What You Need to Know About the Wage Increases That Took Place on January 1st

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As we begin the new calendar year, it’s important for employers to know all the changes that went into effect January 1st. This will not only help ensure compliance but will also allow you to guide employees through changes that impact them.

Some of the biggest changes center around wage increases of various types. Here we will take a look at some of those changes and what they could mean for your workforce.

Minimum wage increases by state

While the minimum wage has not changed at the federal level since it was raised to $7.25 in 2009, many states have changed their labor laws and increased their minimum wages.

Here is a quick overview of the changes to the minimum hourly rate by state:

  • Alaska: Increased to $10.34
  • Arizona: Increased to $12.15
  • Arkansas: Increased to $11
  • California: Employers with 25 employees or fewer have a minimum wage of $13, while employers with 26 or more have a minimum wage of $14
  • Colorado: Increased to $12.32
  • Connecticut: Increased to $13
  • Delaware: Increased to $10.25
  • Florida: Will increase to $10 on September 30, 2021 as part of a six-year increase plan
  • Illinois: Increased to $11
  • Maine: Increased to $12.15, increased to $6.08 for tipped employees
  • Maryland: Increased to $11.75, $11.60 for employers with 25 or fewer employees
  • Massachusetts: Increased to $13.50, increased to $5.55 for tipped employees
  • Minnesota: Increased to $10.08 for large employers and $8.21 for small employees
  • Missouri: Increased to $10.30
  • Montana: Increased to $8.75
  • Nevada: Will increase to $9.75 on July 1, 2021
  • New Jersey: Increased to $12, increased to $4.43 for tipped employees
  • New Mexico: Increased to $10.50, increased to $2.55 for tipped employees
  • New York: Increased to $12.50, will increase to $15 for fast food workers on July 1, 2021
  • Ohio: Increased to $8.80, increased to $4.40 for tipped employees
  • Oregon: Will increase to $12.75 on July 1, 2021
  • South Dakota: Increased to $9.45
  • Vermont: Increased to $11.75
  • Virginia: Will increase to $9.50 on May 1, 2021
  • Washington: Increased to $13.69

Unless stated otherwise, the minimum wage for tipped employees remained the same.

The states where the 2021 minimum wage rates will remain the same:

  • Alabama
  • Georgia
  • Hawaii
  • Idaho
  • Indiana
  • Iowa
  • Kansas
  • Kentucky
  • Louisiana
  • Michigan
  • Mississippi
  • New Hampshire
  • North Carolina
  • North Dakota
  • Oklahoma
  • Pennsylvania
  • Rhode Island
  • South Carolina
  • Tennessee
  • Texas
  • Utah
  • Washington, DC
  • West Virginia
  • Wisconsin
  • Wyoming

New FLSA minimum salary requirements

The federal Fair Labor Standards Act (FLSA) requires employers to, in most cases, pay all employees at least minimum wage and overtime pay for hours worked above 40 hours per workweek.

At a federal level, to be exempt from overtime and minimum wage requirements, employees must make at least $684 per week and get paid their full salary in any week they work.

On a state level, the minimum salary requirement may increase automatically when the minimum wage increases. Here are some updates for minimum wage for exemption by state for 2021:

  • Alaska: $827.20 per week
  • California: At least twice the state minimum hourly wage based on a 40-hour workweek with additional requirements based on employer size
  • Maine: $700.97 per week, or $36,450 per year
  • New York: $1,050 for Nassau, Suffolk, and Westchester Counties, $937.50 per week for the remainder of the state (except for New York City).

There are additional changes per state, so be sure to look into the specifics for your state.

New overtime pay standards

The federal FLSA states that employees must receive overtime pay for all hours worked in excess of 40 hours per workweek. The details include:

  • Employees are not to be paid less than 1.5 times their regular pay rate for overtime pay
  • Overtime pay is not required for work on Saturdays, Sundays, holidays or days of rest unless hours worked on those days is overtime
  • Overtime is calculated per workweek, which is a fixed period of 168 hours

Recent updates to the overtime standards include the ability for employers to pay bonuses or incentive-based pays for salaried, non-exempt workers whose hours vary from week to week. Read more here.

Being familiar with all the changes will help ensure a smooth transition into 2021 compliance needs.