Littler’s Semi-Annual Rates Update for Minimum Wage, Tips, and Exempt Pay Increases on January 1, 2026 (and Other Developments)

Whether you’re planning to serve turkey or tofu during the holidays, we’re serving up notable rate-related developments since our mid-year update, along with known nonexempt and exempt employee rate changes that will take effect on January 1, 2026. The below numbers represent rates “known” at the time of publication, so subsequent legislative or agency activity could change these figures on or after January 1, 2026.

Notable Rate-Related Developments Since Our Mid-Year Update

Missouri enacted HB 567, which, effective September 28, 2025, removed from its minimum wage law a requirement that voters had approved at the November 2024 election, which would have, beginning in 2027, annually adjusted its minimum wage rate based on inflation.

In the District of Columbia, the minimum cash wage that must be paid to tipped employees for whom employers apply a tip credit toward payment of the minimum wage was supposed to increase from $10 to $12 on July 1, 2025, but the increase was postponed to October 1, 2025, then again postponed (via emergency legislation that expires on December 2, 2025) to July 1, 2026, which should become permanent via approved legislation that is undergoing review by Congress and is projected to take effect on December 17, 2025.¹ Moreover, rather than $14 being the minimum cash wage on July 1, 2026, it will be 56% of the minimum wage that will apply on that date (TBD because July 1 is when annual adjustments to D.C.’s minimum wage due to inflation take effect). Additionally, the amendments require the minimum cash wage to increase as a percentage of the minimum wage on July 1 in future years: 60% (2028); 65% (2030); 70% (2032); 75% (2034).

Based on official results for the election on November 4, 2025, voters in Portland, Maine approved a ballot measure to amend the existing minimum wage ordinance to establish a $16.75 per-hour rate on January 1, 2026, increasing to $17.75 on January 1, 2027, and $19.00 on January 1, 2028, followed by annual inflation adjustments starting on January 1, 2029. Conversely, in Olympia, Washington, the unofficial results suggest voters rejected the Workers Bill of Rights Ordinance that would have created a local minimum wage and required employers to offer additional hours to part-time employees before hiring new employees and develop a workplace safety plan for natural disasters.

Among other changes, Saint Paul, Minnesota revised its future rate schedule. As amended, the rate applicable to “small” businesses with 100 or fewer employees from July 2026 through June 2027 will be the 2026 “large” business rate (see further below), and from July 2027 through June 2028 it will be the eventual 2027 large business rate. The rate applicable to “micro” businesses with five or fewer employees will retain its previously preset July 1 increases to $14.25 (2026) and $15 (2027), but, as amended, from July 2028 through June 2029 such businesses must pay the eventual 2028 large employer rate, and from July through December 2029 they must pay the eventual 2029 large employer rate. Beginning on January 1, 2030, one rate will apply to all employers.

So-called “tourism” minimum wage ordinances (or amendments) were all the rage in Southern California, which will host the 2026 World Cup and the 2028 Olympics. In Long Beach, the city amended its Living Wage Ordinance to expand covered workers to include, in addition to workers at the Long Beach Convention Center, workers at the Long Beach Airport and Long Beach Temporary Amphitheater. A $25 wage took effect on October 1, 2025, with preset increases on October 1 in 2026, 2027, and 2028, followed by adjustments to the rate due to inflation on July 1 in 2029 and subsequent years. In Los Angeles, after an unsuccessful referendum attempt, amendments to the Citywide Hotel Minimum Wage Ordinance (CHMWO) (and Living Wage Ordinance for government contractors, airport workers, etc.) took effect on September 8, 2025. As a result, the minimum wage for hotel workers increased to $22.50, with additional increases taking effect on July 1, 2026, and on July 1 in subsequent years. In addition to already dealing with wages and (un)paid time off requirements, the amended ordinance includes a health care benefit (or pay in lieu thereof) component. The amendments have a knock-on effect under similar ordinances in neighboring Glendale and Santa Monica that incorporate by reference the minimum wage rate Los Angeles establishes under the CHMWO. San Diego enacted a Hospitality Minimum Wage Ordinance (HMWO) that covers certain workers at or connected to amusement parks, event centers, and hotels with at least 150 rooms. The ordinance creates a two-tier system, with one rate applicable at amusement parks and hotels, and another at event centers; initial rates for each are $19 and $21.06, respectively, on July 1, 2026, with preset increases occurring on July 1 in 2027, 2028, 2029, and 2030 (both rates will be $25), followed by annual adjustments on July 1 in 2031 and subsequent years. As a result, the city also amended its existing Living Wage Ordinance to remove references to a “City facility” as those entities will be “event centers” under, and subject to, the HMWO. 

Minimum Wage Rate Changes Effective Before January 1, 2026

Minimum Wage Rates Effective January 1, 2026

In the below chart we include the (mostly) generally applicable minimum wage that will change / apply on January 1, 2026. However, we do not discuss sub-minimum wage rates that might apply to certain employees (e.g., for learners or certain minors), heightened minimum wage rates that apply under certain circumstances (e.g., declared emergencies), (for the most part) industry- or position-specific rates (e.g., Minnesota nursing home workers,² New York home care aides), and/or pay standards that apply to various “gig” workers (e.g., California, Washington State, New York City). Businesses with questions about these types of laws, or rates, should contact counsel.

