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California Employers: Be Ready for the January 1, 2026 Minimum Wage Increase

  • Writer: Contact ILS
    Contact ILS
  • Aug 22
  • 2 min read

The California Department of Finance has announced that the statewide minimum wage will rise to $16.90 per hour on January 1, 2026, as part of the state’s annual inflation-based adjustment process. This increase applies to all private employers statewide, regardless of size.


Although the change amounts to only a $0.40 adjustment from the current $16.50 rate, the impact reaches far beyond hourly pay and requires careful attention from employers.


If you have questions about wage and hour law or need legal support tailored to your business, please contact our Managing Partner, Richard Liu, at contact@consultils.com.


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Key Areas of Impact


1. Non-Exempt Employees

 

Every non-exempt employee in California must be paid at least $16.90 per hour as of January 1, 2026.


2. Exempt Employees
 

To remain properly classified, exempt administrative, executive, and professional employees must earn a salary of at least $70,304 per year (or $5,858.67 per month). Employers should confirm exempt workers meet both the duties and salary tests.


3. Industry and Local Minimums
 

Several industries and jurisdictions already impose higher wage standards:


  • Fast food: Covered employees must earn at least $20/hour under the FAST Recovery Act.

  • Health care: Many facilities must pay healthcare workers between $23–$25/hour, depending on role and law.

  • Local ordinances: Cities such as San Francisco, Los Angeles, and Berkeley enforce higher local minimum wages. Employers must always comply with the highest applicable rate at each worksite.


Recommended Employer Actions


1. Evaluate Internal Practices:  Look beyond wage rates and consider how the increase will affect scheduling, staffing levels, and overall labor budgets.

2. Upgrade Systems and Processes: Update payroll, timekeeping, and HR systems in advance so the transition to the new rate is seamless and compliant.

3. Strengthen Communication: Provide managers and supervisors with clear guidance on handling questions from employees. Transparent communication builds trust and reduces the likelihood of disputes.

4. Plan for Continuous Oversight: Establish an ongoing process to track state, local, and industry-specific wage requirements. Regular monitoring ensures your business remains aligned with the most current standards.

 

If you have questions about wage and hour law or need legal support tailored to your business, please contact our Managing Partner, Richard Liu, at contact@consultils.com.


Disclaimer: The materials provided on this website are for general informational purposes only and do not, and are not intended to, constitute legal advice. You should not act or refrain from acting based on any information provided here. Please consult with your own legal counsel regarding your specific situation and legal questions.

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Richard Liu, Esq. is the Managing Counsel of ILS. He serves clients as a management-side defense lawyer specializing in employment and business litigation. Richard is also an expert on litigation prevention and compliance. He regularly advises Fortune 500 companies and startups on employment, labor, and commercial matters.


Email: contact@consultils.com | Phone: 626-344-8949

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