Minnesota Minimum Wage Increase Becomes Law

On April 14, 2014, Governor Dayton signed a bill that will raise Minnesota’s minimum wage beginning in August of 2014.  See H.F. 2091.  Here’s what employers need to know about the new minimum wage law:

Large Employers:  “Large employers” – whose gross annual volume of sales made or business done is $500,000 or more – will need to pay a minimum wage of at least $8.00 per hour beginning on August 1, 2014.  The minimum wage for large employers will increase to $9.00 per hour on August 1, 2015 and will increase again to $9.50 per hour on August 1, 2016.

Small Employers:  “Small employers” – whose gross annual volume of sales made or business done is less than $500,000 – will need to pay a minimum wage of at least $6.50 per hour beginning on August 1, 2014.  The minimum wage for small employers increase to $7.25 per hour on August 1, 2015 and will increase again to $7.75 per hour on August 1, 2016.

Exception for Employees Under the Age of 18:  The new law allows “large employers” to pay employees under the age of 18 a lower minimum wage rate of at least:  (i) $6.50 per hour beginning on August 1, 2014; (ii) $7.25 per hour beginning on August 1, 2015; and (iii) $7.75 per hour beginning on August 1, 2016.

Exception for Employees Under the Age of 20:  During the first 90 days of employment, any employer may pay an employee under the age of 20 a lower minimum wage rate of at least:  (i) $6.50 per hour beginning on August 1, 2014; (ii) $7.25 per hour beginning on August 1, 2015; and (iii) $7.75 per hour beginning on August 1, 2016.

Exception for Certain Summer Work Travel Employees:  An employer that is considered a “hotel or motel,” “lodging establishment,” or “resort,” as defined by Minnesota law, may pay a lower minimum wage rate to employees working under a summer work travel exchange visitor program nonimmigrant visa, if the employer also provides a food or lodging benefit to the employee.  For employees who qualify for this exception, the minimum wage will be:  (i) $7.25 per hour beginning on August 1, 2014; (ii) $7.50 per hour beginning on August 1, 2015; and (iii) $7.75 per hour beginning on August 1, 2016.

Prohibition of Displacement:  The new law prohibits employers from displacing other employees to take advantage of the lower minimum wage rates for employees under the age of 18, employees under the age of 20, or employees who qualify for the summer work travel exception.  This prohibition includes total displacement of employees as well as partial displacement through a reduction in hours, wages, or employment benefits.

Annual Adjustments for Inflation:  Beginning in 2018, the Commissioner of Labor and Industry will adjust the minimum wage rates applicable to all employers and employees to account for inflation, up to a maximum of 2.5% per year.  Beginning in 2017, the new minimum wage rates for the upcoming year will be announced by August 31st.  However, the Commissioner may choose not to adjust the minimum wage rates for inflation if economic indicators indicate the potential for a substantial economic downturn.

About Michael Miller

Michael is a Chambers-rated attorney in Briggs and Morgan's Employment, Benefits, and Labor group and is head of the firm’s Employment Law Counseling and Compliance practice group. He has 25 years experience counseling employers to prevent unwanted litigation and advises companies of ongoing changes in federal, state and local employment law. Michael advises employers in all areas of employment law including discipline and discharge, leaves of absence, wage and hour compliance, non-compete and confidentiality agreements, affirmative action plans, background checking, and drug/alcohol testing. For Michael's full bio, click here.

Posted on April 15, 2014, in Wage and Hour and tagged . Bookmark the permalink. Leave a comment.

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