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June 8, 2020
2020-1514

Virginia state minimum wage to increase incrementally starting May 1, 2021

Recently enacted Virginia legislation (SB 7; HB 395) will incrementally increase the state minimum wage to $12 per hour by 2023, and possibly to $15 by 2026. Under Governor Northam's Common-Sense Virginia 2020 Plan, the first effective date of the increase was delayed upon the governor's request until May 1, 2021 to provide relief for employers affected by COVID-19.

Currently, the Virginia state minimum wage matches the federal minimum wage of $7.50. The legislation increases the state minimum wage to $9.50 per hour as of May 1, 2021; $11 per hour effective January 1, 2022; and $12 per hour effective January 1, 2023 until January 1, 2025.

Provisions in the legislation that would increase the state minimum wage to $13.50 on January 1, 2025 and to $15 on January 1, 2026, will not become effective unless reenacted by a regular or special session of the legislature prior to July 1, 2024.

If the legislature does not reenact these increases by July 1, 2024, the Commissioner of Labor and Industry will instead annually adjust the $12 state minimum wage based on inflation.

Beginning January 1, 2022, three state agencies are required to form a work group to conduct a joint review of the feasibility and potential impact of instituting a regional minimum wage within the state. The work group must also assess the effects of the minimum wage increases scheduled under the legislation and provide, by December 1, 2023, an executive summary and a report of their findings and recommendations to the governor and the legislature.

The legislation also removes from law several employment exemptions from the minimum wage, including domestic services within a private home, services performed by a disabled person, and services performed for an employer of fewer than four employees.

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Contact Information
For additional information concerning this Alert, please contact:
 
Workforce Tax Services - Employment Tax Advisory Services
   • Kenneth Hausser (kenneth.hausser@ey.com)
   • Debera Salam (debera.salam@ey.com)
   • Kristie Lowery (kristie.lowery@ey.com)
   • Peter Berard (peter.berard@ey.com)

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