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

It is important for employers in California to understand what is permitted for wage deductions to maintain compliance and avoid potential pitfalls.

Employers in California may lawfully withhold amounts from an employee’s wages if:  (1) the employer is required to withhold certain amounts under state or federal law, such as federal and state income taxes