Minimum Wage Bill Signed by Governor

The new law phases in a minimum wage increase over three years, beginning Aug. 1, 2014, with subsequent annual inflation adjustments.
(Published Apr 21, 2014)

Gov. Dayton on April 14 signed into law Chapter 166 (HF 2091), which will phase in an increase to the Minnesota minimum wage, effective Aug. 1, 2014. The bill was approved by the House on a 71-60 vote and the Senate on a 35-31 vote.

Under the new law, the state minimum wage increases for the next few years, and the definition of “large employer” is modified. This modification to the large employer definition effectively leads to more cities classified as a “large employer,” based on their city’s total budget, which will in turn lead to the higher state minimum wage rate for their employees.

The definition of large employer now includes those with a total budget of at least $500,000. Previously, a large employer was defined as one with a total budget of at least $650,000.

As before, the minimum wage a city must pay depends on whether it is a large or small employer and if the employee is covered by the law. While the statute is not entirely clear, the League generally advises using the city’s total budget amount to determine whether a city is classified as a large or small employer for pay purposes. For cities, annual gross volume of sales would likely be interpreted to mean the city’s total budget.

As of Aug. 1, 2014, large employers must pay most employees covered by minimum wage law at a rate of at least $8 per hour, and small employers must pay all applicable employees at a rate of at least $6.50 per hour. The League generally advises cities with a total budget of $500,000 or more to comply with the higher Minnesota minimum wage rate (i.e., in August 2014 paying the $8 per hour rate). On Aug. 1 of 2015 and 2016, the Minnesota minimum wage is scheduled to increase for both large and small employers.

Beginning on Aug. 1, 2015, the Minnesota minimum pay rate will increase to $9 per hour for large employers, and to at least $7.25 per hour for small employers. Then, on Aug. 1, 2016, the Minnesota minimum pay rate will increase to $9.50 per hour for large employers, and to at least $7.75 per hour for small employers.

There are two exceptions to these wage amounts for younger employees. First, large employers must pay employees under age 18 a rate of at least $6.50 per hour. Second, all employers may elect to pay employees under age 20 at a rate not less than $6.50 per hour, but only for their first 90 consecutive days of employment. After the 90 days, the minimum hourly rate becomes $8. Both of these rates are effective Aug. 1, 2014, and both amounts are scheduled to increase each year.

As before, these minimum wage requirements do not pertain to elected officials; individuals who serve on any governmental board, commission, committee, or other similar body; city volunteers; or any individual employed, directly or indirectly, by the city to provide police or fire protection services. Also continuing is the cities responsibility to pay time-and-one-half overtime to non-exempt employees for those hours worked over 48 in one workweek.

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