California Minimum Wage 2026: Statewide and Local Rates

California has one of the highest minimum wages in the United States — and for employers, it is far more complex than a single number. Between the statewide rate, industry-specific minimums for fast food and healthcare workers, and dozens of local city and county ordinances that set even higher rates, California employers must navigate a patchwork of requirements. Paying even one employee below the applicable rate — even by accident — exposes your business to costly penalties, back-pay claims, and potential lawsuits. This guide breaks down every minimum wage rate California employers need to know for 2026.

California Statewide Minimum Wage

Effective January 1, 2025, the California statewide minimum wage is $16.50 per hour for all employers, regardless of business size. California eliminated the separate rates for large and small employers in 2023, so there is now a single rate that applies to every employer in the state.

California's minimum wage has increased steadily over the past decade:

• 2020: $13.00/hr (large employers) / $12.00/hr (small employers)
• 2022: $15.00/hr (large employers) / $14.00/hr (small employers)
• 2023: $15.50/hr (all employers — unified rate)
• 2024: $16.00/hr
• 2025: $16.50/hr

Under current law, the statewide minimum wage is adjusted annually based on the Consumer Price Index (CPI), with a maximum increase of 3.5% per year. The Director of Finance can temporarily suspend a scheduled increase if certain economic conditions are met (such as a budget deficit or negative job growth), but this has not been invoked.

Fast Food Worker Minimum Wage ($20/hr)

Assembly Bill 1228 (the FAST Act), effective April 1, 2024, established a minimum wage of $20.00 per hour for fast food restaurant workers in California. This rate is $3.50 above the current statewide minimum and applies to a specific category of employers.

The fast food minimum wage applies to employees of restaurants that are part of a national fast food chain with 60 or more locations nationwide. The restaurant must primarily serve food and beverages for immediate consumption with limited or no table service, and customers must order and pay before eating.

Key details:

• Rate: $20.00/hr (as of April 1, 2024)
• Applies to: Employees of fast food chains with 60+ U.S. locations
• Exemptions: Restaurants operating inside a grocery store (with their own bakery producing and selling bread as a stand-alone menu item) are exempt
• Future increases: The Fast Food Council can approve increases of up to 3.5% per year, with the next potential adjustment on January 1, 2025, and annually thereafter

If you operate a franchise location of a major fast food brand, you must pay at least $20.00/hr. If you operate an independent restaurant — even one that serves fast food-style meals — this law does not apply to you unless you are part of a chain with 60+ locations.

Healthcare Worker Minimum Wage

Senate Bill 525, signed in October 2023, established a phased minimum wage increase for healthcare workers in California, beginning June 1, 2024. The rates vary depending on the type of healthcare facility:

• Large health systems (10,000+ full-time employees) and dialysis clinics: $23.00/hr starting June 1, 2024, rising to $25.00/hr by June 2026
• Hospitals with a high government payer mix (defined as those with government payer revenue at a specified threshold): $18.00/hr starting June 1, 2024, rising to $25.00/hr by June 2033
• Rural hospitals and other covered healthcare facilities: $18.00/hr starting June 1, 2024, with gradual increases to $25.00/hr by 2033
• Clinics (FQHCs, rural health clinics, urgent care): $21.00/hr starting June 1, 2024, rising to $25.00/hr by 2028

Covered healthcare workers include nurses, medical assistants, janitorial and housekeeping staff, security guards, food service workers, laundry workers, and other employees who work in a healthcare facility — not just clinical staff. The law is broad in its definition of "healthcare worker."

Local City and County Minimum Wage Rates

California law allows cities and counties to set their own minimum wage rates above the state level — and dozens of jurisdictions have done so. If your business is located in a city with a local minimum wage ordinance, you must pay the higher local rate, not just the statewide rate.

Here are some of the highest local minimum wage rates in California (rates shown are as of 2025 — many adjust annually on January 1 or July 1):

• City of Los Angeles: $17.28/hr
• Unincorporated Los Angeles County: $17.27/hr
• San Francisco: $18.67/hr
• San Jose: $17.55/hr
• Berkeley: $18.67/hr
• Emeryville: $19.36/hr
• West Hollywood: $19.08/hr
• Mountain View: $18.75/hr
• Sunnyvale: $18.55/hr
• Santa Monica: $16.90/hr
• Oakland: $16.50/hr
• San Diego: $16.85/hr
• Pasadena: $17.50/hr

Some cities also have specific requirements beyond just the wage rate — such as paid sick leave accrual rates that exceed the state mandate, or fair scheduling ordinances. Always check the specific requirements for every city where you have employees working.

