CALIFORNIA STATE – California workers earning the statewide minimum wage are set to receive another pay increase at the beginning of next year.
The state’s minimum wage will rise from $16.90 to $17.40 per hour on January 1, 2027, according to an announcement Friday from Gov. Gavin Newsom’s office.
The 50-cent increase will apply to employers of all sizes, although workers in certain cities and industries may already be entitled to higher hourly rates.
How Much More Will Workers Earn?
For an employee working 40 hours per week, the new rate represents an additional $20 in gross weekly pay.
That comes to roughly $1,040 more per year for someone working full time throughout the year, before taxes and other deductions.
At $17.40 per hour, a full-time minimum-wage employee would earn approximately $36,192 annually.
California’s current statewide rate of $16.90 per hour took effect on January 1, 2026. The upcoming increase therefore amounts to an increase of just under 3%.
Why Is the Minimum Wage Increasing?
The change does not require the Legislature to pass a new bill each year.
California law automatically adjusts the statewide minimum wage annually based on inflation, using the federal Consumer Price Index for Urban Wage Earners and Clerical Workers.
The law does not permit the minimum wage to decrease, even during a period of falling prices. Annual inflation adjustments are generally capped at 3.5%.
California’s minimum wage has more than doubled since 2014, when it stood at $8 per hour.
Some Workers Already Earn a Higher Minimum Wage
The $17.40 rate will serve as the statewide floor, but it will not necessarily be the amount every minimum-wage employee receives.
Numerous California cities and counties have enacted local minimum-wage ordinances with rates higher than the state requirement. Employers generally must follow whichever applicable law provides the greatest benefit to the employee.
That distinction is particularly important in the Bay Area, where communities including Berkeley, Emeryville, Oakland, Richmond, San Francisco and several South Bay cities maintain their own local wage requirements.
Some local rates are adjusted on July 1 instead of January 1, while others follow the start of the calendar year. Employees should check the rules for the city where they physically perform their work, which may be different from the location of their employer’s headquarters.
Fast-Food and Health Care Workers Follow Different Rules
Certain industries are also covered by separate minimum-wage laws.
Many employees at limited-service restaurants that are part of chains with at least 60 locations nationwide are covered by California’s fast-food minimum wage. That rate has been at least $20 per hour since April 2024, although exemptions apply to certain restaurants and locations.
Covered health care workers are subject to another wage schedule that varies according to the type of facility, its size and other factors. Some health care wage rates increased again on July 1, 2026, and additional scheduled increases may take effect in future years.
Workers covered by one of these industry-specific laws are generally entitled to the higher applicable wage rather than the regular statewide rate.
Tips Cannot Be Counted Toward the Minimum Wage
Unlike some other states, California does not allow employers to use tips as a credit toward their minimum-wage obligations.
A restaurant server, bartender or other tipped employee must receive the full applicable minimum wage directly from the employer. Tips are paid in addition to that hourly wage.
The same general statewide minimum wage also applies to both adults and minors. Small employers are no longer permitted to pay a lower statewide rate simply because they have fewer employees.
The new $17.40 rate takes effect statewide on January 1, 2027.
