California Minimum Wage: $16.90 in 2026, $17.40 in 2027, $20 for Fast Food and the Exempt Salary Threshold
California Minimum Wage: $16.90 in 2026, $17.40 in 2027, $20 for Fast Food and the Exempt Salary Threshold
If you hire in California, the state minimum wage is the pay floor for every non-exempt employee, and it adjusts once a year on January 1. The state rate is $16.90 an hour in 2026 and is scheduled to rise to $17.40 an hour on January 1, 2027. Two other figures matter just as much for payroll and job descriptions: the $20 an hour rate for covered fast food workers, and the salary an employee must earn to be classified as exempt. This guide explains each number, how it is set, and where to confirm it.
This is informational content, not legal or tax advice. Wage rules have exceptions and fine print. Employers with complex pay structures, multiple locations or disputed classifications should talk to an employment attorney or a CPA.
California minimum wage for 2026 and 2027
The state minimum wage for 2026 is $16.90 an hour. It applies to all employers at the same rate. Since the 2023 step, there is no lower state rate for small businesses, so an employer with three workers and an employer with three hundred pay the same state floor.
The 2027 rate is $17.40 an hour, effective January 1, 2027. The Director of Finance certified this figure on July 31, 2026, using an inflation measure of 2.99%. The 2026 and 2027 figures come from secondary reports, not directly from the state. Confirm both with the Department of Industrial Relations at https://www.dir.ca.gov/ before you set pay or update a payroll system.
How the state rate is set
Labor Code 1182.12 sets the annual formula. By August 1 each year, the Director of Finance recalculates the minimum wage using the lesser of 3.5% or the change in the U.S. CPI-W. The result is rounded to the nearest ten cents, and the new rate takes effect the following January 1. The method is fixed, but the size of each step is not. A year with high inflation still caps the increase at 3.5%, and a low-inflation year produces a smaller step.
What the 2027 increase means for payroll
The move from $16.90 to $17.40 is a 50 cent raise per hour. For a full-time employee working 2,080 hours a year, that is $1,040 in additional gross pay before payroll taxes. Before January 1, 2027, review the following:
- Hourly rates for every non-exempt employee currently paid at or near $16.90.
- Offer letters and job postings that quote an hourly rate for roles starting in 2027.
- Pay bands above the floor, since employees just above the old minimum may need adjustments to keep pay differences in place.
- Timekeeping and payroll software settings that hold the minimum rate as a fixed value.
The exempt salary threshold and why minimum wage matters
An executive, administrative or professional employee can be classified as exempt only if the role passes the duties test and the employee earns a minimum salary. Under Labor Code 515(a), that salary must be at least two times the state minimum wage for full-time work, where full-time means 40 hours a week. Because the threshold is tied to the state rate, it rises whenever the state minimum rises.
| Year | State minimum wage (per hour) | Exempt salary threshold (per year) |
|---|---|---|
| 2026 | $16.90 | $70,304 |
| 2027 (from January 1) | $17.40 | $72,384 |
The math is the state rate, times two, times 2,080 hours. For 2026, that is $16.90 x 2 x 2,080 = $70,304. For 2027, it is $17.40 x 2 x 2,080 = $72,384.
Local minimum wages do not change this threshold. A city with a higher hourly rate does not raise the exempt salary level for its employees. Only the state minimum sets it. The duties test still applies regardless of salary, so a high salary alone does not make a job exempt.
If you plan to keep exempt staff on payroll into 2027, review their salaries before January 1, 2027. An exempt employee paid between $70,304 and $72,383 a year clears the 2026 threshold but falls below the 2027 level. Confirm the classification rules with an employment attorney before you reclassify anyone.
California fast food minimum wage: $20 an hour
Covered fast food workers have a separate, higher hourly floor. Under Labor Code 1475, the minimum wage for covered fast food employees is $20 an hour, effective April 1, 2024. This is the rate most employers mean when they search for the california fast food minimum wage, and it applies only to restaurants that meet a defined test.
Which restaurants are covered
Labor Code 1474 to 1476 cover a limited-service restaurant that is part of a national chain of more than 60 establishments sharing a brand or standardized decor, menu and service. A restaurant that is not a limited-service operation, or that does not meet the chain test, is not covered by the $20 rate.
The statute also carves out several categories. Among them are restaurants inside grocery establishments run by the grocery employer, certain bakeries, airport restaurants, and restaurants connected to a hotel. Read the statute text and confirm with the Department of Industrial Relations before you assume a carve-out does or does not apply to a specific location.
Future fast food rate changes
The Fast Food Council can set annual increases beginning January 1, 2025. The $20 figure is the starting point, not a fixed rate for every future year. Check the Department of Industrial Relations at https://www.dir.ca.gov/ for any change to the $20 rate before you set fast food pay for a new year.
Exempt salary for covered fast food managers
For a covered fast food employee, the exempt salary threshold is two times the fast food rate, not two times the state rate. This is a secondary-source point. Verify it with the Department of Industrial Relations before you classify a fast food manager as exempt.
Health care worker minimum wages
Minimum wages for health care workers differ by facility type, and some rates rose on July 1, 2026. This guide does not list those figures, because the schedules are separate from the general state rate and have their own rules. Employers and workers in covered health care facilities should get the current schedule directly from the Department of Industrial Relations at https://www.dir.ca.gov/.
Local minimum wages can be higher than the state rate
Many California cities and counties set a minimum wage above the state rate. The employer must pay the higher of the state or local rate where the work is performed. Current examples from secondary reports include the following, and each should be verified with the city or with the Department of Industrial Relations:
- Los Angeles: $18.42 an hour from July 1, 2026.
- Berkeley and San Francisco: $19.61 an hour from July 1, 2026.
- San Diego: $17.75 an hour from January 1, 2026.
Local rates change on different schedules and differ from city to city. For the full list, see the local minimum wage by city guide on this site.
Pay rules that are separate from the minimum wage
The minimum wage figures in this guide do not settle several other pay rules. These include tip credits, overtime, and meal and rest breaks. Each has its own requirements and exceptions. Confirm them with the Department of Industrial Relations and the Labor Commissioner at https://www.dir.ca.gov/ before you rely on any of them for pay practices.
Registering as an employer
Once you have employees, you must register with the Employment Development Department for payroll tax accounts and new hire reporting. The employer registration guide on this site covers payroll registration and paid sick leave, so read it before your first payroll run.
How to verify the figures in this guide
- Check the Department of Industrial Relations at https://www.dir.ca.gov/ for the state rate, any fast food rate change, and the health care schedules.
- Check the city or county website for any local minimum wage that applies to the locations where your employees work.
- Confirm the 2027 state rate of $17.40 in late 2026, since it comes from secondary reports.
- Recheck exempt salaries after the next state adjustment. Under the formula, the Director of Finance calculates the next rate by August 1, 2027, and it takes effect January 1, 2028.
California minimum wage rules change on a set schedule, but the amounts depend on the formula, local ordinances and the specific job. Use this guide as a starting point, then confirm the current figures before you set pay. For classification disputes, multi-location payroll or fast food franchise questions, consult a qualified employment attorney or CPA.