proximity between a complaint and adverse action creates an inference of retaliation that you’ll need to rebut with clear evidence of lawful motives.

Related: 25 Workplace Conflict Examples and How to Manage Them

Building a Bulletproof Compliance System

Proactive compliance systems prevent violations and create defensible records if claims arise. Implement these essential practices:

Conduct Comprehensive Wage Audits

Regularly review all employee compensation to ensure compliance with applicable minimum wages. This includes:

• Verifying the correct minimum wage rate (state, local, or industry-specific) applies to each employee
• Confirming hourly rates meet or exceed minimums
• Checking that piece-rate, commission, and salaried non-exempt employees earn minimum wage when you divide total compensation by total hours worked
• Ensuring proper application of any exemptions or exceptions you’re claiming

Schedule audits at least annually, and also conduct them whenever minimum wage rates change or you open new locations in different jurisdictions.

Implement Multi-Jurisdiction Tracking

If you operate in multiple California cities or counties, your payroll system must accommodate different rates based on work location. This requires:

• Accurate timekeeping that captures where employees work, not just how many hours
• Payroll software capable of applying different rates to the same employee based on work location
• Processes for employees who work in multiple jurisdictions during a single pay period

Test your systems thoroughly before rate changes take effect. Errors in multi-jurisdiction tracking create wage violations that may affect numerous pay periods before discovery.

Maintain Meticulous Records

California requires employers to keep detailed records of hours worked and wages paid for at least three years. In wage claims, strong records provide your best defense.

Document:

• All time worked, including start times, end times, and meal breaks
• Rates paid and basis for calculating wages
• Any exemptions or exceptions applied and why
• Changes in minimum wage rates and when you implemented them

Consider retaining records beyond three years for positions with high turnover or complexity, as extended retention periods may apply in certain circumstances.

Update Required Postings

California requires employers to post minimum wage notices in conspicuous locations where employees can easily see them. After each rate change, obtain and display current posters showing applicable rates.

Failure to post required notices doesn’t prevent liability for wage violations and may support claims that you disregarded legal obligations.

Train Your Management Team

Supervisors and managers making staffing and compensation decisions need thorough training on wage and hour compliance. They should understand:

• Current minimum wage rates applicable to your business
• How to identify potential violations before they occur
• The prohibition on using tips as wage credits
• Why employees cannot waive minimum wage rights
• The serious consequences of retaliation

Schedule training whenever rates change, you hire new managers, or you expand to new locations with different requirements.

Budget for Compliance, Not Just Payroll

View minimum wage compliance as a line item distinct from ordinary payroll. Budget for:

• Annual wage increases tied to inflation adjustments
• Potential local rate increases that exceed state adjustments
• Compliance software and systems to track multi-jurisdiction requirements
• Regular wage audits by HR or legal professionals
• Training programs for managers and supervisors

The cost of prevention is a fraction of the expense of defending wage claims, paying penalties, and managing litigation.

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Strategic Considerations Beyond Basic Compliance

Meeting minimum wage obligations represents the legal floor, but smart employers consider strategic workforce management implications.

Compression and Internal Equity

As minimum wage rises, you may face wage compression where your lowest-paid workers approach compensation levels of more experienced or skilled employees. This creates internal equity problems that can harm morale and retention.

Proactively adjust your entire pay scale as minimum wage increases, maintaining meaningful differentials between entry-level and more advanced positions. While this increases costs beyond minimum compliance, it helps preserve workforce stability and prevents turnover of valued employees.

Pricing and Business Model Implications

Rising minimum wages fundamentally impact business economics, particularly for labor-intensive industries. Consider:

• Whether your pricing structure adequately accounts for ongoing wage increases
• How competitors are responding to higher labor costs
• Whether operational changes (technology, efficiency improvements, staffing models) can offset rising expenses
• Whether your business model remains viable under continuing wage growth

These aren’t minimum wage compliance questions per se, but they’re essential strategic considerations that flow from California’s wage trajectory.

The Competitive Advantage of Exceeding Minimums

In tight labor markets, offering above-minimum compensation can provide competitive advantages in recruiting and retention. While California’s minimum wage keeps rising, employers who pay well above these floors may find it easier to attract quality candidates and reduce costly turnover.

Related: Why Use a Staffing Agency? The Real Advantages and Considerations

Resources for Ongoing Compliance

California’s minimum wage rules change often, and mistakes can be costly. Use the sources below to stay ahead of rate changes and industry-specific requirements.

Statewide Minimum Wage Authority

These are your primary sources for official wage law:

• Division of Labor Standards Enforcement (DLSE) – Official minimum wage rates, FAQs, and enforcement guidance
• Industrial Welfare Commission Wage Orders – Industry wage orders and classification rules
• California Department of Industrial Relations (DIR) – State labor law news releases and employer alerts

Local Minimum Wage Tracking

Many California cities and counties set rates higher than the state minimum.

• UC Berkeley Labor Center – Local Minimum Wage Inventory – Comprehensive list of local minimum wage ordinances with links to city and county laws

Employer Compliance Tools & Training

These sources translate legal changes into practical employer guidance.

• CalChamber (HRCalifornia) – Compliance checklists, employment law summaries, webinars, and HR tools.
• Society for Human Resource Management (SHRM) – California Updates
• American Staffing Association (ASA) – Compliance guidance for staffing and recruiting firms
• California Restaurant Association (CalRest) – Wage and labor law updates for food service employers
• California Hospital Association (CHA) – Regulatory updates affecting healthcare employers

Reviewing these sources regularly helps ensure you apply the correct rates, track local changes, and stay compliant before new rules take effect.

The Bottom Line for California Employers

The California minimum wage in 2026 of $16.90 is only a baseline. Many employers must pay more based on industry and location, and getting it wrong can trigger costly wage claims, penalties, and legal exposure. Treat rising wage requirements as a permanent reality and build compliance into your operations now.

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Frequently Asked Questions (FAQ)

What is the California minimum wage in 2026?

The California minimum wage in 2026 is $16.90 per hour, effective January 1, 2026. Employers must pay at least this amount unless a higher local or industry-specific minimum wage applies.

Do local minimum wage rates override the state minimum wage?

Yes. If a city or county sets a higher minimum wage than the state rate, employers must pay the higher local rate for covered work performed in that jurisdiction.

What if an employee works in multiple cities in the same pay period?

You generally need to pay the minimum wage based on where the work is performed. If an employee works in different cities with different minimum wages, employers should track hours by location and pay the correct rate for those hours.

How does minimum wage work for remote and hybrid employees?

For remote and hybrid arrangements, minimum wage typically follows the employee’s physical work location (home, office, job site) during the time worked. If work happens in multiple jurisdictions, employers should apply the correct minimum wage by location.

Can I pay tipped employees less than minimum wage in California?

No. California does not allow a tip credit. Employers must pay the full applicable minimum wage (state/local/industry) before tips.

Can minors be paid less than the minimum wage?

No. California does not allow a lower minimum wage based on age. Minors generally must be paid the same applicable minimum wage as adults.

Is there any exception that allows paying less than minimum wage?

California has limited exceptions for narrow categories (such as certain learners during the first 160 hours in a new occupation, some apprentices, and specific exempt roles). These exceptions require careful documentation and strict compliance with the rules.