In certain jurisdictions employers may be able to count tips an employee receives toward the minimum wage. In those jurisdictions that permit a tip credit, if the direct wage an employer pays (minimum cash wage) and tips an employee earns equals the minimum wage, an employer satisfies its minimum wage obligation, but, if the direct wage plus tips does not equal the minimum wage, an employer must pay the employee the difference.

Certain jurisdictions might have a multi-tier minimum wage that varies depending on factors like the number of employees a business has, the type of worker, etc. Additionally, a particular rate might be on a different update schedule. In the below chart we focus solely on the rate(s) in a jurisdiction that change(s) on January 1, 2026. The only exception will be when there is a change to a local minimum wage but not the state minimum wage. Employers with questions about other rates applicable in a jurisdiction that are not changing on January 1, 2026, should contact counsel.

Some local jurisdictions are slower than others when it comes to announcing their adjusted rates, or the inflation-related data they use is not published until later during the year, so at the time of publication readers will see a handful of “TBD” notations that we will update once the jurisdiction officially makes their announcement.

Exempt Employee Pay Increases on January 1, 2026

Executive, Administrative and/or Professional Employees: Under federal law, most exempt executive, administrative, and professional employees must be paid on a salary or (for only administrative or professional exemptions) fee basis, and the weekly minimum salary amount is $684 per week. The following states have minimum salary pay requirements that exceed the federal rate and will change on January 1, 2026.

Computer Employees: In California, certain computer software employees are exempt from state overtime requirements if they receive a certain hourly or salary rate. In 2026, the minimum hourly rate will increase to $58.85, the minimum monthly salary will increase to $10,214.44, and the minimum annual salary will increase to $122,573.13. In Colorado, employees in highly technical computer-related occupations must receive at least the lesser of the applicable salary noted above or hourly pay that in 2026 increases to at least $34.85 (technically “proposed” but we expect this to be the “final” rate). In Washington State, compensation for exempt computer employees paid on an hourly basis will increase to $59.96.

Highly Compensated Employees: In Colorado, for purposes of the state’s highly compensated employee exemption, employees must receive at least the above-referenced weekly salary, and their annual salary must equal at least 2.25 times the rounded annual salary, which will increase to $130,014 (technically “proposed” but we expect this to be the “final” rate).

Instructors at Non-Profit Private Higher Education Institutions: California law also provides that employees providing instruction for a course or laboratory at non-profit higher education institutions are exempt if, in addition to performing certain duties, they are paid a monthly salary equivalent to no less than twice the state minimum wage for a 40-hour workweek or, when employed per course or per laboratory, they receive a minimum payment per “classroom hour”; in 2026, that rate will increase to $152.10 per hour.

Medical Employees: In California, to be exempt from state overtime requirements the minimum hourly rate that licensed physicians and surgeons must receive will increase to $107.17 per hour.

Inside Sales: To qualify under the FLSA’s 7(i) overtime exception, the regular rate of pay for an employee of a retail or service establishment must exceed one-and-a-half times the federal minimum wage, and more than half of the employee’s compensation for a representative period (not less than one month) must represent commissions on goods or services. In the following states with upcoming rate changes on January 1, 2026, the 7(i)-type exemption requires – in part – an employee’s pay to either equal or exceed one-and-a-half times the state minimum wage: California; Colorado; Minnesota; New York (possibly); and Washington. Additionally, Connecticut requires pay to equal or exceed two times the state minimum wage.

White Collar Employees Covered by Minimum Wage: In various states, employees covered by the executive, administrative, professional, or outside sales exemptions are exempt from state overtime requirements, but not exempt from state minimum wage requirements. In these jurisdictions, such employees must earn at least the applicable minimum wage for each hour worked in a workweek. Of these states, the following will increase their minimum wage on January 1, 2026: Arizona (all 4 exemptions); Colorado; New Jersey; Rhode Island (possibly); South Dakota; and Virginia. Additionally, in Arizona and Colorado, there will be increases to local minimum wage rates.

(Potential) Developments After January 1, but Before July 1, 2026

In New Mexico, the City of Santa Fe and Santa Fe County will adjust their minimum wage rates based on inflation effective March 1, 2026.

In Tacoma, Washington, a state trial court judge ordered a “Workers Bill of Right” measure to be voted on at a special election in February 2026 (the city has appealed the ruling). If approved, the proposal would once again create a local minimum wage in Tacoma, plus add scheduling-related protections and a requirement to offer more work to part-time employees.

In Oklahoma, if approved by voters at the June 2026 election, State Question 32 will increase the state minimum wage to $10.50 per hour in 2026, and provide for preset increases on January 1 in 2027, 2028, and 2029, followed by adjustments to the rate due to inflation on January 1 in 2030 and subsequent years.