The California Department of Industrial Relations (DIR) on October 16, 2026 announced in its memo that, effective January 1, 2027, qualifying computer professionals must earn at least $127,108.34 annually ($10,592.37 monthly), or $61.03 per hour. California employers relying on the computer professional exemption will need to account for another increase in the exemption’s compensation threshold in 2027.[1][2] The DIR adjusts the minimum compensation required for the exemption each year based on changes in the California Consumer Price Index for Urban Wage Earners and Clerical Workers (CCPI-W).[3]
The new thresholds represent a 3.7% increase from the prior 2026 rates of $122,573.13 annually ($10,214.44 monthly), or $58.85 per hour. Employers should identify employees currently classified under the exemption, review applicable compensation rates and confirm that employees continue to meet the duties test, and determine whether compensation adjustments will be necessary before the new rates take effect.
The annual increase affects the compensation requirement, but it does not change the substantive duties requirements for California’s computer professional exemption. Under California Labor Code Section 515.5, an employee must be primarily engaged in intellectual or creative work that requires the exercise of discretion and independent judgment.
The employee also must be primarily engaged in one or more of the...
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