California employers should begin preparing for another increase in the statewide minimum wage. Effective January 1, 2027, California’s minimum wage will increase to $17.40 per hour, or approximately $36,192 annually for a full-time employee.
The increase affects more than hourly employees. Because California’s salary threshold for many exempt employees is tied to twice the state minimum wage, the new rate will increase the exempt salary threshold to $72,384 per year, or $6,032 per month, beginning January 1, 2027.
For commissioned sales employees, the minimum earnings requirement for the overtime exemption will increase to 1.5 times the state minimum wage, or a minimum of $54,288 annually. Employees relying on this exemption must also receive more than half of their compensation from commissions.
Separate minimum wage requirements continue to apply to certain industries. Fast food workers remain subject to a $20-per-hour minimum wage, while covered healthcare workers are subject to rates ranging from $22 to $25 per hour, depending on the type and size of the facility where they work. Updated rates for computer professionals, physicians and surgeons have not yet been announced.
Employers should also remember that some California cities and counties impose minimum wages higher than the statewide rate. When a local minimum wage exceeds the state minimum, employers generally must comply with the higher applicable rate.
Finally, employers will need to update required workplace postings. California employers must post the statewide minimum wage order and the industry-specific wage order applicable to their workplace in an area accessible to employees. Updated notices will be available through the California Department of Industrial Relations (DIR) workplace postings webpage at www.dir.ca.gov/wpnodb.html
This article is provided for informational purposes only and does not constitute legal advice. Reading this article does not create an attorney-client relationship.