$70,304: The New Minimum Salary Threshold for California Exempt Staff

California employers face new payroll challenges as wages and salary thresholds rise again. Proactive compliance is essential to avoid costly misclassification penalties.

1. State Minimum Wage & Exempt Salary

The state minimum wage is increasing, directly impacting most salaried, exempt employees.

• State Minimum Wage: Effective January 1, 2026, the rate increases by 40 cents to $16.90 per hour (a 2.49% inflation adjustment).

• Exempt Salary Threshold: To maintain exempt status (Executive, Administrative, Professional), the employee must earn a salary equal to at least double the state minimum wage.

• New Exempt Salary: The minimum annual salary for most exempt workers rises to $70,304 per year($5,858.67/month) on January 1, 2026. Adjust pay for all affected exempt staff.

2. Local Minimum Wage Adjustments

Employers must pay the higher of the state or local minimum wage. Below are key city-specific minimum wage rates for 2025:

• Effective as of January 1, 2025:

  • San Jose: $17.95/hour

  • Santa Clara: $18.20/hour

  • Palo Alto: $18.20/hour

• Effective as of July 1, 2025:

  • San Francisco: $19.18/hour

  • Berkeley: $19.18/hour

  • Emeryville: $19.90/hour

  • City of Los Angeles: $17.87

2. Sector-Specific Minimum Wages:

• Fast Food Workers: Minimum wage remains $20/hour, with no increase on January 1, 2026. Exempt managers must earn at least $83,200/year; no adjustment needed. For more information visit State of California Department of Industrial Relations which can be accessed here.

• Covered Healthcare Workers: Minimum wage is covered by the Health Care Minimum Wage law. Those rates just increased effective July 1, 2025 through June 30, 2026. Exempt workers must earn the greater of 1.5x the healthcare wage (which currently range from $18.63 to $24/hr depending on facility) or 2x the state minimum whichever is greater. On July 1, 2026, exempt healthcare workers at certain facilities (e.g., community clinics) earning under $70,304/year will need a salary adjustment, as double the state minimum wage ($33.80/hour) exceeds 1.5x the healthcare minimum wage. For more information visit the State of California Department of Industrial Relations which can be accessed here.

Audit your entire payroll now:

1. Exempt Staff: Ensure all exempt employees earn at least $70,304 annually by January 1, 2026.

2. Hourly Staff: Confirm that hourly employees are paid at least the highest applicable minimum wage, comparing state and local rates.

3. Monitor Local Wage Rates: Regularly visit city or county websites as 2026 nears to verify compliance with local minimum wage rates, which may surpass the state’s hourly rate.

4. Notify Employees of Changes: Inform employees of any wage or salary adjustments before January 1, 2026, to ensure transparency.

5. Update Required Notices: Revise workplace posters and notices to reflect the new state and local minimum wage rates by January 1, 2026.

   
   

✅ Got questions? Contact our office at 408-295-6740.

Law Offices of Samira Amato - www.samiralaw.com