California’s $17.40 Minimum Wage: What It Means for Your Prices and Card Fees

The short answer: California’s statewide minimum wage rose to $17.40 an hour on January 1, 2027. For Orange County restaurants and shops, higher labor costs usually mean higher prices, and how you raise them matters. Under California’s Honest Pricing Law, a mandatory fee has to be built into your listed prices (restaurants get a limited exception with clear disclosure). Before adding fees, it’s worth checking what you can save on card processing, since that’s one of the few large costs you can cut without touching prices or wages.

What Changed on January 1, 2027?

• The statewide minimum wage is $17.40 per hour for all employers, according to the California Labor Commissioner’s Office.
• The minimum salary for exempt employees rose with it. The Labor Commissioner puts the annual salary test at $72,384 for 2027.
• Some industries have their own minimums. Fast-food restaurants and health care facilities covered by separate state laws follow their own schedules, so check the rate for your industry.

How Should You Raise Prices Without Breaking the Rules?

California’s Honest Pricing Law (SB 478) requires that advertised prices include all mandatory fees. That shapes your options:

• Raise menu or shelf prices. This is the simplest and most transparent option, and it’s fully compliant.
• Add a mandatory service fee. Restaurants may do this only if the fee is clearly and conspicuously disclosed, with what it’s for, everywhere prices appear. Most other businesses must build mandatory fees into the listed price.
• Offer a cash discount or add a card surcharge. These are optional fees, because customers can avoid them by paying another way, but each comes with its own state and card-network rules.

Our posts on SB 478, surcharging in California, and cash discount programs cover the details.

Where Do Card Fees Fit In?

When labor costs rise, every other line on your P&L gets more attention — and card processing is often the biggest one you can actually negotiate. For a restaurant processing $80,000 a month, a 0.5% difference in effective rate is $400 a month, or $4,800 a year. That doesn’t replace a price increase, but it can make the increase smaller.

Three quick checks:

1. Calculate your effective rate for December.
2. Look for tiered “non-qualified” charges and monthly junk fees on your statement.
3. Confirm tip adjustments are handled correctly, so tipped transactions stay in their lowest interchange category.

A Note on Timing

January is a natural time to update prices: customers expect it, and menus and price lists are often reprinted anyway. Make every change at once — menus, online ordering, delivery apps, and signage — so your listed prices always match what customers pay at the register.

We’re not attorneys or HR advisors. Check wage rules for your specific situation with the Labor Commissioner or an employment attorney.

Frequently Asked Questions

What is California’s minimum wage in 2027?

$17.40 per hour statewide, effective January 1, 2027, according to the California Labor Commissioner’s Office.

Can my restaurant add a fee to cover higher wages?

Restaurants may add a mandatory fee if it’s clearly and conspicuously disclosed, along with what it’s for, everywhere prices are displayed. Most other businesses must include mandatory fees in their listed prices.

Is it better to raise prices or add a card surcharge?

They do different things. A price increase applies to everyone and is simplest to comply with. A surcharge only applies to credit cards, can’t apply to debit, and has its own rules. Many businesses do some of both, or lower their processing costs first.

Does the minimum wage change affect my processing fees?

Not directly. But raising prices raises your card sales, and your fees with them, so it’s a good moment to make sure your rate is fair.

Sources: California Labor Commissioner — 2027 minimum wage announcement · California Attorney General — SB 478 Hidden Fees