California Minimum Wage Updates: What Employers Need to Know to Avoid Wage Claims

California employers must keep apprised of any minimum wage updates to avoid wage claims. While the amount of the minimum wage changes on an annual basis, and many localities have their own requirements, the wage laws can often be confusing to navigate. Even an inadvertent error in calculations can lead to penalties and wage claims if the issue is not promptly corrected. Employers should maintain accurate payroll and timekeeping records, train managers and supervisors on the regulations, and implement clear wage policies to ensure compliance.

Understanding California’s Statewide Minimum Wage

Beginning January 1, 2026, California will implement a minimum wage update. Specifically, the new minimum wage will be $16.90 per hour. This amount applies to all employers, regardless of size, and is adjusted annually for inflation. Importantly, the state minimum wage is not to be confused with the federal minimum wage, which will be $10.59 as of January 1, 2026. Since the state minimum wage is higher than the federal minimum wage, employers in California must adhere to state law when paying their employees.

California also imposes a minimum salary for full-time exempt employees. As of January 1, 2026, California employers must pay full-time exempt employees at least $70,304 per year. This mandate aligns with the requirement that employers must pay those who are employed on a full-time basis at least twice the state minimum wage. Non-exempt employees who are entitled to overtime pay must be paid at least the statewide minimum wage; due to the overtime exemption, employers are not required to pay them the minimum salary. It is important to note that not all full-time employees are considered exempt and it is strongly recommended that an employer consult with a knowledgeable employment law attorney before categorizing exempt employees.

Exceptions to the Statewide Minimum Wage

Certain industries in California have their own minimum wage requirements that exceed the statewide minimum. For example, since April 1, 2024, the minimum wage in the fast food industry has been $20 per hour. There are also higher minimum wage thresholds for workers in the healthcare industry. The amount is based on the type of facility and has not changed since October 16, 2024. Neither industry has any scheduled increases or minimum wage update for 2026.

Notably, many cities in California have their own minimum hourly wage requirements that exceed the statewide minimum wage threshold. For instance, Los Angeles, San Francisco, San Jose, Oakland, Pasadena, Santa Clara, San Diego, and other cities all have higher minimum wages for employees. The local wage requirements are typically based on the cost of living in that particular municipality. If a local minimum wage is higher than California minimum wage, employers must comply, based on where the work is performed, to avoid running afoul of the law.

Key Strategies for Employers to Avoid Wage Claims

A wage claim can be detrimental to a business’s reputation and bottom line. Not only can these types of claims result in costly and disruptive litigation, but they can also impact employee morale and decrease productivity. Employers should implement some key strategies to avoid wage claims, including the following measures:

• Maintain accurate payroll records: One of the first lines of defense for an employer in a wage claim is accurate payroll records. These documents can demonstrate that an employee was paid correctly.
• Track the hours worked by each employee: Tracking the hours each employee was on the clock is crucial to ensure employees are paid for all time worked. It can also help mitigate potential wage claims.
• Provide proper training to managers and supervisors: Managers and supervisors should be provided with training on California’s wage laws and accurate record keeping. They should also know how to address any reported inaccuracies or discrepancies.
• Stay informed about any minimum wage updates: Employers should be sure to stay informed about any minimum wage update that occurs in California or in their specific industry.
• Establish clear wage policies: Employers should have clear and concise written wage policies in place to minimize the potential for legal risk.
• Encourage employees to communicate inaccuracies: Employers should encourage employees to openly communicate any concerns they may have about the accuracy of their pay.

A knowledgeable employment law attorney can help provide the legal counsel and regulatory advice necessary to ensure compliance with California’s wage laws. They can also help mitigate risk by working with an employer to implement strong policies and offer crucial insight.

Contact an Experienced California Employment Attorney

It’s vital for employers to fully understand their legal obligations regarding California’s minimum wage update. The employment attorneys at White & Bright, LLP work closely with employers in a broad scope of industries for a wide range of employment matters, including those involving wage claims. We welcome you to contact us online or call us at (760) 747-3200 to learn more about our legal services.