As we approach the new year, employers across the United States must once again navigate a complex patchwork of wage and hour adjustments. Effective January 1, 2026, numerous states will implement scheduled increases to their minimum wage rates.
For Human Resources professionals, these changes require more than just updating payroll tables. In several jurisdictions, increases in the state minimum wage trigger automatic hikes in the minimum salary required for overtime exemption, potentially misclassifying employees who were previously compliant.
State Minimum Wage Increases Effective January 1, 2026
The following states have announced new hourly minimum wage rates taking effect on the first day of 2026. Note that some states, such as New York and New Jersey, have specific rates based on employer size or geographic location.
| State | Minimum Wage |
| Arizona | $15.15 |
| California | $16.90 |
| Colorado | $15.16 |
| Connecticut | $16.94 |
| Hawaii | $16.00 |
| Maine | $15.10 |
| Michigan | $13.73 |
| Minnesota | $11.41 |
| Missouri | $15.00 |
| Montana | $10.85 |
| Nebraska | $15.00 |
| New Jersey | $15.23 (employers w/5 or less or seasonal employers) $15.92 (employers w/ 6+ employees) |
| New York | $17.00 (NYC, Long Island, and Westchester County) $16.00 (Rest of State) |
| Ohio | $11.00 |
| Rhode Island | $16.00 |
| South Dakota | $11.85 |
| Vermont | $14.42 |
| Virginia | $12.77 |
| Washington | $17.13 |
Note: Employers in Florida, Nevada, and Oregon should anticipate increases later in the year, as their adjustments typically occur in July or September.
Exempt Salary Threshold Adjustments
Perhaps the most critical compliance challenge for 2026 lies in the “exempt” employee category. In states like California and Washington, the minimum salary threshold for executive, administrative, and professional exemptions is tied directly to the state minimum wage.
If your exempt employees earn below these new thresholds as of January 1, 2026, you must either raise their salaries or reclassify them as non-exempt (overtime-eligible).
California. California’s threshold affects all employers regardless of size.
- New Threshold: $70,304 per year ($1,352 per week).
New York. New York maintains a tiered system based on location.
- NYC, Long Island, & Westchester: $66,300 per year ($1,275.00 per week).
- Rest of State: $62,353.20 per year ($1,199.10 per week).
Washington. Washington continues to lead with the highest thresholds in the country.
- New Threshold: $80,168.40 per year ($1,541.70 per week).
Other Notable States
- Alaska: The salary threshold will rise to $54,080 per year ($1,040 per week)
- Colorado: The salary threshold will rise to $57,783.96 per year ($1,111.23 per week).
- Maine: The state threshold increases to approx. $45,300 ($871.16 per week).
Next Steps for Employers
To ensure a smooth transition into 2026, employers should take the following immediate actions:
- Review Local Minimum Wage Ordinances: Remember that many cities and counties (i.e., Denver, Flagstaff, Los Angeles, and Seattle), enforce minimum wage rates higher than the state or federal standard.
- Check Industry-Specific Wage Orders: Be aware that certain industries, such as fast food, hospitality, and healthcare may be subject to specialized wage orders or different increase schedules.
- Audit Exempt Classifications: Review the salaries of all exempt employees in the listed states. Identify those falling below the new 2026 thresholds.
- Budget for Adjustments: Determine the financial impact of raising salaries to maintain exemptions versus the cost of potential overtime if employees are reclassified.
- Update Payroll Systems: Ensure your payroll software is updated with the new minimum wage rates for hourly workers to prevent underpayment in the first pay period of January.
- Post Updated Notices: Order and display updated labor law posters for 2026 in all physical worksites and make digital versions available for remote staff.
