The Sunnyvale employees union on Friday rejected the city's last offer and its members will walk off their jobs at 12:01 a.m. Monday, sources say.
The move culminates tense last-minute negotiations after the Sunnyvale Employees Association overwhelmingly authorized a strike earlier this week.
According to sources, the city essentially offered a signing bonus to workers, which union leaders rejected.
The union has been pushing for, what it called, a long-delayed pay raise that stretched out over years.
Some members told NBC Bay Area that they agreed to not getting a raise to help the city through hard financial times and want compensation now that city is doing better.
A neutral fact finders committee recently released a report that the union says supported their claim.
Sunnyvale officials have taken action that could lead to an injunction to prevent some workers from walking off their jobs for the sake of public safety.
Officials are trying to keep the city's water pollution control plant operating. They also want to ensure that workers will be available in the case of a disaster or emergency.
The union is expected to make the official strike announcement later Friday, possibly with a rally at City Hall.