You probably are familiar with the federal and Minnesota minimum wage rates, but if you are in Minneapolis or St. Paul you also need to comply with the minimum wage rates in each of those cities…and they are changing! On July 1, 2020, the minimum wage rates in Minneapolis and St. Paul will be increasing as part of the gradual increase to eventually reach $15.00 per hour. The minimum wage rates below are the ones applicable to the majority of employers and employees. Both cities provide for slightly reduced rates during the first 90 days of employment for certain employees who are under the age of 20 and subject to additional requirements.
Minneapolis Minimum Wage Starting July 1, 2020
Effective July 1, 2020, the minimum wage in Minneapolis will increase to $13.25 per hour for large businesses and to $11.75 for small businesses. For purposes of the Minneapolis minimum wage, large businesses are defined as employers with more than 100 employees, and small businesses are defined as employers with 100 or less employees. These new minimum wage rates are scheduled to be in effect for one year, when additional increases will occur.
St. Paul Minimum Wage Starting July 1, 2020
Effective July 1, 2020, the minimum wage in St. Paul will be 11.50 per hour for large businesses (more than 100 employees), $10.00 per hour for small businesses (100 or fewer employees), and $9.25 per hour for micro businesses (5 or fewer employees). Important Note: If a micro business has annual gross revenues of $500,000 or more, then it is subject to the state of Minnesota’s large employer minimum wage of $10.00 per hour. For macro businesses (more than 10,000 employees) and the city of St. Paul, the St. Paul minimum wage rose to $12.50 per hour back on January 1, 2020. Like Minneapolis, these new minimum wages are scheduled to be in effect for one year, when additional increases will occur.
Business Size is Based on All Employees, Regardless of Where They Work
When determining business size, all individuals who perform work for compensation, whether full-time, part-time, joint, or temporary employees, must be counted, without regard to whether or not they work in Minneapolis or St. Paul. Business size for each calendar year is based upon the average number of employees who worked per week during the previous calendar year. For a new business, business size for the current calendar year is based upon the average number of employees per week during the first 90 days after the first employee began work. Special and more complex rules apply for franchises and full-service restaurants with multiple locations.
Each city’s minimum wage rates apply to all time worked within the respective city. An employee who typically is based outside of Minneapolis or St. Paul, as the case may be, is covered by the city’s minimum wage during any week in which the individual works at least 2 hours within the city.
Employer Action Item: July 1, 2020, is fast approaching. While businesses have understandably been focused on various pressing issues given the COVID-19 pandemic, they must be careful not to let items such as this inadvertently slip through the cracks. Now is the time to make sure wages are correct and that payroll processors have the right information. Oh, and do not forget about the still relatively new Minnesota and Minneapolis wage theft ordinances, both of which require that affected employees receive written notice of any wage changes.
