Minnesota Passes Law Increasing Minimum Wage

In April, 2014, Governor Dayton signed into law a substantial increase to the minimum wage in Minnesota. The new law takes effect on August 1, 2014 and imposes a phased increase to the minimum wage. The amount of the minimum wage increase for each employer depends on whether the employer is defined as a “large employer” or “small employer” under the law.

Large Employer Minimum Wage Rate Increases

Large employer is defined as an enterprise whose annual gross volume of sales made or business done is not less than $500,000. The new minimum wage rates for large employers are as follows:

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

The new law also provides large employers with certain age-related carve-outs. Large employers who employ individuals under the age of 18 may pay employees the same minimum wage rates as required for small employers. Large employers who employ individuals under the age of 20 may also pay such employees the same minimum wage requirements as required for small employers for the first 90 consecutive days of that employee’s employment.

Small Employer Minimum Wage Rate Increases

Small employer is defined as an enterprise whose annual gross volume of sales made or business done is less than $500,000. The new minimum wage rates for small employers are:

  • $6.50 per hour beginning August 1, 2014
  • $7.25 per hour beginning August 1, 2015
  • $7.75 per hour beginning August 1, 2016
Minimum Wage Rate Increases Indexed for Inflation

Beginning on January 1, 2018, the minimum wage rates for both large and small employers will automatically increase annually with inflation as measured by the implicit price deflator. These inflation indexing increases will occur every January 1st and may not increase the minimum wage rate by more than 2.5%, rounded to the nearest cent. Under the new law, the Commissioner has the authority to suspend any annual inflation increase to minimum wage due to a substantial economic downturn.

Payment of the State or Federal Minimum Wage

Commencing on August 1, 2014, Minnesota employers must pay the higher wage rate of either the federal or state wage minimum wage law. Thus, large employers in Minnesota must automatically pay its employees the new state minimum wage. Most small employers will still likely be required to pay the federal minimum wage until Minnesota’s minimum wage rate for small employers exceeds the federal minimum wage rate. Minnesota’s minimum wage for small employers is scheduled to surpass the federal minimum wage rate on August 1, 2016.

Employers must plan for and modify their minimum wage rates to meet Minnesota’s new minimum wage requirements by August 1, 2014. If you have any questions regarding Minnesota’s new minimum wage law please contact one of the employment attorneys at Eckberg Lammers.


About the Author

Michael McCain is the lead employment law attorney at Eckberg Lammers. Mike exclusively represents businesses and management in labor, employment, and business law matters. He may be reached at 651-439-2878 or mmccain@eckberglammers.com.

This site uses cookies and other tracking technologies to assist with navigation and your ability to provide feedback, analyze your use of our website, and assist with our promotional and marketing efforts. Read our Privacy Policy for more information.