California Increases State Minimum Wage

California is increasing its minimum wage to $16.90 per hour effective January 1, 2026. This represents a 40-cent increase from the current minimum wage of $16.50, which took effect on Jan. 1, 2025. The state minimum wage will apply to all employers, regardless of size.

The California minimum wage increase will also affect the minimum salary threshold for salaried exempt employees, raising their rates to $70,304 per year ($5,858.67 per month).

California Labor Code Section 1182.12 (c) mandates that the Director of Finance calculate an adjusted minimum wage on or before Aug. 1 each year. Joe Stephenshaw, Director of the California Department of Finance, sent a letter to Gov. Gavin Newsom about the upcoming increase in January.

Keep in mind that employers must still adhere to local jurisdictions and industry-specific minimums. For example, on July 1, 2025, Los Angeles County increased its rates to $17.81 per hour, which applies to employees working in unincorporated parts of L.A. County.  And on July 1, 2025, the City of Los Angeles increased its minimum wage to $17.87 for employees working withing the geographic boundaries of the City. Additionally, certain industries have their own unique minimum wage rates (e.g., the fast-food industry has a separate minimum wage of $20 per hour and healthcare workers also have different rates).

State and local minimum wage rates will continue to increase annually. California employers should monitor their state and local wage rates to ensure compliance. Employment counsel can help employers with questions regarding wage and hour matters.

Sue M. Bendavid is the Chair of our Employment Practice Group.