Minnesota Minimum Wage Dramatically Increased

Today Governor Dayton will sign a significant increase to the minimum wage into law. The law imposes a new minimum wage on employers based upon the annual gross volume of sales or business done in the year. Large employers are defined as those having $500,000 or more of gross revenue. Those businesses with less than $500,000 of gross revenue are considered Small Employers.

New minimum wage requirements imposed on Large Employers:

$8.00 per hour beginning August 1, 2014
$9.00 per hour beginning August 1, 2015
$9.50 per hour beginning August 1, 2016

New minimum wage requirements imposed on Small Employers:

$6.50 per hour beginning August 1, 2014
$7.25 per hour beginning August 1, 2015
$7.75 per hour beginning August 1, 2016

Beginning in 2018 the rates will automatically increase with inflation pursuant to a formula defined in the statute.

There are some limited exceptions that Large Employers can utilize to pay the lower Small Employer rates to certain employees. During the first 90 consecutive days of employment, a Large Employer may pay an employee under the age of 20 years a training wage at the Small Employer rates. Large employers can also pay employees under the age of 18 the Small Employer rate. Additionally, resorts and hotels hiring employees under J visas and providing a food and lodging benefit can pay those employees a minimum of $7.25 per hour beginning August 1, 2014; $7.50 per hour beginning August 1, 2015; and $7.75 per hour beginning August 1, 2016.

Employers utilizing those exceptions must remain mindful that the minimum wage law prohibits an employer from taking “any action to displace an employee, including a partial displacement through a reduction in hours, wages, or employment benefits, in order to hire an employee” at the lower wage.

Finally, Small Employers paying less than the Federal Minimum Wage of $7.25 to their adult, non-training wage employees run the risk that the United States Department of Labor will consider their business to be engaged in interstate commerce and therefore subject to the Federal Minimum Wage regardless of the size of their business.

Please contact Martin Kappenman or any of the other Peters, Revnew, Kappenman & Anderson, P.A. attorneys (952-896-1700 or firm@seatonlaw.com) with questions regarding these changes and how best to address the challenges these new legislative burdens impose on your business. We will provide further updates as new labor and employment related legislation is passed in this legislative session.

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