Virginia to Raise Minimum Wage Rate on May 1

Apr 29, 2021 | GTM Blog, Household Payroll & Taxes, Tax & Wage Laws

The Virginia minimum wage rate, which has been the same as the federal rate for several years, is set to increase in 2021 and then periodically for the next few years until it’s tied to inflation beginning in 2027.

Virginia’s minimum wage rate is set to increase annually beginning on May 1, 2021. Right now the state’s minimum wage rate is the same as the federal rate, which is $7.25 per hour and has remained unchanged for 12 years. On May 1, the state rate increases to $9.50/hour.

The Virginia Minimum Wage Act (VMWA) specifically includes home care providers – defined as individuals who provide home health or personal care services) – and no longer excludes those who “work in domestic service, or in or about the private home” as covered employees. Employers of three or fewer workers, which typically include families with household help, are now required to follow the minimum wage rate after being previously exempt.

Babysitters who work fewer than 10 hours per week and au pairs participating in the federal Exchange Visitor Program are not covered under the VMWA.

The minimum wage rate increase actually was signed into law in 2020 but Gov. Ralph Northam and the state legislature agreed to delay its implementation because of the pandemic’s impact on small businesses.

After May 1, the Virginia minimum wage rate will increase periodically through 2026 and then will be tied to inflation beginning in 2027.

Minimum Wage Rate	Effective Date
$9.50	May 1, 2021
$11	Jan. 1, 2022
$12	Jan. 1, 2023
$13.50	Jan. 1, 2025
$15	Jan. 1, 2026
Adjusted annually for inflation	Jan. 1, 2027

Virginia’s commissioner of labor and industry will set a new minimum wage rate every year based on changes in price indexes. The first announcement is set for Oct. 1, 2026, and will go into effect on Jan.1, 2027.

Nannies and other household employees are hourly workers who need to be paid at least the highest minimum wage among the prevailing federal, state, and local rates. In Virginia, that means the new state rate applies beginning May 1.

Overtime Pay

Beginning July 1, 2021, the Virginia Overtime Wage Act (VOWA) — like its federal counterpart, the Fair Labor Standards Act — will require employers to compensate their non-exempt employees for overtime work at a rate of one-and-a-half times the employee’s regular wage rate. Nannies and other household employees are considered non-exempt employees and eligible to receive overtime pay.

Under the VOWA, the regular wage rate formula for hourly employees is calculated by adding all wages earned at the hourly wage rate and any other non-overtime wages paid or allocated for the workweek (less any items regularly excluded under the FLSA) and then dividing the sum by the total number of hours worked in the workweek.

Household employees can now file claims for unpaid overtime wages up to three years after the event takes place. The act also removes the good faith defense for household employers who fail to pay overtime wages, and increases the penalties, costs, and damages that they may be required to pay for unpaid overtime wages.

Enforcement of Minimum Wage and Overtime Laws

In addition to civil and criminal penalties, household employers who violate Virginia wage and hour requirements may face employee lawsuits that can result in orders to pay up to triple the amount of unpaid wages. Courts may also order a non-compliant employer to pay an amount equal to one-third of any monetary judgment as reimbursement for attorney fees and eight percent interest on the unpaid wages (accruing from the time when the wages should have been paid).

Civil Penalties

A household employer that knowingly fails to pay wages to their employee may face fines of between $10 and $200 along with orders to pay reasonable attorney fees. In addition, a household employer that knowingly fails to pay their worker appropriate wages may be fined up to $1,000 for each violation.

Criminal Penalties

A household employer that willfully, and with the intent to defraud, fails, or refuses to pay employee wages may be charged with a Class 1 misdemeanor, punishable by imprisonment for up to 12 months, a fine of up to $2,500, or both. If the amount of wages owed exceeds $10,000, the employer may be charged with a Class 6 felony, punishable by imprisonment for up to five years, a fine of up to $2,500, or both.

Required Postings

Employers in Virginia must display federal wage and hour posters to notify their employees of their rights in the workplace. Employers can access federal posters from the U.S. Department of Labor website.

Prohibited Retaliation

The VWMA prohibits a household employer from discharging or otherwise discriminating against their employee because they have:

Filed a wage complaint;
Instituted a wage proceeding (or has caused a proceeding to be instituted); or
Testified (or is about to testify) in any wage proceeding

Household employers who retaliate against their employees may be ordered to reinstate their employees, compensate them for unpaid wages, and pay liquidated damages.

Virginia Tax, Wage, and Labor Laws

For more information about the tax, wage, and labor laws in Virginia, visit our webpage Household Employment in Virginia and our recent blog post on Virginia’s new domestic worker protection laws.

Get help staying compliant

Being compliant with ever-changing tax, wage, and labor laws is not easy. But GTM Payroll Services can help. Our team can talk about minimum wage rates, overtime pay, and other factors that impact how you pay and employ a nanny. Get answers to your questions with a complimentary, no-obligation consultation with a household employment expert. Call (800) 929-9213 or schedule time with us at your convenience.