On September 30, Washington's Department of Labor & Industries confirmed it: the state minimum wage goes from $17.13 to $17.73 an hour on January 1, 2027. Still the highest state rate in the country.

Most payroll teams will update the hourly rate and call it done.

That's the easy part. The part that will actually bite is the exempt salary threshold, which jumps much faster than the hourly rate for any employer with 51 or more workers.

Here's what we'd fix before the first pay date of 2027.

#1. The hourly rate: $17.73, and $15.07 for 14 and 15 year olds

The 3.5% increase comes from the CPI-W, measured August to August, as Washington law requires. Per the official L&I announcement:

• Adult minimum wage: $17.73 per hour, up from $17.13.

• Workers ages 14 and 15: may be paid 85% of the minimum, which is $15.07 per hour, up from $14.56.

Very, very easy to update the default rate in your HCM and miss the people who are paid "minimum plus a little." If someone sits at $17.25 today, they are under the floor on January 1. Every one of those records needs a new rate, not just the ones coded as minimum wage.

#2. The exempt salary floor for large employers jumps to $92,196

This is the headline nobody is reading.

Washington sets the overtime exempt salary as a multiple of the minimum wage. For employers with 51 or more employees, that multiplier rises from 2.25 to 2.5 in 2027. Combined with the higher hourly rate, the floor becomes:

• Large employers (51+): $1,773.00 per week, or $92,196.00 per year.

• Small employers (1 to 50): $1,595.70 per week, or $82,976.40 per year. The small employer multiplier stays at 2.25 for 2027 and is scheduled to reach 2.5 in 2028.

Ok, ok, you say, our exempt people make more than that. Some of them, sure. But think about your office managers, junior accountants, HR generalists, and assistant store managers. Anyone classified exempt below $92,196 at a large employer loses the exemption on January 1 unless you raise their pay.

And losing the exemption means overtime. Every hour over 40, at time and a half, with timekeeping you may not even be tracking for them today.

#3. Computer professionals paid hourly need $62.06

Washington lets certain computer professionals be exempt on an hourly basis, at 3.5 times the minimum wage, regardless of employer size. For 2027 that's $62.06 per hour. If you have hourly contractors converted to W-2, or engineers paid by the hour, check every rate.

#4. You have to decide: raise the salary or reclassify

For each exempt employee under the new floor, there are really only two options:

• Raise the salary to at least $92,196 (or $82,976.40 for small employers), effective with the first pay period of 2027.

• Reclassify as non-exempt, start tracking hours, and pay overtime. That means new time entry, new pay codes, and a conversation with the employee.

Either way, this is a budget decision, not a payroll decision. Get the list to finance and HR leadership now, not the week before Christmas.

One more thing: Washington requires wage ranges in job postings. If you raise the salary for a role, the posted range for that role needs to move too.

#5. Don't forget the local rates

The state rate is the floor, not the answer. L&I notes that eight jurisdictions set higher minimums: Seattle, SeaTac, Tukwila, Renton, Bellingham, Everett, Burien, and unincorporated King County. Each publishes its own 2027 rate on its own schedule.

We see the same pattern every year. Teams update the state rate, then find out in February that an employee who works in Renton or Everett was underpaid for six weeks. Work location data has to be right before the rate tables are.

We covered the same problem for California in our post on California's 2027 minimum wage. The lesson carries over: a bulk update isn't enough.

#6. Non-compete thresholds move too

L&I also published updated non-compete salary thresholds for January through June 2027: $131,326.59 per year for employees and $328,316.49 for independent contractors. If you rely on non-competes in Washington, check that everyone bound by one earns above the line.

The bottom line

The $17.73 rate is the story everyone will tell. The $92,196 exempt floor is the one that creates back pay claims.

That's exactly what Current is built for. It runs compliance checks on the data already in your HCM, across 2,500+ regulations, and flags every exempt employee below the 2027 threshold, every worker paid under a state or local minimum, and every work location that doesn't match the rate applied. Penny, our payroll processing AI, catches the same issues run by run. And if your HCM data is a mess to begin with, our Implementation team fixes it during migration.

Fix the list in October and November. Not in February.

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This post is general information, not legal advice. Confirm your obligations with counsel.