March 16, 2018

The New Minneapolis Minimum Wage Ordinance Took Effect on January 1, 2018…But Don’t Forget that the State of Minnesota Also Raised Its Minimum Wage The Same Day!

New Minneapolis Minimum Wage

On June 30, 2017, the Minneapolis City Council approved a minimum wage ordinance that will gradually raise the minimum wage in the city to $15 per hour.  The new ordinance can be found in Article IV of Chapter 40 of the Minneapolis Code of Ordinances.

The first wage increase under the new Minneapolis ordinance took effect on January 1, 2018, when the minimum wage for large businesses rose to $10.00 per hour.  On July 1, 2018, the minimum wage will increase to $11.25 for large businesses and $10.25 for small businesses.  Thereafter, the minimum wage will gradually increase until it reaches $15.00 per hour.


          Definition of Large and Small Businesses

Although the Minneapolis minimum wage ordinance applies to all employers, the rate at which the new minimum wage will be phased in depends upon whether a business is a “large” business, meaning it has more than 100 employees, or a “small” business, which is an employer with 100 or less employees.  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.  Business size for each calendar year is based upon the average number of employees who worked for compensation 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 who worked for compensation per week during the first 90 days after its first employee began work.  Special and more complex rules apply for franchises and full-service restaurants that have multiple locations.


          Phase-In of the New Minimum Wage

The minimum hourly wage will increase pursuant to the schedule below.  Note that, despite some controversy, there is no tip credit, meaning that tipped employees must be directly paid at least the minimum wage by their employers.

Date                            Large Business                                              Small Business

Jan. 1, 2018                $10.00                                                                   —-

July 1, 2018                $11.25                                                                   $10.25

July 1, 2019                $12.25                                                                  $11.00

July 1, 2020               $13.25                                                                  $11.75

July 1, 2021                $14.25                                                                  $12.50

July 1, 2022               $15.00                                                                  $13.50

January 1, 2023        At least $15.00 (indexed to inflation),          —

July 1, 2023               —                                                                         $14.50

January 1, 2024       At least $15.00 (indexed to inflation),         —

July 1, 2024              At least $15.00 (indexed to inflation)            At least $15.00 (indexed to inflation)

Thereafter, each Jan. 1   Increases based on inflation                   Increases based on inflation


The Minneapolis ordinance does provide for a slightly reduced minimum wage for the first 90 days of employment for an employee who is under the age of 20 and who is employed in a city-approved training or apprenticeship program.  Criteria for such a program will be developed by the city.


          Covered Employees

The Minneapolis ordinance applies all time worked by employees within the city.  An employee who typically is based outside of Minneapolis and who only works occasionally in the city is covered in a particular calendar week if the individual works at least 2 hours within the city during any such week (a calendar week for purposes of this ordinance runs from Monday – Sunday).


          Notice to Employees

Employers are required to post, in a conspicuous location at any workplace or job site where an employee works, a notice informing employees of the current minimum wage and their rates under the ordinance.  The Minneapolis Department of Civil Rights has prepared such a poster in several languages, which poster can be found here.  The notice must be in English and in any other language spoken by at least 5% of the employees at the workplace or job site, if the Minneapolis Department of Civil Rights publishes a notice in such language.


New Minnesota Minimum Wage

While there has been some discussion in the media regarding the new Minneapolis minimum wage ordinance, there has been very little publicity regarding Minnesota’s minimum wage increase that also took effect on January 1, 2018.  Under Minnesota law, the state minimum wage increases every year based on inflation.  For 2018, the following Minnesota minimum wage rates are in effect:

  • $9.65 per hour for large employers (up from $9.50)
  • $7.87 for small employers (up from $7.75)
  • The 90-day training wage (for people under 20 years old) and the youth (under age 18) wage also increased to $7.87 (up from $7.75)


Minnesota defines a large employer and a small employer differently than does Minneapolis.  For purposes of the Minnesota law, a large employer has annual gross revenues of at least $500,000.  A small employer has annual gross revenues of less than $500,000.

While individuals who work at least two hours per week in Minneapolis should be paid at or above the Minneapolis minimum wage for their time worked in the city, all other employees in Minnesota should receive at least the minimum wage required by Minnesota law.


Action Item for Employers

Employers need to make sure they are in compliance with all applicable minimum wage requirements, whether they be federal, state or local requirements.  With the start of a new year, now is a good time for businesses to review their wage and hour practices to ensure they are in compliance with all applicable laws.