The federal minimum wage is $7.25 per hour. When state and federal law differ, you must comply with the more restrictive requirement. California state minimum wage is higher, so that is the rate that you must pay employees in California.

An increasing number of local minimum wage ordinances in California require some employers to pay a local minimum wage rate that is higher than the state rate.

This topic contains the following information:

• State Minimum Wage Requirements
• Subminimum Wages
• Local Minimum Wage Ordinances
• Living Wage Versus Minimum Wage

State Minimum Wage Requirements

Effective January 1, 2026, the California minimum wage is $16.90 per hour.

The minimum wage can be subsequently increased each year up to 3.5 percent (rounded to the nearest 10 cents) for inflation as measured by the national Consumer Price Index.

In 2024, California created new minimum wage rates and schedules for certain fast-food chain restaurants and health care facilities that will be higher than the state’s general minimum wage rate described above.

• Under the Fast Food Worker Minimum Wage law, the minimum wage was increased to $20 per hour.
• The Health Care Worker Minimum Wage Law provides that covered health care employers will be subject to one of several minimum wage schedules, depending on the employer. Read more about these minimum wage rates in Wage and Hour Requirements for Specific Industries.

Employers should be mindful of the effect of state minimum wage increases on exempt classifications and ensure that employees meet the salary basis test for the exemption claimed. For more information, see ”Minimum Salary Requirements for Exempt Employees” in Determining Exempt or Nonexempt Employee Status.

Note that the increase in the minimum wage rate also corresponds to a higher required overtime rate.

• If you have employees earning the state minimum wage, make sure their wages are increased effective January 1, 2026 to meet the increased minimum wage rate. Note that the increase in the minimum wage rate also corresponds to a higher required overtime rate for employees earning minimum wage. For more information on overtime, see Overtime Pay.

Minimum Wage “Averaging” Prohibited

California Wage Orders provide that every employee must receive no less than the state minimum wage per hour for all hours worked. In contrast, the federal Fair Labor Standards Act (FLSA) requires payment of minimum wage to employees who work in any workweek.

California law prohibits employers from averaging the hourly rate to determine compliance with the state minimum wage law, even though the FLSA allows minimum wage averaging.1 For example, California employers cannot lump all of an employee's work together (e.g. productive time, travel time, paperwork time etc.), and claim that the average pay of all hours is more than the minimum wage. Instead, each work hour must be examined to ensure the minimum wage is paid.

• California law provides greater employee protection than federal law by mandating that each hour of work be regarded independently to determine if the employer met its obligation to pay the agreed upon wage.

Employers may also run afoul of minimum wage requirements if they pay their employees pursuant to “activity-based” compensation systems. In this type of wage structure, employees’ pay is based on labor that results in direct charges to customers. Because time spent on “non-productive” tasks — such as cleaning, waiting for customers, traveling or taking rest breaks — doesn’t generate those charges, courts have found in some circumstances that employers must separately compensate employees for that time.

Fixed Salaries and Nonexempt Employees

Some employers have fixed salary arrangements with nonexempt employees (often called mutual wage agreements). For example, an employer may set a fixed weekly wage that includes payment for a certain number of hours of work per day and per week. Labor Code section 515(d)(2) states that payment of a fixed salary to a nonexempt employee will be deemed to be payment only for the employee’s regular, non-overtime hours, notwithstanding any private agreement to the contrary.

• Consult legal counsel before entering into a fixed salary agreement with nonexempt employees. Fixed salary agreements pose liability risks and are difficult to administer. Employers still need to keep track of hours worked and overtime regardless of any private agreement.

Exceptions to the Minimum Wage

Other exceptions to the minimum wage include:

• Learners and apprentices.
• Organized camp counselors, program counselors and student employees are exempt from the minimum wage if they receive a salary of at least 85 percent of the minimum wage for a 40-hour week regardless of the number of hours per week they work at the organized camp. If they work fewer than 40 hours per week, they must be paid at least 85 percent of the minimum wage for each hour worked. The organized camp can, with the employee’s written permission, deduct a fair market value of meals and lodging from employee salaries.2
• Any individual who is a parent, spouse, child or legally adopted child of the employer.3
• Outside salespeople. For more information, see Outside Salesperson Exemption.4
• Some executive, administrative and professional employees may be exempt. For more information see Exempt/Nonexempt.

Subminimum Wages

Both federal and state law contain provisions for paying employees less than minimum wage. If the two laws conflict, you must follow the more restrictive rule.

The IWC Wage Orders permit you to pay learners 85 percent of the minimum wage, rounded to the nearest nickel, which means at least $14.40 per hour. State law allows for the subminimum wage for the first 160 work hours, after which the employee must be paid at least minimum wage. ⁵ “Learners” are employees who have no previous similar or related experience in the occupation.

Federal law allows payment of a subminimum wage — called an opportunity wage — for employees younger than 20 years of age, for their first 90 consecutive calendar days of employment. You cannot displace employees or reduce employees’ hours, wages or employment benefits to hire a youth at subminimum wage.6 The following table summarizes subminimum wage laws. The most restrictive rules are in bold and must be followed in California.

Local Minimum Wage Ordinances

Some cities and counties in California have adopted their own local minimum wage rates that are separate from the state rate. This is part of a growing trend. Eligibility rules may vary from city to city. If a local ordinance provides for a higher minimum wage rate than the current state rate, the local rate must be paid.

Pursuant to the Health Care Worker Minimum Wage law, enacted in 2024, localities cannot enact minimum wage ordinances targeting only health care facilities. See Wage and Hour Requirements for Specific Industries for more information on the Healthcare Worker Minimum Wage law.

Pursuant to the Fast Food Worker Minimum Wage law, enacted in 2024, localities also cannot enact minimum wage ordinance targeting only the fast food industry. However, the Fast Food Council may issue minimum wages that affect only certain regions in the state. See Wage and Hour Requirements for Specific Industries for more information on the Fast Food Worker Minimum Wage law.

At the time of publication, the following California jurisdictions have local minimum wage ordinances:

• Local minimum wage rates may change at any time; employers should closely monitor them.Visit HRCalifornia’s Local Ordinances section for detailed information on local employment-related ordinances in California, including minimum wage ordinances.

Local agencies generally have the authority to enforce their minimum wage laws. The state Labor Commissioner also has authority to investigate and enforce local minimum wage and overtime provisions. The Labor Commissioner can issue citations and penalties against employers for violation of local minimum wage or overtime laws, except when a local government entity has already cited the employer for the same violation. If the Labor Commissioner issues a citation, the local entity cannot cite the employer for the same violation.

Living Wage Versus Minimum Wage

Living wage ordinances generally require employers who contract with a city or county to pay their employees a rate higher than the minimum wage for work done pursuant to the contract. Often the living wage ordinances also require additional contributions toward health benefits.

The following cities, counties, towns and ports have adopted some version of a living wage ordinance:

1. Armenta v. Osmose, Inc., 135 Cal. App. 4th 314 (2005)