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California minimum wage in 2026 and the 2027 change
California payroll setup starts with the employee’s work location and industry. Review the statewide rate, higher applicable rates and effective dates before changing an earnings record.
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General information, not legal or tax advice.
Identify the statewide hourly baseline
DIR lists the California minimum wage as $16.90 per hour effective January 1, 2026 for employers not covered by a higher industry or local rate. Record the applicable rate and effective date together so a later payroll review can explain why an employee’s rate changed.
Sources: DIR - Minimum Wage FAQ
Check local and industry coverage
A higher applicable city or county minimum wage takes precedence over the lower statewide rate. Covered fast food employees have a minimum of $20.00 per hour beginning April 1, 2024. Health care schedules vary by facility category, so use the linked DIR guidance to identify the correct coverage before setting a rate.
Sources: DIR - Minimum Wage FAQ; DIR - Fast Food Minimum Wage FAQ; DIR - Health Care Worker Minimum Wage FAQ
Schedule the statewide increase
The statewide hourly minimum becomes $17.40 on January 1, 2027. DIR also states a $72,384 annual salary floor for the exemption salary test beginning that date, with duties and other exemption requirements still applicable. Treat hourly rate updates and exemption reviews as separate payroll tasks.
Sources: DIR News Release 2026-66
Document the change in payroll records
DIR identifies wage-order posting obligations and the requirement to show wage rates on pay stubs. Keep the rate authorization, affected employees and implementation confirmation together. Review the first payroll using the revised settings against approved hours and the intended effective date.
Sources: DIR News Release 2026-66
Sources: identify the statewide hourly baseline
Prepare payroll for the rate change
Tidwell helps organize payroll inputs, review records and support payroll reporting. We coordinate tax questions with your CPA and leave employment-law interpretation with your legal adviser.