The Biden Administration’s efforts to increase the current federal minimum wage from $7.25 an hour to $15 an hour have been delayed, but in New York, New Jersey, Connecticut, Pennsylvania and other states and municipalities, most employers in 2021 are already subject to new minimum hourly wage rates and minimum salaries for exempt employees well in excess of the federal minimum wage. Moreover, federal, state and local government agencies have indicated that there will be increased enforcement efforts in 2021 regarding minimum wage and other wage hour violations.
New Minimum Wage Rates
- New York – Effective January 1, 2021, the minimum hourly wage rate for employees in Nassau, Suffolk and Westchester counties increased to $14 an hour from $13 an hour. The minimum wage rate for employees in New York City in 2021 continues to be $15 an hour. In all other New York counties, the hourly minimum wage increased to $12.50 an hour from $11.80 an hour, effective January 1, 2021. Employees involved in the hospitality, food service, fast food, seasonal and agricultural industries are subject to different minimum wage requirements.
- New Jersey – The new minimum hourly wage rate in 2021 for most of New Jersey employees increased on January 1, 2021, by $1 per hour to $12 an hour. Additional $1 hourly rate increases are scheduled for 2022, 2023 and 2024. Smaller employers with fewer than six employees and employees engaged in seasonal or farm work are subject to different minimum hourly rates and minimum wage increases.
- Connecticut – The minimum hourly wage rate for employees in Connecticut will increase by $1 per hour to $13 an hour on August 21, 2021, with similar $1 per hour increases scheduled for July 1, 2022, and June 1, 2023.
- Pennsylvania – The minimum hourly wage rate for most private employees in Pennsylvania is currently $7.25 an hour – the same as the federal rate. However, in February 2021, the governor of Pennsylvania proposed an increase in the minimum wage rate for most private employees to $12 an hour on July 1, 2021, with annual $.50 an hour increases until the minimum wage rate reaches $15 per hour on July 1, 2027. The minimum hourly wage rate for Pennsylvania commonwealth employees under the governor’s jurisdiction increased to $13 in 2021, while the minimum hourly wage rate for Philadelphia municipal workers, contractors and subcontractors increases to $14.25 per hour on July 1, 2021 and to $15 an hour on July 1, 2022.
New 2021 Minimum Salary Requirement for Exempt Employees
In order to be exempt from overtime pay requirements, exempt employees must meet a duties test and be paid a minimum salary. The minimum federal salary requirement for exempt employees in 2021 is currently unchanged at $684 per week or $35,568 annually. Additionally, improper classifications of exempt employees or independent contractors can lead to overtime pay and minimum wage violations.
The minimum salary requirement for exempt employees in New York City in 2021 remains unchanged at $1,125 per week, or $58,500 per year. However, on January 1, 2021, the minimum salary requirement for exempt employees in Nassau, Suffolk and Westchester counties increased to $1,050 per week or $54,600 per year. The minimum salary requirement for exempt employees in upstate and all other New York State counties increased on January 1, 2021 to $937.50 per week or $48,750 annually.
Increased Enforcement in 2021
Increased enforcement of minimum wage, minimum salary requirements and other wage hour laws by federal, state and local governments is also planned. Penalties for violations include back wages, liquidated damages, interest and attorneys’ fees. Moreover, disclosures of wage hour violations may be required in bids and applications for government contracts and applications, and government funding, and violations could lead to disqualification for federal, state and local contracts or funding.
Compliance with all state and federal minimum wage and other wage hour laws in 2021 is, therefore, critical. Employers should review and audit their compensation and wage hour policies to comply with these new wage hour requirements and increased enforcement initiatives.