Washington’s 2027 Wage Changes: What Employers Should Budget For

Washington employers have two payroll changes to plan for in 2027: higher minimum wages and higher salary thresholds for certain overtime-exempt employees. For small businesses balancing payroll, health insurance and other expenses, checking the numbers now can help prevent January surprises.

What changes on January 1, 2027?

The statewide minimum wage rises to $17.73 an hour. In Seattle, the minimum rises to $22.14 an hour for employees working within city limits.

The salary figures apply to the executive, administrative and professional overtime exemptions. Sources: Washington L&I minimum wage guidance, L&I’s salary threshold schedule and Seattle’s announcement.

Seattle isn’t the only place with a higher local minimum. Check L&I’s local wage directory for the jurisdictions where your employees work.

The salary threshold deserves a separate review

For employers with 1-50 employees, the 2027 threshold is $1,595.70 per week. For those with 51 or more, it’s $1,773 per week. The larger-employer increase combines inflation with a scheduled increase in the multiplier used to calculate the threshold. Smaller employers are scheduled to reach that higher multiplier in 2028.

Paying above the threshold doesn’t automatically make someone exempt. The employee must also meet the applicable salary-basis and actual job-duties requirements. A management title alone isn’t enough.

If an employee falls below the new threshold, review whether to raise their salary or classify them as nonexempt. Nonexempt employees can still be salaried, but employers must track hours, pay required overtime and provide other applicable protections. L&I explains these options in its overtime rules Q&A.

Put the changes into your budget

For illustration, 10 employees each working 2,080 hours annually at the state minimum would add $12,480 in base wages compared with 2026. At Seattle’s minimum, the same example adds $17,472. Those calculations exclude overtime, payroll taxes and other payroll-related costs.

Before January:

• Review pay and classifications. Check affected hourly rates, exempt salaries and actual duties with your HR advisor or employment counsel.
• Look beyond the minimum. Consider whether increases will narrow pay differences between newer employees and experienced staff.
• Prepare payroll and employees. Update pay settings, timekeeping and required workplace postings, and explain any changes before they take effect.

BHT members can also use the included Archbright HR and safety hotlines for workplace questions.

Review benefit costs alongside payroll

As wage requirements rise, reviewing health coverage can help employers find room elsewhere in the budget. Business Health Trust brings small businesses together for group purchasing power and helps employers compare benefit options with their broker.

Our free Washington Small-Group Plan Comparison Tool lets you explore estimated premiums using public filed rates. Compare options for your group, including December 2026 and January 2027 start dates, and bring the results to your broker. Estimates aren’t formal quotes.

All 2027 BHT medical plans also include Nice Healthcare at no additional cost, with $0 primary care, virtual mental health therapy and virtual physical therapy. It’s another way we’re helping small businesses offer benefits employees can use while reducing their out-of-pocket costs for covered care.