California minimum wage to hit $17.40

Governor Gavin Newsom said on July 31 that California's statewide minimum wage will rise to $17.40 an hour on January 1, 2027, lifting the floor above the state's current $16.90 rate. The announcement came from the governor's office, while the California Department of Industrial Relations continues to list $16.90 as the statewide minimum wage effective January 1, 2026. State officials said California already has higher wage floors for some sectors, including fast-food workers and certain healthcare workers. The change means employers will need to distinguish between the statewide rate and industry-specific minimums that remain above it in some cases. ### When does the $17.40 rate actually start? January 1, 2027, is the effective date Newsom's office gave for the new statewide minimum wage. The governor's statement said the increase would take California's general minimum wage to $17.40 per hour at the start of next year. The California Department of Industrial Relations says the current statewide minimum wage is $16.90 per hour effective January 1, 2026, for all employers unless a higher industry-specific or local rate applies. (gov.ca.gov) That makes 2026 the bridge year before the statewide increase takes effect in 2027. ### What workers does the statewide rate cover? The Labor Commissioner's Office says the statewide minimum wage applies to all employers unless workers are covered by a higher minimum wage tied to an industry or locality. (gov.ca.gov) California also notes that some cities and counties set local minimum wages above the state floor. The Department of Industrial Relations publishes the statewide minimum wage order and separate wage materials for covered industries. (dir.ca.gov) Employers are directed to post the applicable wage order and to check whether local ordinances require a higher rate than the state minimum. ### Why are fast-food workers already at $20? AB 1228, which Newsom signed on September 28, 2023, raised the minimum wage for certain fast-food restaurant employees to $20 an hour effective April 1, 2024, according to the Department of Industrial Relations. (dir.ca.gov) The law also created a Fast Food Council within the department. State guidance says all covered fast-food restaurant employees must be paid at least $20 per hour starting April 1, 2024. (dir.ca.gov) The department's FAQ also says the Fast Food Council can establish future increases, subject to a cap tied to 3.5% or the consumer price index, whichever is smaller. ### Does $17.40 replace those higher sector wages? The Department of Industrial Relations says the statewide minimum wage is the baseline for workers "not otherwise covered by a higher minimum wage specific to an industry or a locality." (dir.ca.gov) That means the 2027 statewide increase does not displace a higher applicable wage for covered fast-food workers, healthcare workers or workers in cities and counties with higher local minimums. (dir.ca.gov) The state's wage pages list fast-food workers as covered by a higher minimum wage effective April 1, 2024, and certain healthcare workers as covered by a separate higher wage schedule effective October 16, 2024. California has published FAQs and wage-order materials for both categories. ### Where should employers and workers check next? The governor's office said the statewide increase begins on January 1, 2027, and the Department of Industrial Relations maintains the wage orders and FAQs employers use for compliance. (dir.ca.gov) The department's minimum wage page and industry wage-order page are the state's central references for current posting and pay-floor rules. (dir.ca.gov) January 1, 2027, is the next statewide milestone. Before then, California employers will still be operating under the $16.90 statewide rate unless a higher local or industry-specific wage applies, according to the Department of Industrial Relations. (dir.ca.gov) (gov.ca.gov)