On August 2025, the California Department of Finance provided updated figures regarding the upcoming adjustment to the minimum wage in California. The change is part of an annual process tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is used to track cost-of-living variations for certain categories of employees.
According to information cited by Marca in the middle of the article, the revision corresponds to a 2.5% difference compared to the current $16.50 rate in 2025. Officials indicated that this modification is smaller than the one applied in the previous year.
Statewide Adjustment and Scope
The 40-cent increase applies to all employers, regardless of company size, and complements local ordinances that may set higher wages. Cities such as Los Angeles, San Francisco, and Berkeley maintain their own standards, which can exceed the statewide rate.
As of July 2025, Los Angeles County had set its minimum wage at $17.81, while the city of Los Angeles required $17.87 per hour.
These figures illustrate how municipal adjustments operate independently from the statewide policy, and they often reflect variations in local living costs, labor market conditions, and budgetary priorities established by each jurisdiction.
Impact on Exempt Employee Salary Thresholds
The 2026 minimum wage increase also raises the salary threshold for employees classified as exempt in executive, administrative, or professional roles. Beginning in January, the minimum annual salary will be $70,304, equivalent to $5,858.67 per month, to remain compliant with state labor regulations.
This threshold is calculated as twice the annualized state minimum wage for a full-time schedule and applies uniformly across all employers regardless of size.
It serves as a key benchmark for determining overtime eligibility under California labor law, meaning that employees earning below this level must be compensated for overtime hours in accordance with state requirements.
Employer Compliance Measures
Employers are advised to prepare for the change by conducting audits to ensure all employees meet the updated pay requirements, updating payroll systems to reflect the minimum wage change, revising internal policies and workplace postings in the place of work to display the new rate, and training HR and payroll staff on the impact to overtime eligibility and paycheck accuracy.
While the state’s minimum wage provides a baseline, certain sectors and jurisdictions mandate higher pay. In industries such as fast food and health care, hourly rates can reach $20, and businesses operating across multiple locations must ensure compliance with each local rule in addition to state requirements.
