California Minimum Wage: Rates, Local Rules, Exceptions

The first payroll I set up for a California team was wrong inside a month. I had the state rate from a news headline, typed it into the pay run and stopped thinking about it. The employee worked in the City of Los Angeles, which sets its own higher rate. I owed back wages, and the fix cost more in bookkeeping time than the wage gap itself.

That is California minimum wage in one story. There is a state floor, a city rate stacked on top of it across most of the population centers, and two industry rates written into statute that override both. Getting the state number right is the easy part of the job.

This page carries the figures and the source behind each one. Everything below comes from the California Department of Industrial Relations, the Department of Finance, or the city that passed the ordinance. For overtime, meal breaks, leave and termination rules, use the California HR compliance guide.

The Current California Minimum Wage

The California minimum wage is $16.90 per hour, effective January 1, 2026, and it applies to every employer regardless of the number of employees. The Department of Industrial Relations states it directly in its minimum wage FAQ: employers must pay all employees at least the minimum wage per hour even if they only have one employee.

The two-tier system many owners still remember is gone. Between 2017 and 2022 employers with 25 or fewer workers paid a lower rate than larger ones. Those tiers merged on January 1, 2023, and there has been a single statewide figure ever since.

The wage order also fixes the only credits California permits against the minimum wage. Meals and lodging may be credited, but only under a voluntary written agreement and only up to set amounts. For 2026 those caps are $6.10 for breakfast, $8.42 for lunch, $11.28 for dinner, and $79.46 per week for a room occupied alone.

The Next Scheduled Increase

The state rate rises to $17.40 per hour on January 1, 2027. The Department of Finance certified the increase on July 31, 2026, and the Department of Industrial Relations announced it that week. That is a $0.50 step from the current figure.

The mechanism is worth understanding because it makes every future increase predictable. Under Labor Code Section 1182.12, the Director of Finance must determine by August 1 of each year whether to adjust the rate for the following January 1, based on the national consumer price index for urban wage earners and clerical workers.

Two guardrails sit on that calculation. The rate can never be lowered, even after a year of negative inflation. And no single adjustment may exceed 3.5 percent. So the worst case for a California payroll budget is roughly 3.5 percent on the wage floor, announced about five months ahead. Our page on how minimum wage increases work covers the same mechanism across other states.

Tipped Employees and the Tip Credit

California allows no tip credit. The tipped minimum cash wage is the full minimum wage: $16.90 per hour today, $17.40 from January 1, 2027. The Department of Industrial Relations answers this with a one-word no, adding that an employer may not use an employee's tips as a credit toward its obligation to pay the minimum wage per hour.

This is one of the sharpest breaks from federal practice. Under the federal system an employer may pay a $2.13 cash wage and claim a tip credit for the rest. In California a server earns the full hourly floor from the employer, and every tip sits on top of that. Tips are the property of the employee under Labor Code Section 351, and the employer may not take any part of them.

The practical consequence shows up in labor cost modeling. A restaurant moving from another state into California should expect front-of-house wage cost to roughly triple on the base rate alone. Two related reads: tipped employee minimum wage rules and how tip pooling works.

City and County Minimum Wages

Local ordinances are the part employers miss. California expressly permits cities and counties to set a higher minimum wage, and dozens have. Where local, state and federal rules overlap, the Department of Industrial Relations says the employer must follow the stricter standard, meaning the one most beneficial to the employee.

Coverage generally follows the work, not the office. In both the City of Los Angeles and the City of San Diego, an employee is covered after as little as two hours of work inside city limits in a week. A mobile technician, a delivery driver or a hybrid employee can pull a city rate into a payroll that never planned for one.

Notice the two adjustment calendars. The state moves every January 1. Most local ordinances move every July 1, which means a California employer with staff in a covered city changes rates twice a year, not once. San Diego is the exception in the table above, adjusting on January 1 alongside the state.

Some cities also run a separate, higher wage for hotel and hospitality workers. Santa Monica sets $25.00 per hour for hotels and businesses operating on hotel property, effective July 1, 2026. Los Angeles and San Diego maintain their own hotel and hospitality schedules; if you run a hotel, read the ordinance rather than the general rate. The city publishes the current figures at sf.gov and sandiego.gov respectively.

Fast Food, Health Care, and Agriculture

Two California industries have their own statutory minimum wage that overrides the state floor, and one industry that employers often assume has a lower rate does not. Fast food and health care are set by statute. Agriculture is not.

Fast Food: $20.00 Per Hour

Covered fast food restaurant employees must be paid at least $20.00 per hour, effective April 1, 2024, under AB 1228. Coverage is narrower than the name suggests. The DIR fast food FAQ requires a limited-service restaurant where customers order and pay before eating, part of a chain with at least 60 establishments nationwide, primarily selling food and drink for immediate consumption.

