California's statewide minimum wage rose to $16.90 per hour on January 1, 2026, adjusted annually for inflation under a formula the Department of Finance applies each summer for the following year. The statewide rate applies to employers of all sizes; the old small-employer tier was phased out in 2023.

But for many employers, the statewide rate is not the number that matters.

What changes on January 1, 2027

California has confirmed that the statewide minimum wage will rise to $17.40 per hour on January 1, 2027. The increase applies to employers of every size unless a higher industry or local rate controls.

The state increase also raises the salary threshold used as part of California's test for the executive, administrative, and professional overtime exemptions. Beginning January 1, 2027, an employee must earn at least $72,384 annually to satisfy the salary portion of the test. Salary alone does not establish an exemption; the employee must also meet the applicable duties test and other requirements.

Before the effective date, employers should update payroll settings, review salaries near the new threshold, and replace the statewide minimum-wage order and applicable industry wage order in the workplace posting area. The Labor Commissioner's announcement also reminds employers to put wage rates on pay stubs. Add the January 1 change to the Federal Weekly compliance calendar.

Industry floors above the state rate

  • Fast food. Under AB 1228, employees of fast food chains with 60 or more locations nationally have a minimum wage of at least $20.00 per hour, set in April 2024. The state's Fast Food Council has authority to raise the rate annually by up to 3.5 percent or the rate of inflation, whichever is lower. Franchise ownership does not exempt a location; the count is at the brand level.
  • Healthcare. SB 525 created a separate minimum wage schedule for healthcare workers, phasing toward $25.00 per hour on timelines that vary by facility type and size. The schedule covers a broad definition of healthcare workers, including many support roles.

City and county ordinances

More than three dozen California cities and counties set their own minimum wages above the state floor, including Los Angeles, San Francisco, San Jose, San Diego, Oakland, Berkeley, and West Hollywood. Many adjust every July 1 rather than January 1, so a single year can involve two different local rates.

The rule that resolves conflicts is simple: the employee is owed whichever applicable rate is highest. An employer with locations in multiple cities can owe different wages for identical work.

Common compliance mistakes

  • Applying the state rate in a city with a higher local ordinance.
  • Missing a July 1 local adjustment after correctly updating on January 1.
  • Assuming a franchised fast food location is exempt from AB 1228.
  • Forgetting that exempt-employee salary thresholds are tied to the state minimum wage, so wage increases also raise the minimum salary for exempt status.

The practical takeaway

Minimum wage compliance in California is a mapping problem, not a single number. Keep a list of every work location and the ordinances and industry rules that apply to it. Use the Los Angeles and Orange County wage lookup to check the locations covered here. Before January 1, 2027, update the statewide floor to $17.40, review exempt salaries against $72,384, replace required postings, and retain a July 1 reminder for local adjustments.