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California’s minimum wage hits $17.40 in 2027 — and “exempt” now starts at $72,384
The state has certified next year’s wage floor. The exempt-salary line moves with it, so January 1 is the date to have your salaried roster checked.
At a glance
- California’s minimum wage rises from $16.90 to $17.40/hour statewide on January 1, 2027.
- The salaried-exempt threshold rises to $72,384/year ($17.40 × 2 × 40 hours × 52 weeks).
- Local city and county minimums can be higher — and many adjust on the same date.
- Any exempt employee paid below $72,384 on January 1 is at risk of being misclassified.
The Department of Finance certified the adjustment on July 31, 2026, and the Department of Industrial Relations announced it in August: starting January 1, 2027, California’s statewide minimum wage is $17.40 an hour, up from $16.90.
As always, the hourly rate is only half the story. California sets the exempt-salary floor at twice the state minimum wage for full-time work, so the minimum annual salary for an exempt executive, administrative, or professional employee climbs to $72,384 — up from $70,304 in 2026.
What changed
Both numbers index upward on January 1, 2027. Salaried employees who cleared the 2026 line with less than about $2,100 to spare will fall below the 2027 threshold unless their pay goes up — which, in practice, makes them non-exempt and entitled to overtime.
Who’s affected
Every employer with California workers. Hourly employees at or near the floor need a rate change; salaried supervisors, coordinators, and office managers paid near the threshold need a deliberate decision. Employers in cities with their own minimum wage should check the local rate as well, since it can be higher than the state’s.
What to do now
Before your last payroll of 2026: update hourly rates to at least $17.40 (or the local rate, if higher); list every exempt employee with an annualized salary below $72,384 and decide whether to raise pay or reclassify and track hours; update pay stubs and wage notices; and post the updated state and industry wage orders.
How The HR Meeting helps
We run the 2027 exemption math across your roster, model “raise vs. reclassify,” and make sure timekeeping, offer letters, and postings are ready before January 1.
Sources & official text
This article is general information for California employers, not legal advice. Rules change and application depends on your facts — confirm against the official text or ask us before acting.