Every January, California payroll resets — and every July, the local ordinances reset again. Here’s what changed on January 1, 2026, and the two follow-on effects (exempt salaries and local rates) that catch employers who only updated the headline number.
The statewide floor: $16.90
California’s minimum wage rose to $16.90 per hour on January 1, 2026, for employers of all sizes. If anyone on your roster was at the old rate, this needed to be in your first January payroll run — retroactive fixes are messy but far cheaper than a wage claim.
The follow-on most people miss: exempt salaries
Salaried-exempt employees (executive, administrative, professional) must earn at least twice the state minimum wage for full-time work — with the 2026 rate, that’s $70,304 per year. An “exempt” manager below that line is legally non-exempt, which means overtime, meal-and-rest-break premiums, and timekeeping you probably haven’t been doing. Audit titles against salaries every January.
Local ordinances and sector rates sit on top
The state number is the floor, not the answer. The City of Los Angeles, unincorporated L.A. County, Pasadena, and others set higher local minimums that typically adjust each July 1 — so mid-year, your rate may move again depending on where the work is performed. Separate state laws set higher minimums for fast-food workers (at large national chains) and many health-care facilities. If you operate in La Crescenta proper (City of Glendale territory borders matter here), check the locality of each work site, not your mailing address.
SDI: still no ceiling
Since 2024, State Disability Insurance withholding applies to all wages with no annual cap — high earners no longer stop contributing mid-year. The rate is set annually by the EDD; confirm the current-year rate and your payroll system’s setting against the EDD’s annual DE 44 employer guide rather than assuming last year’s number carried over.
Three checks — hourly rates, exempt salaries, SDI settings — take fifteen minutes in January and again in July. The wage-claim version of discovering these late comes with penalties, interest, and attorney’s fees stacked on top of the back pay. If you’d rather hand the machine off entirely, here’s what managed payroll should include.
Action items
- Confirm every hourly employee is at or above $16.90 — and above the local rate where they work
- Verify every exempt salary clears $70,304; reclassify or raise where it doesn’t
- Calendar July 1 for local-ordinance increases
- Check fast-food and health-care sector minimums if they apply to you
- Confirm the current SDI rate in your payroll system against the EDD’s DE 44
This article is general information, not tax advice for your specific situation. Rules change and details matter — talk to a CPA (we know one) before acting on anything here.