Employer Alert: Minimum Wage Increase effective January 1, 2027
In a recent press release, Governor Gavin Newsom announced that California will raise the statewide minimum wage starting January 1, 2027. The minimum wage will increase to $17.40 per hour and will apply to all employers. This is an increase of $0.50 from the current rate.
Employers should take note that this rate increase applies to all workplaces no matter the size. In addition, employers should be aware of how this change affects exempt employees’ salaries, overtime payments, sick leave accruals, and wage statement compliance, among other items.
In addition, please note that some cities and counties have higher minimum wages than the state’s rate. Here is a list of City and County minimum wages in California maintained by UC Berkeley as of July 1, 2026. When there are conflicting requirements in the laws, the employer must follow the stricter standard; that is, the one that is the most beneficial to the employee.
Here are some workplace tips for employers to help prepare for this change:
Compensation and Payroll Preparation
- Audit pay rates: Check all current hourly employee wages to identify anyone who will fall below the new $17.40 floor.
- Review exempt thresholds: Keep in mind that California’s exempt salaried employees must earn a salary equivalent to at least two times the state minimum wage for full-time work; calculate the new minimum salary required for white-collar and professional exemptions. Based on the new rate, for most exempt employees, the minimum salary works out to $72,384 annually.
- Update payroll software: Program your payroll and timekeeping systems ahead of time to reflect the new hourly and salary figures.
Policy and Compliance Adjustments
- Check local ordinances: Verify whether specific cities or counties where your employees work have local minimum wage rates that exceed $17.40.
- Update workplace postings: Order and display the updated official state minimum wage poster in physical breakrooms and digital employee portals before January 1.
- Train HR and staff: Educate payroll personnel on the cascading effects the hike has on overtime calculations, double-time, and sick leave payout rates.
Compliance questions? Rosasco Law Group is here to help. Give us a call with your employment and labor law issues and we can help guide you through any concerns that may affect your business.