An independent restaurant is not covered. Neither is a full-service restaurant with table service, nor a chain under 60 locations. Statutory exemptions also remove some locations inside covered chains, such as an establishment that produces and sells bread as a stand-alone menu item. The exempt salary floor for a covered fast food manager is $83,200, calculated as two times the $20.00 rate for full-time work. More detail sits in our guide to the fast food minimum wage.

The Fast Food Council may raise the rate once a year by the smaller of 3.5 percent or the increase in the consumer price index. As of the last-checked date the DIR FAQ still shows $20.00 with no adopted increase, so the rate has held since April 2024.

Health Care: $19.28 to $25.00 by Facility Type

Covered health care facilities have paid a higher minimum wage since October 16, 2024 under SB 525, on a schedule that varies by facility type. Most categories reached a new step on July 1, 2026. The DIR health care FAQ holds the full schedule through 2035.

Coverage reaches further than clinical staff. Support roles at a covered facility, including janitorial, food service, security and clerical work, fall inside the law when the work supports the provision of health care. The exempt salary floor for covered health care workers is the greater of 1.5 times the applicable health care rate or two times the state minimum wage.

Agriculture: No Separate Rate

There is no lower agricultural minimum wage in California. Farm workers earn the same $16.90 state floor as everyone else, and the same local rate where a city ordinance reaches the work site. What differs for agriculture is overtime, not the wage floor, and that sits in the state compliance guide rather than here.

One narrow monthly minimum does exist. Sheepherders and goat herders on regularly scheduled 24-hour shifts, seven days a week, are owed $3,004.50 in monthly minimum wage plus $1,933.71 in required overtime, a total of $4,938.21 per month effective January 1, 2026, per the Labor Commissioner's published schedule.

Youth and Learner Wages

California has no youth minimum wage. The Department of Industrial Relations states that there is no distinction made between adults and minors when it comes to payment of the minimum wage, so a 16 year old on a summer shift earns $16.90 per hour, the same as a 40 year old.

There is one training-style exception, and it is not about age. A learner of any age may be paid 85 percent of the minimum wage, rounded to the nearest nickel, during their first 160 hours of employment in an occupation in which they have no previous similar or related experience. At $16.90 that is $14.365 before rounding, which lands on $14.35 per hour.

The 160 hours are counted per occupation, not per employer, and the clock does not restart when someone changes jobs into work they have already done. Minors also face separate work permit rules and hour limits that have nothing to do with the wage rate; those live in our overview of child labor laws.

The Posting Requirement

Every California employer must post the current minimum wage order where employees can read it. The official notice is MW-2026, and its own instruction line reads: please post next to your IWC industry or occupation order. The notice is free from the Department of Industrial Relations and should never be bought from a poster vendor.

Three points get missed. The wage order notice is separate from the industry or occupation order it sits beside, and you need both. Employers covered by the fast food or health care rate must post the matching supplement to the wage order in addition to the general notice. And remote employees who never visit a physical site must receive the notices electronically.

Posting an expired notice counts as failing to post. Because the state rate changes every January 1, the wage order notice is reissued every year with a new number, and last year's copy on the break room wall is a finding waiting to happen. The same replacement discipline applies to the rest of your required workplace postings.

How California Compares to the Federal Rate

The federal minimum wage is $7.25 per hour and has not moved since July 24, 2009. California's $16.90 sits $9.65 above it, which means the federal figure is functionally irrelevant to California payroll: no California employer will ever pay it, and no California employee will ever be entitled to only that.

The federal rate still matters in two places. It sets the baseline that federal enforcement uses, and it governs the multi-state comparison if you employ people outside California. The Wage and Hour Division keeps the federal picture, and our federal minimum wage page covers how it interacts with state law.

The tip rule is where the gap gets dangerous for employers moving into California. A payroll configuration built around the federal tip credit will underpay every tipped California employee from the first pay run. Rebuild the pay rates rather than importing the settings.

What to Do When a Rate Rises

A rate increase is a five-item task, and only the first item is obvious. Raising the hourly rate is the part everyone does; the exempt salary floor and the written notice are the parts that generate claims.

The exempt salary step is the one that quietly breaks. A salaried manager who cleared the floor in one year can fall below it the next without anyone touching their pay, because the floor moved. The moment that happens they are non-exempt and owe daily overtime, which in California starts after eight hours in a single shift.

Run the check against the duties test as well, since the salary threshold is only half of the exemption. Our explainer on exempt versus non-exempt classification walks through both halves, and the overtime overview covers what the reclassification actually costs.

Keep the paper trail. Store the notice you sent, the effective date, and the version of the poster you put up. FirstHR is an onboarding and HR platform, not a payroll provider, so it holds the employee records and the acknowledgements rather than the pay run itself. If you want to see how the wage change lands on total cost before you commit, work it through the labor cost method first.

One more habit worth building: put a calendar entry on August 1 and another on June 1. August 1 is the statutory deadline for the state to announce next January's rate. June 1 gives you a month to catch the July 1 local increases before they hit. That single pair of reminders prevents most California wage claims a small employer will ever face. The rest of the state picture sits in the compliance hub.

Frequently Asked Questions