United States: Minimum Wage Set To Rise In 25 States And D.C. In 2021

As the New Year approaches, employers throughout the United States must prepare for new legislation taking effect that may impact their operations. One critical change that commonly occurs around the New Year is an increase to the minimum wage in certain jurisdictions. On January 1, 2021 (or December 31, 2020), the minimum wage will rise in twenty states. The District of Columbia and five other states will increase their minimum wages at some other time in the next year. Forty-eight individual municipalities that impose their own, higher, standards will also raise their minimum wages in 2021. There is no increase to the federal minimum wage scheduled in 2021 and an increase is unlikely within the next year. A table of the states and municipalities increasing their minimum wage on January 1, 2021 (or December 31, 2020) is set forth below:

Minimum Wage Increases on January 1, 2021

Other Minimum Wage Increases in 2021

A number of states and municipalities will raise their minimum wage on July 1, 2021 or other dates throughout the year. The amount of some of those increases in various municipalities are unknown at this time because they are dependent on an Index. These are noted by the letter I in the following chart.

States That Are Not Changing Their Minimum Wage

There are twenty-five states that are maintaining their current minimum wage in 2021. While Michigan was originally scheduled to increase its minimum wage in 2021, the Wage and Hour Division of the Michigan Bureau of Employment Relations recently announced that the scheduled increase is unlikely to occur because the state's current annual average unemployment rate for 2020 remains well above 8.5 percent (the threshold above which a minimum wage increase cannot occur according to statute). If, as expected, the unemployment rate does not fall below 8.5 percent when the final 2020 numbers are released, then Michigan's minimum wage will not increase.

The states that are marked by an asterisk (*) do not set a state-specific minimum wage, but simply use the Federal minimum wage. A table of those states follows:

Takeaways

Employers with employees in states or municipalities subject to a minimum wage increase should adjust their pay practices by the date the increase becomes effective at the latest. Employers should consider and react to increases to both the standard minimum wage and the tipped minimum wage in their workforce. Additionally, employers should always review any applicable provisions of the Fair Labor Standards Act (FLSA) in conjunction with state law and local ordinances.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.