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California exempt salary review for the 2027 threshold
A salary amount does not decide whether an employee is exempt. Review pay and actual duties together, with employment counsel addressing the applicable exemption before payroll settings are changed.
Last reviewed:
General information, not legal or tax advice.
Use the DIR-confirmed upcoming salary floor
Beginning January 1, 2027, DIR states that the annual salary must be at least $72,384 to meet the salary threshold for exemption. Its published calculation uses $17.40 times 2 times 40 hours times 52 weeks. Keep the effective date with the approved pay change.
Review duties as a separate requirement
DIR expressly says employees must also satisfy the duties and other requirements of the specific exemption. Its executive guidance includes management, supervision, discretion and authority over employment decisions. A title or salary increase alone should not close the review of what the employee actually does.
Sources: DIR News Release 2026-66 (August 13, 2026); DLSE Glossary - executive exemption
Document how management time is spent
DLSE cautions that a manager supervising only a small team may spend substantial time outside managerial duties. Assemble a factual job description and a record of actual responsibilities for counsel. Keep the legal classification decision separate from the payroll operator’s implementation checklist.
Sources: DLSE Glossary - executive exemption
Plan the payroll transition with the approved decision
Compare the current employee setup with counsel’s reviewed classification and the upcoming salary requirement. Retain the effective date, compensation approval and implementation check. Review affected employees before the new year so the approved change reaches payroll with enough time to investigate discrepancies.
Sources: use the DIR-confirmed upcoming salary floor
Implement approved classification decisions
Tidwell helps organize payroll inputs, review records and support payroll reporting. We coordinate tax questions with your CPA and leave employment-law interpretation with your legal adviser.