If you’re a small-business owner in the Old Dominion state, we know you’re eager to stay on top of current Virginia minimum wage rules. So, we’ve put together this quick guide with all the info you need to know about the minimum wage in Virginia.
What is the minimum wage in Virginia?
The minimum wage rate in Virginia matches the federal minimum wage rate, which is currently $7.25 per hour. Some employees who are exempt from this minimum wage rate include:
Tipped employees, who may be paid a minimum cash wage of $2.13 per hour (employers may utilize a maximum tip credit of $5.12 per hour)
Full-time students, who may be paid no less than 85 percent of the minimum wage ($6.16) for up to 20 hours of work per week when school is in session
Any other employee who is exempt from the federal minimum wage under the Fair Labor Standards Act
Keep in mind that counties, cities, and towns may have their own minimum wage laws. Be sure to check what local wage laws may apply to you.
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Are there plans to change the minimum wage?
Virginia’s state minimum wage is set to increase to $9.50 on May 1, 2021, and will gradually increase each year, until it reaches $15 starting January 1, 2026. It will then be $15 per hour for workers whose employment is covered by the federal Fair Labor Standards Act (FLSA) and to public employees. A higher minimum wage may also be required by the FLSA for some workers.
The last time the VA minimum wage increased was in 2009, when it met the federal minimum wage of $7.25 per hour.
What’s happening to the Virginia minimum wage beyond 2025?
Because the minimum wage in Virginia will increase from $7.25 to $15 over five years, the plan beyond 2025 is uncertain. Most Virginia minimum wage employees will be earning gradual increases per hour each year until it caps at $15 in early 2026. Some mitigating circumstances could change this. For instance, the current law allows the Virginia Commissioner of Labor and Industry to stop wage increases if they see negative job growth in the state.
How should small business owners prepare for changes to the minimum wage?
With changes to the minimum wage on the horizon, you should prepare. Here are a few options you may consider during the Virginia minimum wage increase:
- Audit your expenses: Check your cash flow in detail and create a hiring plan you can afford. In some cases, you may find that hiring temporary workers as needed is less expensive than taking on full-time regular staff.
- Make sure you hire and keep the right employees: Replacing an employee can cost a lot. You can decrease the total cost associated with recruiting and training when you hire (and then retain) the right people. Look for candidates with good track records, who come recommended, and who fit in with the company culture. Once the employee is onboarded, make sure you build a relationship and provide paths for employee growth; it makes it more likely that they will stay in their role.
- Update tech: Consider automating certain aspects of the work (like payroll); learn how to effectively manage benefits, employee taxes, and other payroll features; and find ways to reduce production costs.
As always, to make sure your business is prepared and stays in compliance, you should discuss Virginia minimum wage laws with your accountant and lawyer.