California minimum wage 2027: $17.40 for restaurants, no tip credit, and the new exempt salary

You are building the first January schedule and every hourly line on it costs more: dishwashers, cooks, hosts and servers alike, because California does not let tips count toward the minimum. Here is what changes, and what to do before the first shift.

From 1 January 2027, California's minimum wage is $17.40 an hour for every employer, up from $16.90. There is no tip credit, so servers get the full $17.40 plus their tips. A salaried manager needs at least $72,384 a year to be exempt from overtime, and every employer must give staff the Workplace Know Your Rights notice by 1 February. Last checked: 5 November 2026.

What is the California minimum wage in 2027?

$17.40 an hour from 1 January 2027, for employers of every size. The Department of Finance certified the increase on 31 July 2026, and the Department of Industrial Relations confirmed it in a release dated 13 August 2026 (DIR release 2026-66). The release sets out the exempt salary sum itself: $17.40 x 2 x 40 hours x 52 weeks = $72,384.

The rise is 50 cents, or 3%. Overtime for nonexempt staff is calculated on the regular rate, so a cook on $17.40 earns at least $26.10 for an overtime hour.

Can a California restaurant pay servers less because they get tips?

No. California is one of the states the U.S. Department of Labor lists as requiring "full state minimum wage before tips" (DOL tipped wage table, revised 1 July 2026). A server working 30 hours in January is owed $522 in wages, whatever the tips come to. The tips are theirs on top.

Two things follow:

• Tip pools can still include the kitchen. Because you take no tip credit, federal rules let back-of-house staff share in a mandatory pool. Managers and owners never can. Our tip pooling guide sets out who may join.
• A service charge is not a tip. If you add one, it is your revenue and wages when paid out, and California has its own rules on how it must be shown to guests. Those display rules are in our service charge guide and the junk-fee laws guide.

You can still claim the federal FICA tip credit on reported tips, and in California it is often worth the most. The tip credit guide explains why.

What is the fast food minimum wage in 2027?

$20.00 an hour, unchanged since 1 April 2024, for "fast food restaurant employees" under AB 1228. It applies only where all of these are true, per the DIR fast food FAQ:

• the restaurant is limited-service: guests order and pay before they eat, with little or no table service;
• it belongs to a chain of at least 60 establishments nationwide;
• it is primarily engaged in selling food and drink for immediate consumption.

An independent counter-service cafe, or a full-service restaurant of any size, pays $17.40, not $20.00. One knock-on catches franchisees: the DIR FAQ says an exempt manager at a covered fast food restaurant needs twice the fast food rate for 40 hours, which is $83,200 a year, not $72,384. The Fast Food Council can raise the rate, but on 5 November 2026 the DIR's fast food pages still showed $20.00 and we found no Council order for 2027. Check the DIR page before you set January rates if you are a franchisee.

Do California cities pay more than $17.40?

Many do. Many California cities set their own minimum by ordinance, and some adjust on 1 July rather than 1 January. You pay whichever is higher for the place the work is done.

We do not repeat city figures here because each is set by the city and some change mid-year. Read your city's own page: in Los Angeles, the Office of Wage Standards; elsewhere, search your city's labor standards office. The state's minimum wage page covers the statewide rate only.

How close is $17.40 to what California restaurant jobs pay?

Closer than most owners think. We took the Bureau of Labor Statistics' Quarterly Census of Employment and Wages for full-service restaurants (NAICS 722511, private sector) and compared each county's 2025 average weekly wage with $696, one 40-hour week at the 2027 minimum.

Our analysis of the BLS QCEW 2025 annual averages, industry 722511, private ownership, downloaded 5 November 2026. Rows are the ten largest counties by jobs, plus Fresno; the median and the 42 of 53 count use every county with published data.

What it shows:

• In 42 of the 53 counties with published data, the average full-service restaurant job paid less in a week than one 40-hour week at $17.40. The median county was $620.
• That is not underpayment. The QCEW counts every job, full-time and part-time, and under most state laws its wages include tips. It means the typical restaurant job is part-time, and that the minimum wage is the going rate for most of your hourly payroll, not a floor a few people sit on.
• So a 50-cent rise moves almost every hourly line on the schedule, and the staff just above the minimum will expect to stay ahead of it.

What does the 2027 rise cost a California restaurant?

Worked example: a 60-seat restaurant with 392 hourly hours a week paid at the minimum (kitchen, servers, hosts and bussers together) and one salaried manager paid at the old exempt floor.

On $30,000 of weekly sales, that is 0.85% of sales before you look at staff paid just above the minimum. Add those next: a lead line cook on $18.50 who expects to keep a gap above $17.40 is part of the real figure.

What must California employers do before 1 January and 1 February?

1. Update every rate below $17.40, effective with the first hours worked on 1 January 2027.
2. Show the wage rate on pay stubs. DIR's 2026-66 release reminds employers to list employees' wage rates on their pay stubs.
3. Give the Workplace Know Your Rights notice by 1 February. Since 2026, California requires a yearly written notice to every worker, "regardless of their immigration status", in the languages normally used at the workplace, by email, text or in person (DIR release 2026-14, 30 January 2026). Workers may also name an emergency contact.
4. Post the 2027 minimum wage order when DIR publishes it on its wage order page. On 5 November the 2027 order was not yet listed.
5. Raise exempt salaries to at least $72,384, or reclassify the role as hourly with overtime.
6. Check your city's rate if it has its own ordinance.

Every other state that changes on 1 January is in our 2027 state-by-state table, and the duties half of the exempt test is in our restaurant manager salary guide. Check with an adviser for your situation.

CALIFORNIA 1 JANUARY 2027 CHECKLIST

[ ] Every hourly rate at least $17.40 from the first January shift
    (or my city's rate, if higher: $______  checked on: ______)
[ ] Servers and bartenders on the full rate, no tip credit
[ ] Fast food chain (60+ locations nationwide)? Rate $20.00 confirmed on DIR
[ ] Staff just above the minimum reviewed, decision recorded
[ ] Pay stubs show each employee's hourly rate(s)
[ ] Exempt managers paid at least $72,384 a year ($1,392 a week),
    or $83,200 at a covered fast food chain, and spending more
    than half their time on exempt duties
[ ] 2027 minimum wage order printed and posted next to Wage Order 5
[ ] Know Your Rights notice sent to all staff by 1 February 2027,
    in the languages used at work; proof of delivery kept
[ ] Emergency contact forms offered
[ ] Menu prices reviewed for the items that carry the cost

Can TablePort handle this for you?

TablePort's Staff Management add-on has a California preset, so the schedule side of these rules is checked as you build the week.

1. Turn on the California preset to get overtime and break warnings while you draft the schedule, before anyone sees it.
2. Read labor as a share of forecast sales against your target for each day of the first January week, and give the autopilot a labor cap in plain words.
3. Staff clock in on the till with a PIN, so attendance and approved timesheets match the hours you pay, and you export them as a CSV or for Xero.

One honest limit: TablePort does not set pay, follow minimum wage changes, run payroll or send the Know Your Rights notice. See the staff rota page.