California Minimum Wage to Increase to $17.40 in 2027

California’s statewide minimum wage will rise to $17.40 per hour on Jan. 1, 2027, according to the California Department of Industrial Relations. The increase will affect most workers statewide and will also raise the salary threshold for certain exempt employees.

Highlights

• New minimum wage: $17.40 per hour starting Jan. 1, 2027.
• Exempt employee salary threshold: $72,384 annually.
• Employer requirements: Businesses must update workplace postings and ensure pay stubs reflect applicable wage rates.
• Local rates: Cities and counties with higher minimum wages will continue to require employers to follow the higher local rate.
• Compliance: Employers that fail to meet minimum wage requirements may face back wages, penalties and liquidated damages.
• Construction relevance: The increase could affect labor costs and wage planning for contractors and other employers across California.

The increase is tied to California’s annual inflation-based minimum wage adjustment. California Department of Industrial Relations announcement

Why It Matters for Construction

For construction companies, the higher wage floor could influence labor budgeting, subcontractor pricing, project estimates and workforce compensation planning heading into 2027. Contractors should also account for applicable local wage requirements, which can exceed the statewide minimum.

Source: DIR, State Of California.