Understanding the 2026 Minimum Wage Increase in California and Its Impact on Salary Thresholds

The California minimum wage 2026 update brings significant changes that affect many employees across the state. If you work in California, understanding how the new wage increase and salary thresholds impact your pay and job classification is essential. This post breaks down what you need to know about the $16.90 minimum wage California will enforce in 2026 and how the California exempt salary threshold 2026 will affect exempt employee salary California 2026 standards, including the $70,304 salary threshold.

What Is Changing in California Minimum Wage 2026?

California has a history of gradually increasing its minimum wage to keep up with inflation and cost of living. For 2026, the minimum wage will rise to $16.90 per hour for all employers, regardless of size. This increase reflects the state’s commitment to ensuring workers earn a livable wage.

Key Points About the 2026 Minimum Wage Increase

• The minimum wage will be $16.90 per hour starting January 1, 2026.

• This rate applies to all employees in California, whether full-time, part-time, or temporary.

• Employers must comply with this wage floor or face penalties.

  
  

This increase means that hourly workers earning minimum wage will see a boost in their earnings, which can improve their quality of life. However, the change also affects salary thresholds for exempt employees, which impacts how some workers are classified and paid.

Understanding the California Exempt Salary Threshold 2026

The California exempt salary threshold 2026 is the minimum annual salary an employee must earn to qualify as exempt from overtime and minimum wage protections. For 2026, this threshold is set at $70,304 per year.

What Does This Mean for You?

• If you are classified as an exempt employee, your salary must be at least $70,304 annually.

• Employees earning less than this amount cannot be classified as exempt and must receive overtime pay.

• This threshold ensures that only employees with higher salaries and typically more responsibilities are exempt from overtime rules.

  
  

The salary threshold is tied to the minimum wage increase because the law requires the exempt salary to be at least twice the minimum wage for a full-time employee working 40 hours per week, 52 weeks per year.

Example Calculation

• Minimum wage: $16.90 per hour

• Weekly hours: 40

• Weeks per year: 52

• Annual salary threshold = $16.90 × 40 × 52 × 2 = $70,304

  
  

This calculation confirms the $70,304 salary threshold for exempt employees in 2026.

How the Changes Affect Exempt Employee Salary California 2026

If you are an exempt employee, your salary must meet or exceed the new threshold. Employers may need to adjust salaries or reclassify employees to comply with the law.

What Employers Might Do

• Increase salaries to meet the $70,304 threshold.

• Reclassify some exempt employees as non-exempt, making them eligible for overtime.

• Adjust work hours or responsibilities to align with new classifications.

  
  

What Employees Should Watch For

• If your salary is below $70,304, you should receive overtime pay for hours worked beyond 8 per day or 40 per week.

• If your employer does not adjust your salary or classification, you may want to discuss this with HR or seek legal advice.

• Keep track of your hours worked and pay to ensure compliance.

  
  

Impact on Different Types of Workers

Hourly Workers

Hourly workers will benefit directly from the increase to $16.90 minimum wage California 2026. Their hourly pay will rise, increasing their take-home pay if they work the same hours.

Salaried Non-Exempt Workers

Some salaried workers might find themselves reclassified as non-exempt if their salary falls below the $70,304 salary threshold. This means they will be eligible for overtime pay.

Salaried Exempt Workers

Salaried exempt workers earning above the threshold will likely see no change in classification but may receive salary adjustments if their pay was close to the previous threshold.

Preparing for the 2026 Changes

For Employees

• Review your current salary and classification.

• Understand your rights regarding overtime and minimum wage.

• Keep records of your hours and pay.

• Talk to your employer if you have questions about your classification or pay.

  
  

For Employers

• Audit employee salaries and classifications.

• Adjust payroll systems to reflect the new minimum wage and salary thresholds.

• Communicate changes clearly to employees.

• Train HR and management on compliance requirements.

  
  

What This Means for California’s Workforce

The increase to the California minimum wage 2026 and the updated exempt salary threshold aim to provide fair compensation and protect workers from being misclassified. While some employers may face higher payroll costs, the changes promote a more equitable workplace.

For you as an employee, these updates mean better pay if you earn minimum wage and clearer rules about overtime eligibility if you are salaried. Staying informed helps you ensure your rights are respected and your pay is fair.

Contact Our California Employment Law Firm for a Free Consultation

If you believe you have been misclassified as an exempt employee, or if you have questions about whether your employer is complying with California's wage and hour laws, we encourage you to contact our firm for a free, confidential consultation. We represent employees throughout California in wage-and-hour claims, and we are committed to holding employers accountable when they violate the law.

You worked the hours. You earned the pay. Let us help you recover what you are owed.

This blog post is for informational purposes only and does not constitute legal advice. If you believe you have been retaliated against for whistleblowing activity, consult with a qualified California employment attorney to discuss your specific situation.