No Tip Credit in California

This is one of the most important differences between California and federal labor law, and it catches many new restaurant and hospitality employers off guard.

Under federal law (the Fair Labor Standards Act), employers can take a "tip credit" — paying tipped employees a lower base wage of just $2.13/hr, as long as tips bring the employee's total compensation up to at least the federal minimum wage of $7.25/hr.

California does not allow any tip credit whatsoever. Under California Labor Code Section 351, employers must pay the full applicable minimum wage to every employee, regardless of how much the employee receives in tips. Tips are the property of the employee and cannot be counted toward the employer's minimum wage obligation.

For a restaurant in San Francisco, this means you must pay every server, bartender, and barista at least $18.67 per hour — the full local minimum wage — before any tips are counted. Tips are entirely supplemental income for the employee.

Salary Exempt Threshold

California's minimum wage directly affects which employees can be classified as "exempt" from overtime. To qualify for the executive, administrative, or professional exemption under California law, an employee must earn a monthly salary of at least twice the state minimum wage for full-time employment.

The formula is: State minimum wage x 2 x 2,080 hours (annual full-time hours) = minimum annual exempt salary.

At the 2025 statewide minimum wage of $16.50/hr:

• $16.50 x 2 = $33.00/hr
• $33.00 x 2,080 hours = $68,640 per year
• $68,640 / 12 = $5,720 per month

This means any salaried employee earning less than $68,640 per year (or $5,720 per month) cannot be classified as exempt in California, regardless of their job duties. They must be treated as non-exempt and paid overtime for hours worked beyond 8 in a day or 40 in a week.

Important: If your business is in a city with a local minimum wage higher than the state rate, the exempt salary threshold is not based on the local rate — it is based on the statewide minimum wage. However, you still must pay non-exempt employees at least the local minimum wage for hours worked.

Penalties for Minimum Wage Violations

California takes minimum wage violations seriously, and the penalties are steep:

• Back pay: You must pay the employee the full difference between what they were paid and what they should have been paid, for every pay period affected.
• Liquidated damages: Under Labor Code Section 1194.2, employees can recover an amount equal to the unpaid wages as liquidated damages — effectively doubling the back-pay liability.
• Interest: Prejudgment interest accrues from the date the wages were due.
• Waiting time penalties: If the underpayment is discovered at termination, the employer may also owe up to 30 days of wages as waiting time penalties under Labor Code Section 203.
• Civil penalties: Under the Private Attorneys General Act (PAGA), employees can bring representative actions seeking civil penalties of $100 per employee per pay period for the initial violation and $200 per employee per pay period for subsequent violations — these add up extremely fast.
• Criminal penalties: Willful minimum wage violations can be prosecuted as a misdemeanor, carrying fines of up to $10,000 and/or up to 6 months in county jail.

A single underpaid employee over a one-year period can easily result in a five-figure liability when you combine back pay, liquidated damages, interest, and PAGA penalties. Class-action and PAGA lawsuits involving multiple employees can produce six- or seven-figure verdicts.

Compliance Tips for Employers

Given the complexity of California's minimum wage landscape, here are practical steps to protect your business:

• Audit your rates annually. Every January 1 (and July 1 for some cities), check the statewide rate and every local rate that applies to your locations. Update your payroll system immediately.
• Track where employees work. If employees travel between cities, document the primary work location for each pay period.
• Never apply a tip credit. Pay the full minimum wage to all employees, including tipped workers. Period.
• Review exempt classifications. Every time the minimum wage increases, recalculate the exempt salary threshold ($16.50 x 2 x 2,080 = $68,640 for 2025). If any exempt employee earns less than this, reclassify them immediately or increase their salary.
• Use reliable payroll software. Modern payroll platforms track rate changes and can flag compliance issues before they become problems.
• Keep records for at least 4 years. California's statute of limitations for wage claims is 3 years for oral agreements (4 years under the Unfair Competition Law). Maintain detailed payroll records including hours worked, rates paid, and all deductions.