California Employers: Minimum Wage Is Going Up Again in 2027

With January approaching, now is a good time for employers to review their hourly pay rates, exempt employee salaries, employee classifications, and applicable local or industry-specific requirements.

Effective January 1, 2027, California’s statewide minimum wage will increase from $16.90 to $17.40 per hour for all employers, regardless of size.  

The increase is required by California Labor Code section 1182.12, which provides for annual adjustments to the state minimum wage based on inflation.

But employers should not assume this change affects only their minimum-wage workers.

Higher Salary Requirement for Exempt Employees

The minimum salary required for most employees classified as exempt under California’s executive, administrative, and professional exemptions is tied to the state minimum wage. Under Labor Code section 515, these employees generally must earn a salary of at least twice the state minimum wage for full-time employment—in addition to satisfying the applicable duties requirements.

As a result, on January 1, 2027, the minimum salary will increase to $72,384 per year.

Employers with exempt employees earning less than $72,384 will therefore need to consider increasing their salaries or reclassifying them as non-exempt employees.

The State Minimum May Not Be Enough

California employers should also remember that $17.40 is only the statewide minimum. Many cities and counties impose higher local minimum wages.  For example, 2026 minimum wages include $20.34 per hour in Emeryville, $19.61 in San Francisco and Berkeley, $18.45 in San José, $20.25 in West Hollywood, $18.57 in Pasadena, and $18.42 in the City of Los Angeles. 

Because many local minimum wages are adjusted annually, employers should confirm the applicable rate for each location where employees work.

Separate minimum-wage requirements also apply to certain industries, including covered fast-food and health-care employees.

Wage-and-hour errors can become expensive quickly, even when they are inadvertent. If you have questions about how the 2027 minimum-wage increase affects your employees—or whether your employees are properly classified as exempt or non-exempt—contact Workplace Legal. We can review your compensation and classification practices before the new requirements take effect