Minimum wage legislation update

February 13, 2020

On February 11, two different bills raising the minimum wage in Virginia passed the House and the Senate. HB 395 (Ward) cleared the House, 55-45, and SB 7 (Saslaw) passed the Senate, 21-19. Both bills would incrementally increase the wage from the current federally mandate rate of $7.25 per hour. As previously reported, these bills represent a multiyear effort to raise minimum wages for Virginia employees and incorporate several legislative proposals from each chamber. Both bills would include state and local government employees in the categories of eligible workers. However, key differences exist between the House and Senate versions.

SB 7 adopts a regional approach that would raise the minimum wage to $11.50 per hour in 2024. The first incremental increase would be delayed to January 1, 2021, and raise the minimum wage to $9.50 per hour at that time. The bill directs the Commissioner of Labor and Industry to establish wage regions in the Commonwealth by dividing the state into contiguous regions with similar median household incomes and costs of living. Localities would not be divided into more than one region. By March 1, 2024, the Commissioner is required to establish an adjusted minimum wage for each wage region and update it annually to take effect the following July 1.  The increase in minimum wages for the region with the highest median family income (Northern Virginia) would continue to see annual wage growth of $1 per year until an amount of $15 per hour is reached. Other regions would see wages increased based on average incomes and then matched to the consumer price index for all urban consumers (CPI-U) once the region with the highest median income reaches $15 per hour.

HB 395 would incrementally raise the minimum wage across Virginia to $15 by July 1, 2025, and then tie further increases to CPI-U. The first incremental increase would occur effective July 1, 2020, and raise the minimum wage to $10 per hour. The bill would also eliminate exemptions for persons employed as a farm laborer or farm employee, persons employed in domestic service, persons employed by employers with less than four employees, among certain other exemptions.

According to the Department of Planning and Budget’s Fiscal Impact Statement (FIS) for HB 395, raising the minimum wage impacts the Department of Medical Assistance Service’s (DMAS) expenditures because it increases the rates paid for attendant care providers, home and community-based waiver services, and other provider types that currently receive wage rates at or near the minimum wage. This would effect five areas impacting DMAS expenditures: 1) attendant care, 2) adult day health care, 3) in-home residential care, 4) community engagement, and 5) day support. Such increases would impact General Fund expenditures for the Commonwealth in future Fiscal Years.

VACo will continue to monitor and report on these bills as they advance through the General Assembly.

VACo Contact: Jeremy R. Bennett

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