California Minimum Wage 2027: What LA Employers Need to Know

California's statewide minimum wage goes up on January 1, 2027, and plenty of Los Angeles owners are already asking what it means for their payroll. The short answer is that the new hourly floor changes less inside the city and unincorporated county than it does elsewhere in the state, but a related number, the salary line for exempt employees, rises for everyone. Here is what changes, what doesn't, and what to review before the year ends.

The new state rate

On July 31, the California Department of Finance certified that the statewide minimum wage will rise 2.99% to $17.40 an hour on January 1, 2027, up from $16.90 today, according to the department's certification letter. The increase is automatic. State law ties it to the federal CPI-W inflation index and caps any single year's raise at 3.5%. The Governor's office announced the figure the same day.

Why LA's local rates matter more

Employers have to pay whichever minimum is highest where the work is performed. In Los Angeles, local ordinances already sit above the new state number:

• City of Los Angeles: $18.42 an hour since July 1, 2026, per the city's official minimum wage notice. The city adjusts that rate every July 1.
• Unincorporated LA County: $18.47 an hour since July 1, 2026, according to the county's Department of Consumer and Business Affairs.

So for a shop in Silver Lake or a warehouse in unincorporated East LA, the January state increase does not by itself change the hourly floor. For businesses in the many county cities that follow the state rate, it does. With 88 cities in the county, a company with locations or mobile staff in several of them should check each one rather than assume a single number. The county notes that the rate depends on where the work is done, not where the employee lives or where the company is based.

Industry rules can also sit on top of these. Employment law firm Ogletree reminds employers that separate, higher statewide minimums apply to fast food and health care workers, along with other local ordinances.

The change that hits everyone: the exempt salary threshold

California's test for exempting a salaried employee from overtime is tied to the state minimum wage, not local ones. The threshold equals twice the state minimum for full-time work. The California Department of Industrial Relations spells out the math: $17.40 times 2 times 40 hours times 52 weeks equals $72,384 a year, the minimum salary for an exempt employee starting January 1, 2027. Salary alone is not enough. Employees must also meet the duties tests for the exemption they fall under.

For small teams this is often the bigger budget line. A salaried office manager or shift lead paid just under that figure would either need a raise or would have to be treated as non-exempt, which means tracking hours and paying overtime. The department also reminds employers to update their required workplace postings.

A year-end checklist for LA employers

The steps below are our suggestions, not legal advice. For specific situations, talk with an employment attorney or the agencies linked here.

1. List every work location. Note which city or unincorporated area each employee works in, including staff who drive between sites, and the minimum that applies there.
2. Flag salaried staff under $72,384. Decide now whether to raise their pay or reclassify them, and document the duties that support any exemption you keep.
3. Plan for July as well as January. The city and county adjust their rates each July 1. Budgeting for two changes a year avoids surprises.
4. Look at pay ladders. Raising the lowest rung can squeeze the gap between new hires and experienced staff. Decide whether to adjust the wider scale.
5. Update postings and payroll settings. Replace notices and confirm your payroll provider has the new rates and thresholds loaded before the first January pay run.
6. Revisit pricing. If labor is a large share of your costs, now is the time to model whether menu or service prices need to move in the new year.

The bottom line

Inside the City of Los Angeles and unincorporated county areas, the January state increase is more of a reminder than a shock, since local rates are already higher. The exempt salary threshold is the piece that reaches every California employer, and it's the one worth checking against your payroll this quarter.