LBExamThe California minimum wage rises to $17.40 per hour on January 1, 2027. The Department of Industrial Relations (DIR) announced it in a news item dated August 13, 2026, and the current rate, $16.90 per hour for all employers since January 1, 2026, still shows on the Division of Labor Standards Enforcement (DLSE) minimum wage page. The increase is 50 cents, just under 3 percent.
Where the number comes from
Nobody votes on it. Lab. Code s. 1182.12 carried the state to $15 an hour in stages, reaching it on January 1, 2022 for employers with 26 or more employees and January 1, 2023 for those with 25 or fewer, and subdivision (c) has run the figure on autopilot since. On or before each August 1 the Director of Finance calculates an adjusted minimum wage: the current wage increased by the lesser of 3.5 percent and the change in the U.S. Consumer Price Index for Urban Wage Earners and Clerical Workers (the CPI-W) between the two most recent July-to-June periods, rounded to the nearest ten cents. The adjusted wage takes effect the following January 1.
The DLSE page adds the rest of the mechanism: the wage cannot go down even if the index does, the largest rise allowed in any one year is 3.5 percent, and the Governor can no longer pause a scheduled increase. The $17.40 is the August 2026 calculation.
What the figure has done
The DLSE page keeps the history. The two schedules merged on January 1, 2023, and the rate has been one number for every employer since:
| From | 26 or more employees | 25 or fewer |
|---|---|---|
| January 1, 2022 | $15.00 | $14.00 |
| January 1, 2023 | $15.50 | $15.50 |
| January 1, 2024 | $16.00 | $16.00 |
| January 1, 2025 | $16.50 | $16.50 |
| January 1, 2026 | $16.90 | $16.90 |
| January 1, 2027 | $17.40 | $17.40 |
The 2027 row is DIR’s announcement; the rest is the DLSE table. Fast food and certain health care workers have their own higher minimums, and a city or county may set a higher local rate, which under Lab. Code s. 1197 is the wage that applies there. That section is short and worth knowing: the minimum wage fixed by the commission or by any applicable state or local law is the minimum wage to be paid to employees, and the payment of a lower wage is unlawful.
Two rates in one exam year
Employment Requirements is 20 percent of the Law and Business exam, and a candidate who sits in 2026 answers $16.90 per hour for the state minimum wage, while one who sits on or after January 1, 2027 answers $17.40. Both figures rest on the same section, and the sitting date picks between them.
A question is as likely to ask how the rate is set as what it is. The mechanism is in s. 1182.12(c) and does not change from year to year: the Director of Finance, by August 1, the lesser of 3.5 percent and the CPI-W, rounded to ten cents, effective January 1. On a public works job of more than $1,000 the floor is a different one: under Lab. Code s. 1771 every worker is paid not less than the general prevailing rate of per diem wages for similar work in the locality, which is the Public Works section’s business.
Sources
- DIR news, “ICYMI: California’s minimum wage set to increase to $17.40 per hour on January 1, 2027”, August 13, 2026
- DLSE Minimum Wage Frequently Asked Questions, Department of Industrial Relations, questions 1 to 3 and the rate history table
- Labor Code, ss. 1182.12, 1197 and 1771