Minimum wage increases for July 1: What you need to know

Many state and local minimum wage rates are scheduled to increase on July 1, 2021. Below is a summary of these changes and guidelines to help you comply with your minimum wage requirements.

State minimum wage increases:

This chart covers July 1, 2021 minimum wage increases for all applicable states. Some states increase their minimum wage rates on a different schedule. The information below applies to July 1, 2021 increases only.

Oregon:

Oregon's minimum wage differs based on where the employer is located:

·      Non-urban Counties: Employers in Baker, Coos, Crook, Curry, Douglas, Gilliam, Grant, Harney, Jefferson, Klamath, Lake, Malheur, Morrow, Sherman, Umatilla, Union, Wallowa, and Wheeler must pay non-exempt employees at least:

$12 per hour beginning July 1, 2021

·      General: Employers that aren't located in one of the non-urban counties above and aren't located within the metropolitan Portland urban growth boundary (see below) must pay non-exempt employees at least:

$12.75 per hour beginning July 1, 2021

·      Portland Metro: Employers that are within the metropolitan Portland urban growth boundary must pay non-exempt employees at least:

$14 per hour beginning July 1, 2021

Local minimum wage increases:

Several cities and counties are also increasing their minimum wage effective July 1, 2021. Some of these include:

This is not an exhaustive list. There may be additional local jurisdictions that have scheduled increases for July 1. Check your local laws to confirm compliance.

* Saint Paul's minimum wage for employers with five or fewer employees is $10 per hour effective July 1, 2021. However, the state's minimum wage is $10.08 per hour for employers with annual gross revenue of $500,000 or more. Therefore, employers with five or fewer employees but annual gross revenue of $500,000 or more must pay non-exempt employees at least $10.08 per hour in 2021.

Other considerations:

Tipped employees:

In some jurisdictions, the minimum cash wage required for tipped employees also increases with the minimum wage. For example, the minimum cash wage for tipped employees in the District of Columbia will increase to $5.05 per hour on July 1, 2021. If an employee's hourly tip earnings (averaged weekly) and cash wages don't equal or exceed $15.20 per hour, you must pay the difference. Check your state and local law to determine whether the minimum cash wage is changing on July 1, 2021.

Note: Some jurisdictions, such as California, don't allow employers to apply a tip credit toward the minimum wage. In such cases, you must pay tipped employees the full minimum in direct cash wages.

Multiple minimum wage rates:

If an employee is subject to more than one minimum wage requirement (such as federal, state, and local), you should generally comply with the rate most generous to the employee. For example, if your state minimum wage is $14 and the local minimum wage is $15, you must generally pay the employee at least $15 per hour, since it's higher than the state and federal minimum wage rates. Additionally, if your business is located in one state, but you have employees (such as remote workers) working in another jurisdiction, the minimum wage in the location where the employee performs work generally applies.

Note: Some requirements may only apply to businesses of a certain size, or employees who perform a certain number of work hours in that jurisdiction. Check your state and local law for details.

Employees earning more than the minimum wage:

When the minimum wage increases, some employers provide a raise to employees already earning equal to or more than the new rate. While there's no obligation to provide a raise in such cases, some employees may be expecting one. Consider the potential impact on labor costs, employee morale, internal equity (how employees are paid when compared with other employees within your company based on skills and experience), and your typical merit increase schedule.

New posters:

Most jurisdictions require employers to post an up-to-date minimum wage notice in the workplace. 

More 2021 increases coming:

Some jurisdictions schedule their changes at another point during the year. For example, Connecticut's minimum wage will increase to $13 per hour on August 1, 2021. In Florida, the minimum wage will increase to $10 per hour on September 30, 2021. Closely monitor minimum wage changes in your jurisdiction to ensure compliance.

Overtime exemptions:

In some states, including Oregon, the minimum salary required to be classified as exempt from overtime is tied to the minimum wage. However, Oregon's new minimum salary requirements for exemption will still be lower than the federal salary requirement of $684 per week. Therefore, the change in the state's minimum wage/salary requirements will likely impact only exempt employees who aren't covered by the federal Fair Labor Standards Act (virtually all employees are covered) but are covered by state law. To determine the monthly minimum salary requirement for exemption from overtime, Oregon uses the following formula: multiply the applicable minimum wage by 2,080 and then divide by 12.

Note: State and federal law require that certain duties tests also be satisfied to qualify for exemption from overtime.

Conclusion:

Ensure that you understand the minimum wage rules that apply to your employees and, if applicable, make any necessary before July 1, 2021. Additionally, be sure to post updated minimum wage posters in each work location.