New Employee Minimum Pay Rates

New Employee Minimum Pay Rates

Most employers should now know that there are minimum wage requirements mandated by the federal government, state of California and local municipalities.  Keeping up with them is laborious. Here’s the latest:

New Minimum Wage Rate

  • •As of January 1, 2026, all employers in California must pay at least the state minimum wage of $16.90 per hour, an increase from 2025’s $16.50 per hour.

  • •California also sets a minimum salary threshold for most “exempt” employees. This salary requirement is tied to California’s state minimum wage—not local ordinances. The current minimum salary threshold in California is $68,640 per year. So, beginning January 1, 2026, the new exempt salary threshold will be $70,304 per year, equal to two times the state minimum wage (based on a 40-hour workweek multiplied by 52 weeks = 2080 hours).

Exempt vs. Non-Exempt

Employers are advised to carefully determine whether an employee meets the exempt tests. Paying the minimum salary does not automatically make an employee exempt from overtime, meal and rest break requirements, or other wage protections.

Employers must carefully analyze the actual work performed by an employee before classifying them as exempt. Improper classification can expose employers to significant liability.

Action Items

January 1, 2026:

  • •Update payroll systems to reflect the new $16.90 hourly minimum wage.

  • •Confirm that all exempt employees meet the increased $70,304 salary threshold, as well as the required duties test.

  • •Post updated state minimum wage notices in the workplace.

  • •Check both state and local wage rates and use the applicable highest. Remember that the exempt salary threshold always follows the state standard.

California’s wage and hour laws continue to evolve quickly. Employers should review classifications, pay practices, and notices now to ensure compliance.  We are here to help you plan and grow and protect your business.  Please feel free to contact Dawn at: dawn@eppscoulson.com.

Information contained in this Memo is intended for informational and educational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.  It is likely considered advertising.  Epps & Coulson, LLP encourages you to call to discuss these matters as they apply to you or your business.  Epps & Coulson, LLP attorneys and affiliated counsel admitted to practice in California, Texas, Colorado, Oregon, New York, Connecticut, District of Columbia, Massachusetts, Michigan, New Jersey, Hawaii, European Union, England and Wales, France (Paris Bar), Sweden, and the US Patent & Trademark Office.

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