California Governor Gavin Newsom has announced that California’s statewide minimum wage will increase from $16.90 to $17.40 per hour effective January 1, 2027. The new rate, announced on July 31, 2026, reflects the annual inflation-based adjustment required under California law.

The increase will also affect the minimum salary threshold for employees classified as exempt under California’s executive, administrative, and professional exemptions. Effective January 1, 2027, exempt employees generally must earn a salary of at least $72,384 annually ($1,392 per week). This is an increase from the 2026 threshold of $70,304 annually ($1,352 per week).

Satisfaction of the minimum salary threshold alone does not establish that an employee is exempt. The increase provides a useful opportunity to confirm that employees classified as exempt continue to satisfy the applicable duties and all other requirements for the exemption being claimed.

The statewide increase also highlights the need to evaluate all applicable wage requirements, not just the state minimum wage. Numerous California cities and counties maintain minimum wage rates that exceed the statewide rate, and employees must be paid in accordance with the highest applicable minimum wage. Additionally, businesses in the fast-food and health care industry should also verify compliance with industry-specific wage requirements.

Certain occupations remain subject to separate compensation requirements. For example, California Labor Code section 515.5 establishes distinct hourly and salary compensation requirements for certain exempt computer software employees, which are adjusted annually.