Minimum wage laws can affect businesses of all sizes, whether operating nationwide, in multiple jurisdictions, or only in one state, county, or city. To help manage this challenge, below we provide, essentially, a rates-only update that details scheduled state- and local-level wage increases throughout the summer and fall of 2021 so employers can determine the minimum amount they must pay non-exempt, tipped, and certain exempt employees. Before we chart out these rates, we briefly highlight some notable wage and hour developments that have occurred in 2021. Note that pending or future legislation might change minimum wage, tipped, and exempt employee rates that will apply in 2021, so we recommend employers monitor legislative developments and consult with counsel to confirm rates did not change since publication. Also, please note that some – but not all – New York rates may also increase on December 31, 2021, but we will cover those New Year’s Eve rate changes in our annual end-of-year article later this year.

Notable 2021 Wage & Hour Developments

Hero / Hazard Pay: During the COVID-19 public health emergency, employers, primarily in the retail, hospitality, and/or drug store industries, have had to contend with what may feel like a continually expanding number of laws that require them to provide certain employees premium pay, in addition to their normal wage, for in-person work performed during the pandemic. Most of these laws have been enacted at the local level in California, but these laws also have been enacted in numerous localities in Washington State. It has not been an entirely local affair, however, as Michigan mandated premium pay for certain healthcare workers; Vermont created a grant program for these types of workers, and Louisiana enacted a grant program for essential critical infrastructure workers. Note that, generally, these laws will exist for a limited time only; the exception being a “declared emergency minimum wage” ballot initiative in Portland, which ME voters approved in November 2020, the start date for which is being litigated, including, most recently, before Maine’s Supreme Judicial Court.

Minimum Wage: On May 20, 2021, Rhode Island enacted HB 5130, a bill that increases the state’s $11.50 per minimum wage, on January 1, to $12.25 (2022), $13.00 (2023), $14.00 (2024), and $15.00 (2025).

Tips: Amendments to federal Fair Labor Standards Act (FLSA) tip rules implemented by the previous administration were supposed to take effect on March 1, 2021. The current administration, however, delayed their effective date until April 30, 2021; then on April 29, 2021, allowed some of the proposed changes to take effect on April 30, while holding back until December 31, 2021, and accepting further comments, on other portions of the rule changes. Wisconsin SB 50, enacted April 23 and effective April 25, 2021, requires state labor department tip credit rules to allow employers to require tipped employees to use an electronic signature or other electronic means to acknowledge tips or gratuities. Montana SB 190, enacted and effective May 3, 2021, made employer-friendly changes to tip-pooling standards.

Overtime: Virginia HB 2063, enacted March 30 and effective July 1, 2021, creates a new overtime obligation with limited exemptions, defines how to calculate the regular rate, creates a default three-year statute of limitations, and mandates double-damages, for violations.

Recordkeeping: New Hampshire HB 258 allows required records (hours worked, wages paid, employee classification) to be made, signed, acknowledged, approved, and kept electronically.

Minimum Wage Changes

In this section we highlight state, counties, and cities where the minimum wage earlier in 2021 did, or later in 2021 will, increase.

2021 Tipped Rate Increases

Tipped Employees

Next, we highlight state, counties, and cities where, for tipped employees, the minimum cash wage and/or tip credit rates earlier in 2021 did, or later in 2021 will, increase. In certain places – excluding, e.g., California, Minnesota, Nevada, New York (Fast Food), Oregon – employers may be able to count tips an employee receives toward the minimum wage. In these jurisdictions, if the direct wage and tips an employer pays an employee equals the minimum wage, an employer satisfies its minimum wage obligation. However, if the direct wage plus tips does not equal the minimum wage, an employer must pay the employee the difference. Directly below we highlight the minimum cash wage (MCW) that must be paid, and the maximum tip credit (TC) employers can claim, for covered tipped employees, as well as the amount of the increase.

Exempt Employees

Executive, Administrative, or Professional Exemption Minimum Pay Increases

Under the FLSA, to be a bona fide executive, administrative, or professional employee, employers must compensate the individual on a salary or fee basis (only for administrative and professional employees) at least $684 per week, excluding board, lodging, or other facilities. Employers may translate the $684 a week amount into equivalent amounts for periods longer than one week, e.g., $2,964 (Monthly) and $35,568 (Annually). On October 3, 2021, the amount of Pennsylvania’s minimum salary or fee (only for professional employees) will increase and exceed the federal rate.

White Collar Employees Covered by Minimum Wage

In various states, executive, administrative, or professional employees are exempt from state overtime requirements, but not exempt from state minimum wage requirements. In these jurisdictions, such employees must earn at least the applicable minimum wage for each hour worked in a workweek. The minimum wage in some of these states earlier in 2021 did, or later in 2021 will, increase. On May 1, the Virginia minimum wage increased to $9.50 per hour. On July 1, the minimum wage in Nevada will increase to $9.75 or $8.75 per hour, depending on whether an employer offers health benefits. Note that, in Illinois, local minimum wage rates may apply (see above).

Additionally, in a handful of states, outside sales employees are not exempt from state minimum wage requirements. In these jurisdictions, such employees must earn at least the applicable minimum wage for each hour worked in a workweek. The minimum wage in one of these states, Nevada, will increase on July 1.

Commissioned Employee Overtime Exemption

To qualify under the FLSA’s 7(i) overtime exception, the regular rate of pay for an employee of a retail or service establishment must exceed one-and-a-half times the federal minimum wage, and more than half the employee’s compensation for a representative period (not less than one month) must represent commissions on goods or services. In the following states with upcoming 2021 rate changes, the 7(i)-type exemption requires – in part – an employee’s pay to either equal or exceed one-and-a-half times the state minimum wage.

Connecticut: An employee's regular rate of pay must exceed two times the state minimum wage, which on August 1, 2021, will increase to $13.00 per hour.

District of Columbia: An employee’s regular rate of pay must exceed one-and-a-half times the district minimum wage, which on July 1, 2021, will increase to $15.20 per hour.

Nevada: An employee’s regular rate must exceed one-and-a-half times the state minimum wage, which on July 1, 2021, will increase to $9.75 per hour if an employer does not offer health benefits or $8.75 per hour if an employer offers health benefits.

Oregon: An employee’s regular rate of pay must exceed one-and-a-half times the state minimum wage, which on July 1, 2021, will increase to $14.00 per hour (urban), $12.75 per hour (general), and $12.00 per hour (non-urban).