On July 31, 2026, the California Department of Finance Director Joe Stephenshaw officially certified that California’s minimum wage will increase to $17.40 per hour for all employers starting on January 1, 2027.
Under California Labor Code section 1182.12, the California Director of Finance must determine on or before August 1 of each year whether to adjust California’s minimum wage for inflation and if so, calculate this increase by applying whichever of the following two options would result in the smaller increase:
- A 3.5 percent increase; or
- The actual rate of change per the U.S. Consumer Price Index (CPI).
For the 12-month period from July 1, 2025, to June 30, 2026, the Department of Finance’s calculations showed that the CPI increased by 2.99 percent compared to the prior 12-month period, meaning the minimum wage will increase by 2.99 percent — to $17.40 per hour — on January 1, 2027.
This hourly increase also affects the minimum salary requirements for full-time exempt employees, which currently is $70,304 per year ($5,858.67 per month). Beginning January 1, 2027, the minimum salary for a full-time exempt employee will be $72,384 per year ($6,032 per month).
Keep in mind that fast food and healthcare workers have their own minimum wage rates. All fast food restaurant employees covered under California Labor Code Section 1474-1476 have a minimum wage of $20 per hour. And California’s various healthcare worker minimum wage rates are based on different types of healthcare facilities — some of which increased on July 1, 2026.
It’s important to note that in these industries, these rates impact exempt salary thresholds. To qualify as exempt, covered fast food employees must make two times the fast food minimum wage. And covered healthcare employees must make one and a half times the applicable healthcare rate or two times the state minimum wage, whichever is greater.
Finally, several cities and counties in California have their own local minimum wage rates. If the locality where employees are performing work requires a higher minimum wage rate than the state minimum wage rate (such as Emeryville, Los Angeles, San Diego and San Francisco, to name just a few), the local rate must be paid. Keep in mind, however, that only the state minimum wage — not local minimum wages — determines the minimum salary requirements for exempt employees.
James W. Ward, J.D., Employment Law Subject Matter Expert/Legal Writer and Editor, CalChamber
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