California's Minimum Wage Hits $17.40 Jan. 1. Salaried Exempts Need $72,384

Gov. Newsom announced on July 31 that California's statewide minimum wage rises from $16.90 to $17.40 an hour on January 1, 2027. For most ABA practices the hourly rate isn't the number that moves.

The turn: the number that moves is a salary

California ties its exempt-salary floor to the minimum wage: a salaried employee has to earn at least twice the state minimum for full-time work to be treated as exempt from overtime. At $17.40 that's $72,384 a year, up from $70,304. Two law-firm and employer-association analyses give the same figure, and it matches the arithmetic from $17.40.

The people in an ABA practice who sit near that line are the ones who don't punch a clock: clinical directors, newer BCBAs on salary, intake coordinators, billing managers. A BCBA paid $71,000 is exempt on December 31 and, if the duties test is met but the salary isn't, non-exempt on January 1. Non-exempt means overtime past eight hours in a day or 40 in a week, meal and rest period rules, and timekeeping for every hour.

What the announcement says

• Rate: $17.40 an hour, effective January 1, 2027. The Governor's office describes it as the automatic annual inflation adjustment under California law.
• Current rate: $16.90, per the Department of Industrial Relations' minimum wage page for 2026.
• Exempt salary: $72,384 a year for the executive, administrative and professional exemptions, per the analyses below.
• Who it binds: every California employer not already covered by a higher industry or local rate. That includes entities with only a handful of employees.

The limits

The statewide rate is a floor, not necessarily your rate. The Department of Industrial Relations notes that certain health care workers have a separate, higher minimum wage, and that many cities and counties set their own, higher rates. Whether either reaches an ABA entity depends on facts this announcement doesn't address, so don't assume the $17.40 line is yours. The salary threshold also isn't the whole exemption: the duties test still applies.

What you must know or do

• Owners: list every salaried employee you treat as exempt and sort by pay. Anyone under $72,384 on January 1 needs one of two things: a raise to at least that figure, or a move to hourly with timekeeping and overtime. Decide before the last payroll run of December, not after the first January paycheck.
• If you reclassify: price it. A BCBA who regularly works 45-hour weeks costs more hourly than on salary, and meal and rest breaks have to be scheduled around session times.
• Office managers and billing leads: check every hourly rate against $17.40 and against your city or county minimum, whichever is higher. Then check the gap between your lowest RBT rate and your supervisors' pay; a floor that rises can compress it.
• Before relying on either number: confirm with your payroll provider or employment counsel whether the health care minimum wage applies to your entity.