California’s Department of Finance recently announced the minimum wage increase for 2026. The minimum wage in California will increase from $16.50 per hour to $16.90 perhour on January 1, 2026. This increase applies to all employers, regardless of size. This increase is based on the state’s annual cost-of-living adjustment tied to the U.S. Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), subject to a cap of 3.5% or the actual CPI-W increase, whichever is lower, as provided under Labor Code §1182.12(c).

Additionally, the minimum salary for full-time exempt employees will increase from $68,640 to $70,304 per year on January 1, 2026, in accordance with California’s requirement that exempt employees must earn at least twice the state minimum wage for full-time work (40 hours per week, 52 weeks per year).

However, employers should be aware that numerous cities and industries across the state have separate minimum wages, which are typically higher than the state minimum wage. Additionally, exemptions, such as the computer software employee’s exemption under California Labor Code Section 515.5, may exist for occupations and come with their own elevated compensation thresholds.