California's 2027 Minimum Wage: $17.40 per Hour
On August 13, 2026, the California Department of Industrial Relations (DIR) announced that the statewide minimum wage will increase to $17.40 per hour effective January 1, 2027. The increase is the annual inflation adjustment required under California law; the Department of Finance certified the adjustment on July 31, 2026.
The new rate is $0.50 higher than the $16.90 rate in effect during 2026. Because California's exempt-employee salary test is tied to the minimum wage, the increase also raises the minimum annual salary needed to classify an employee as exempt.
| Item | 2026 | Effective Jan 1, 2027 |
|---|---|---|
| Hourly minimum wage | $16.90 | $17.40 +$0.50 |
| Exempt salary threshold (2× minimum wage, full-time) | $70,304 | $72,384 +$2,080 |
| Calculation basis | $16.90 × 2 × 40 × 52 | $17.40 × 2 × 40 × 52 |
Exempt Salary Threshold Rises to $72,384
To qualify for the executive, administrative and professional exemptions, California employees must earn a monthly salary equal to at least two times the state minimum wage for full-time employment (2,080 hours per year), in addition to meeting the duties tests. At $17.40 per hour, DIR calculates the 2027 annual minimum at $72,384. Salaried employees currently paid below that amount will need a raise, or will need to be reclassified as non-exempt and tracked for overtime, meal and rest-period compliance.
What Payroll Teams Need to Update
State law requires most California workers, including those paid on a piece-rate basis, to receive at least minimum wage. DIR also reminds employers to post current wage notices and to list employee wage rates on pay stubs. Non-compliance can lead to back wages, penalties and liquidated damages.