Quick Answer
Starting January 1, 2027, California's statewide minimum wage is $17.40 per hour for all employers, up from $16.90. An exempt employee must earn an annual salary of at least $72,384. Some cities and counties set higher local rates.
In This Guide
What changes on January 1, 2027
Beginning January 1, 2027, the California statewide minimum wage rises to $17.40 an hour. The current rate, in effect since January 1, 2026, is $16.90, so the increase is $0.50 an hour. The Labor Commissioner's Office confirmed the new rate in DIR news release 2026-66. The 2026 rate is listed in the Labor Commissioner's minimum wage FAQ.
California adjusts the statewide rate each year for inflation. The Department of Finance certified the 2027 increase on July 31, 2026.
The rate applies to most workers in the state, including workers paid by piece rate. California does not allow a tip credit, so tipped employees must get the full $17.40 before tips.
| Item | 2026 | 2027 |
|---|---|---|
| Statewide minimum wage | $16.90 | $17.40 |
Exempt salary threshold
The raise also moves the minimum salary for employees treated as exempt from overtime. DIR shows the math as $17.40 x 2 x 40 hours per week x 52 weeks per year = $72,384.
Beginning January 1, 2027, an exempt employee must earn an annual salary of at least $72,384. Salary is only part of the test. The employee must also meet the duties and other requirements for the specific exemption.
Look at every salaried exempt employee before year end. Anyone below $72,384 needs a raise or needs to be reclassified as non-exempt. A non-exempt employee is owed overtime under California's daily and weekly rules, so you would also need to track hours.
Local and industry rates
Some California cities and counties have local minimum wages that are higher than the state rate. When a local rate applies, the employer must pay the higher local rate. Many local rates change on January 1 or July 1, so check each city or county where your employees work.
Fast food workers and certain health care workers have separate, higher minimum wages. The 2027 statewide announcement does not cover those rates. Check the current DIR guidance if you employ either group.
Who gets the raise
The minimum wage is a floor. An employee already paid more than $17.40 an hour does not have to get a raise. Hourly staff under that rate do, unless a specific exception covers them.
Pay plans that are not hourly need a look too. A non-exempt employee paid by salary, commission or piece rate must still receive at least the minimum wage for the hours worked. Check those employees against the new rate before January.
Pay periods that cross January 1
The new rate applies to hours worked on or after January 1, 2027. It does not depend on the pay date. If a pay period starts in December and ends in January, split the hours. Pay the December hours at the 2026 rate and the January hours at $17.40.
Paying the whole period at the new rate is also allowed, and it is simpler. Paying the January hours at the old rate is not.
Watch pay just above the minimum. When the floor moves to $17.40, a shift lead or a long-time employee may end up only a few cents ahead of a new hire. Keeping that gap is a business choice, not a legal one. It is easier to plan for in the fall than in January.
What to do before January 1
- Raise covered employees' hourly rates below $17.40. Apply the new rate to hours worked on or after January 1, 2027.
- Check each exempt salary against $72,384.
- Post the notices. Employers must post the statewide minimum wage order and the industry wage order that applies to their workplace. DIR offers both on its workplace postings page.
- Check your pay stubs. Employers must list employees' wage rates on pay stubs, so the new rate has to show correctly on the first 2027 stub.
- Budget for the raise, including overtime and employer payroll taxes.
DIR notes that employers who do not comply may owe back wages, penalties and liquidated damages.
For the rates in effect through December 31, 2026, see our California minimum wage 2026 guide. For withholding and filing rules, see the California payroll compliance guide.
Frequently Asked Questions
What is the California minimum wage in 2027?
Beginning January 1, 2027, California's statewide minimum wage is $17.40 per hour, up from $16.90 in 2026.
What is the California exempt salary threshold for 2027?
Beginning January 1, 2027, an employee must earn an annual salary of at least $72,384 to meet the salary threshold for exemption. The duties test must also be met.
Do California cities have higher minimum wages?
Yes. Some California cities and counties have local minimum wage rates that are higher than the state rate. When a local rate applies, employers must pay the higher local rate.
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Legal & Tax Disclaimer
This article is for general informational purposes only and does not constitute legal, tax, or professional advice. Employment laws, tax regulations, and compliance requirements change frequently. The information on this page reflects our understanding as of the date noted above and may not reflect recent changes in federal or California state law.
Do not act or refrain from acting based solely on the information in this article. Always consult a qualified attorney, CPA, or HR professional familiar with California law before making payroll or compliance decisions for your business.