California’s minimum wage is set at $16.90 for most employees as of January 1, 2026. However, navigating payroll means looking beyond the baseline, as different cities and industries have their own specific local ordinances and upcoming minimum wage adjustments to account for.
What you’ll learn
What you’ll learn
Key takeaways
- California’s statewide minimum wage is $16.90 per hour for most employees as of January 1, 2026
- Employers must track local ordinances, as many cities like Los Angeles and San Francisco require higher minimum hourly rates
- Tipped employees must be paid the full minimum wage before tips, as California prohibits employers from claiming a tip credit
- Sector-specific minimums apply, requiring $20 per hour for certain fast food workers and up to $25 per hour for covered healthcare workers
To help you stay compliant and support your entire business, this comprehensive guide breaks down the California labor code, local minimum wage ordinances, tipped employee rules, and key exemptions you need to know.
Current minimum wage rates in California by employer size
California’s minimum wage starts at $16.90 for most employees. However, certain cities and industries must pay a higher minimum wage. Businesses of all sizes are responsible for staying on top of minimum wage increases, and the consequences for noncompliance can be serious.
The minimum salary for exempt employees in California is currently $70,304 per year, or two times the state minimum wage of $16.90 per hour for full-time work.
City-specific wage ordinances: Why Los Angeles and San Francisco stand out
As of July 1, 2025, many cities now require a higher minimum pay in California (and many of these jurisdictions will have an increase in July 2026). Chiefly, these cities represent urban areas where the cost of living is higher than average. Naturally, Los Angeles and San Francisco feature on this list.
Here are a few city-specific wage ordinances your business should be aware of for payroll purposes:
- Los Angeles: $17.87 per hour (increases to $18.42 on 7/1/26)
- San Francisco: $19.18 per hour (increases to $19.61 on 7/1/26)
- Belmont: $18.95 per hour (as of 1/1/26)
- Berkeley: $19.18 per hour (increases to $19.61 on 7/1/26)
- Cupertino: $18.70 per hour (as of 1/1/26)
- Mountain View: $19.70 per hour (as of 1/1/26)
- Palo Alto: $18.70 per hour (as of 1/1/26)
- San Diego: $17.75 per hour (as of 1/1/26)
- San Jose: $18.45 per hour (as of 1/1/26)
- West Hollywood: $20.25 per hour (as of 1/1/26) for non-hotel employees
- Hotel employees: $20.22 (increases to $20.87 on 7/1/26)
Your payroll department will need to track employees by location to stay on top of minimum wage laws across California. While federal minimum wage remains $7.25, businesses in California are required to pay the higher state minimum wages.
Tipped workers and California’s strict rules on cash wages
In addition to local minimum wages, your business must also adhere to statewide rules for tipped workers when it comes to minimum wages per hour. Here’s the scoop on tips in the state of California:
- All tipped workers must be paid the state’s minimum wage of $16.90 per hour or higher.
- Your business can’t use a tip credit to offset the state’s minimum wage.
- Managers and supervisors are not allowed to take a portion of your workers’ tips.
- Credit card tips for tipped employees must be paid out no later than the next regular payday.
Beyond these rules for tipped workers, California’s minimum wage also varies for workers in fast food and healthcare.
Industry-specific standards: Fast food, healthcare, and other sectors
The state’s minimum wage is higher for certain industries, including the following:
- As of April 1, 2024, fast food workers have a statewide minimum wage of $20 per hour for restaurants that have 60 or more locations nationwide.
- Healthcare workers in covered facilities, such as hospitals, clinics, and home health agencies, must be paid $24 per hour as of July 1, 2025, with wage increases scheduled to go to $25 per hour on July 1, 2026. Starting January 1, 2028, the minimum wage will be adjusted annually based on inflation.
The minimum wage for fast food workers, however, does not apply to restaurants in airports, hotels, event centers, theme parks, or museums, or on a single-company corporate campus. If you are in the fast food or healthcare industry and aren’t sure what category your business falls into, consult with an attorney or payroll professional.
Exemptions and employee classifications
While most team members in California are due minimum wage, not every employee fits the bill. There are several exemptions and exceptions to the rules that your California business should be aware of:
- Outside salespeople whose main focus is sales and are typically away from the office
- Apprentices who work under the California Division of Apprenticeship Standards
- Learners, who can be paid 85% of the state’s minimum wage for their first 160 hours of employment
- Individuals under the age of 20, who may be exempt from minimum wage rules for their first 90 days of employment
- Family members of any employer
Your business can’t classify employees as independent contractors with the aim of skirting California minimum wage laws. To this end, your business must carefully classify employees to further make sure they are paid properly. In addition, exempt staff are not due overtime pay for hours above and beyond 40. However, nonexempt team members must be paid 1.5 times their regular pay for any hours beyond 40 in a given work week.
Payroll compliance considerations
Exemptions, special considerations, and ongoing statewide wage increases can make payroll compliance challenging for businesses in California. With state and local minimum wage increases, your payroll team needs to be adept at quickly adjusting pay as needed, maintaining accurate payroll and tax records, and complying with both state and federal Department of Labor reporting requirements. It is your business’s responsibility to stay on top of both federal and state payroll updates.
To support accurate and on-time payroll for all of your workers, automated payroll software can help you stay ahead of changes and keep employees satisfied. If you’re unsure of your current compliance status, reach out to your attorney or a payroll specialist.
Tools to simplify California wage compliance and reduce risk
The good news is that there are many automated payroll tools that can help your business simplify wage compliance and reduce risk in California.
OnPay automates California minimum wage updates, tracks exemptions, and helps ensure accurate employee payments every time. Automated payroll software takes the guesswork out of payroll compliance, eliminating the errors that can come with manual payroll and streamlining your entire payroll process, including deductions, reporting, and more. We also offer a California hourly paycheck calculator and a California tax rate calculator to help with accurate payroll calculations.
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These systems automatically apply complex California overtime and wage rules, offer an accurate record of hours worked, and simplify the entire recordkeeping process for your business, reducing legal risks and increasing overall compliance. If your business isn’t already using automated software for payroll and HR, there’s no time like the present to modernize your systems.
Preparing your payroll for California’s complex wage laws
With the combination of statewide increases, local city ordinances, and industry-specific wage tiers, managing payroll in California requires attention to detail. Employers should regularly review their employee classifications and local labor laws to ensure accurate compensation across the board. Implementing an automated payroll system is a practical way to keep up with these shifting regulations. OnPay automates California minimum wage updates, tracks exemptions, and manages tax withholding to ensure accurate employee payments. You can focus on growing your business while OnPay manages your payroll. If you have any questions, our team is here to help!
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Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.