California’s 2027 Minimum Wage of $17.40 Raises the Salary Line for Overtime Too

Last updated September 30, 2026 · Reviewed by Michael Nourmand

California’s statewide minimum wage rises from $16.90 to $17.40 an hour on January 1, 2027, for employers of every size. The Labor Commissioner’s Office confirmed the California minimum wage for 2027 on August 13, 2026, after the Director of Finance ran the annual cost-of-living calculation that Labor Code § 1182.12(c) requires by August 1 of each year. The same increase raises the salary an employer must pay before it can refuse a worker overtime.

Starting January 1, 2027, a full-time employee must earn at least $72,384 a year to be treated as exempt from overtime, which is two times the state minimum wage for 40 hours a week over 52 weeks. A salaried worker paid less than that cannot be classified as an exempt executive, administrative, or professional employee under Labor Code § 515(a). That worker is owed time and a half under § 510 for every hour past eight in a workday or 40 in a workweek, and double time past 12 hours in a day, like any hourly employee covered by California’s wage and hour laws.

Which Minimum Wage Applies When a City Sets a Higher Rate?

The $17.40 figure is the statewide minimum, and a higher one can apply. Labor Code § 1197 makes the minimum wage whichever rate is fixed by state law or by “any applicable state or local law,” and the Labor Commissioner’s guidance tells employers to follow the standard most beneficial to the worker. A worker in a city or county with its own higher ordinance is owed the local rate, and some industries carry their own higher statewide minimums.

In a city or county without its own ordinance, the state rate is the number that shows up on a paycheck. A warehouse picker, a janitor, or a restaurant cook paid $16.90 today there should see at least $17.40 for hours worked from January 1, 2027. The Labor Commissioner’s announcement also reminds employers that each pay stub must list the hourly rates in effect.

The $72,384 Salary Line for Exempt Employees

An exempt employee is a worker whose job meets a statutory duties test and pays a qualifying salary, which together remove the right to overtime pay. Under Labor Code § 515, all three of these conditions must be met:

1. The employee is primarily engaged in duties that meet the test of the exemption, and “primarily” means more than half of the employee’s worktime.
2. The employee customarily and regularly exercises discretion and independent judgment in performing those duties.
3. The employee earns a monthly salary of at least two times the state minimum wage for full-time work, which is $6,032 a month in 2027.

A job title, a salary, or a signed offer letter calling the position exempt does not satisfy the test by itself. An employee who spends most of the day stocking shelves, running a register, or dispatching trucks can be owed overtime even when paid well above $72,384. The distinction between exempt and non-exempt employees turns on what the job involves day to day. The Nourmand Law Firm, APC handles overtime claims for salaried California workers who were treated as exempt without meeting that test.

The salary line moves every January along with the minimum wage. The 2026 line is $70,304. An assistant manager paid $71,000 and treated as exempt this year falls below the line on January 1, 2027, unless the employer raises the salary or starts paying overtime. A worker whose salary sits in that range and whose employer does neither may be owed overtime from the first week of January. If that is what happened to you, call The Nourmand Law Firm, APC at 800-700-WAGE (9243). The consultation is free.

How Overtime Is Figured for a Salaried Worker Who Is Not Exempt

Section 515(d) sets the calculation. A non-exempt salaried employee’s regular hourly rate is one-fortieth of the weekly salary, and the salary pays only for regular hours, “notwithstanding any private agreement to the contrary.” A worker earning $71,000 a year makes about $1,365 a week, so the regular rate is about $34.13 an hour and each overtime hour is worth about $51.20.

An employer cannot avoid that calculation by calling the salary all-inclusive. A worker who regularly puts in 50-hour weeks on that salary, while being treated as exempt without meeting the test, may be owed roughly $512 a week in unpaid overtime. Over a year of 50-hour weeks, that adds up to more than $25,000, which is why California overtime claims often begin with a close look at how a salaried job was classified.

What an Employer Owes After Paying Less Than the Minimum

Under Labor Code § 1194(a), a worker paid less than the minimum wage or the required overtime may recover the unpaid balance, interest, reasonable attorney’s fees, and costs, “notwithstanding any agreement to work for a lesser wage.” For minimum wage shortfalls, § 1194.2(a) adds liquidated damages equal to the unpaid wages plus interest, which roughly doubles the recovery. That section does not extend liquidated damages to unpaid overtime.

An employer can ask to reduce or avoid liquidated damages under § 1194.2(b) by showing it acted in good faith and had reasonable grounds to believe it was following the law. In Iloff v. LaPaille, decided August 21, 2025, the California Supreme Court held that the employer must show it made a reasonable attempt to determine what the minimum wage law required, and that proof of ignorance of the law is insufficient. An employer that never checked the new rate cannot rely on not knowing it.

Getting Help With a California Minimum Wage or Overtime Claim

A worker still being paid $16.90 after January 1, or a salaried worker under $72,384 who is denied overtime, may have a claim for the difference and the penalties that go with it. The Nourmand Law Firm, APC represents California workers in minimum wage and overtime cases, individually and as class actions, and never represents employers. Call The Nourmand Law Firm, APC at 800-700-WAGE (9243) or contact the firm online for a free consultation. Cases are handled on a no recovery, no fee basis.