As of October 2026, the California minimum wage is $16.90 an hour for all employers, and it rises to $17.40 an hour on 1 January 2027. Fast food restaurant workers ($20.00) and certain health care workers have higher rates, and many cities and counties set their own higher local minimums.
If you employ anyone in California, even one person, this is the number you build your payroll around. The headline rate is simple. The traps are the rules around it: tips, exempt salaries and local rates. Here's how they work, straight from the California Department of Industrial Relations (DIR).
California minimum wage at a glance
| Rate | Amount (as of October 2026) | Applies from |
|---|---|---|
| Statewide minimum wage | $16.90 an hour | 1 January 2026 |
| Statewide minimum wage, next year | $17.40 an hour | 1 January 2027 |
| Fast food restaurant employees | $20.00 an hour | 1 April 2024 |
| Exempt employee minimum salary | $70,304 a year | 1 January 2026 |
| Exempt employee minimum salary, next year | $72,384 a year | 1 January 2027 |
There's no separate rate for small employers any more. DIR's own table shows the two-tier system, where businesses with 25 or fewer employees paid less, ended when both tiers met at $15.50 on 1 January 2023.
How the rate goes up each year
Since the state wage reached $15, California adjusts it every year for inflation using the national consumer price index for urban wage earners and clerical workers (CPI-W). DIR says the wage can't be lowered, even if inflation is negative, there's a cap on how much it can rise in one year, and the Governor can no longer pause a scheduled increase.
The 2027 rise follows that formula. DIR says the Department of Finance certified the increase on 31 July 2026, and the Labor Commissioner's Office is already reminding employers to prepare. So if you're setting 2027 budgets or pricing, use $17.40 from January.
The exempt salary trap most owners miss
This is the insight I'd want every small business owner in California to know. The minimum wage doesn't only affect hourly staff. To treat a salaried employee as exempt from overtime, California requires a salary of at least twice the state minimum wage for full-time work. DIR spells out the sum:
| Year | DIR calculation | Minimum annual salary (as of October 2026) |
|---|---|---|
| 2026 | $16.90 x 2 x 40 hours x 52 weeks | $70,304 |
| 2027 | $17.40 x 2 x 40 hours x 52 weeks | $72,384 |
So every January, the salary floor for your managers and other exempt staff moves too. If someone is exempt today on a salary between $70,304 and $72,384, they won't meet the salary test from 1 January 2027 unless you raise their pay or start paying overtime. DIR also reminds employers that the duties tests still have to be met; salary alone doesn't make someone exempt.
Tips, minors and other rules
- Tips can't count towards the minimum wage. DIR's FAQ says an employer may not use an employee's tips as a credit towards the minimum wage, so a server earns at least $16.90 an hour before tips.
- Minors get the same rate. DIR says there's no distinction between adults and minors for the minimum wage.
- One employee is enough. An employer with a single employee must still pay at least the minimum wage unless an exemption applies.
- It can't be waived. The minimum wage can't be waived by any agreement, including a collective bargaining agreement.
- Learners are the narrow exception. Learners with no similar experience can be paid not less than 85% of the minimum wage, rounded to the nearest nickel, during their first 160 hours of employment.
DIR's list of exemptions also includes outside salespersons, the parent, spouse or child of the employer, and apprentices regularly indentured under the State Division of Apprenticeship Standards.
State, local or federal: which rate wins?
Most California employers are covered by federal and state law, and many cities and counties have their own higher rates. DIR's rule is simple: when the laws conflict, you follow the stricter standard, the one most beneficial to the employee. With the federal rate far below California's, the state rate is your floor, and a higher local ordinance replaces it where it applies. DIR links to a list of city and county rates maintained by UC Berkeley, so check where each person works, not just where your business is registered.
New York's rates are covered in our New York minimum wage guide.
A compliance checklist for 2027
- Update every hourly rate below $17.40 to take effect on the first pay period that includes 1 January 2027.
- Check each exempt salary against $72,384, and the duties test, before January.
- Look up the local rate for every work location, including remote staff working from home in a city with its own minimum.
- Print the new minimum wage order and your industry wage order and post them where staff can see them, as DIR requires.
- Make sure pay stubs list the wage rates, which the Labor Commissioner's Office also reminds employers about.
If you're still running payroll by spreadsheet, a rate change like this is a good moment to compare payroll software for small businesses, and a time clock app makes the hours side much easier to prove.
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My verdict
California's minimum wage is easy to quote and easy to get wrong. The rate itself is $16.90 now and $17.40 from January, but the bit that catches small employers is the exempt salary floor moving with it. Diarise December every year: new hourly rates, new salary checks, new posters. Do that and you've covered most of what goes wrong.
Washington has its own rate, covered in our Washington minimum wage guide.
Frequently asked questions
What is the minimum wage in California in 2026?
As of October 2026, it's $16.90 an hour for all employers, from 1 January 2026, unless a higher industry or local rate applies.
What will California's minimum wage be in 2027?
DIR says the statewide minimum wage rises to $17.40 an hour on 1 January 2027.
Can California employers count tips towards the minimum wage?
No. DIR says an employer may not use an employee's tips as a credit towards its obligation to pay the minimum wage.
What is the minimum salary for exempt employees in California?
Twice the state minimum wage for full-time work: $70,304 a year in 2026 and $72,384 a year from 1 January 2027, as of October 2026.
Is there a different minimum wage for small businesses in California?
No. The lower rate for employers with 25 or fewer employees ended when both rates reached $15.50 in January 2023.
What is the fast food minimum wage in California?
Since 1 April 2024, covered fast food restaurant employees must be paid at least $20.00 an hour, as of October 2026.
