New Minneapolis minimum wage law now in effect

If your employees work in the City of Minneapolis, even infrequently, you may need to comply with the City’s new minimum-wage ordinance. Effective January 1st, 2018, the ordinance will incrementally raise the minimum wage until it reaches $15.

Does my business have to comply?

Yes, if your employees work in Minneapolis for at least 2 hours/week during any calendar week (not during every calendar week). A calendar week is defined as Monday-Sunday. But take note:

  1. You have to pay the minimum wage for time worked within the City when the employee meets the conditions above. You don’t have to pay the minimum wage for time worked in the City which is less than 2 hours in a calendar week.
  2. You don’t have to pay the Minneapolis minimum wage to the rest of your employees who do not work in Minneapolis.
  3. Time spent just travelling through Minneapolis, without employment-related stops besides refueling, doesn’t count as time worked in Minneapolis.

 

Right now, the ordinance applies even if your company isn’t based in Minneapolis. If this seems unusual, it is—Minneapolis legislation has been challenged in the past for attempting to regulate businesses outside its borders. A similar lawsuit has been filed to challenge the minimum-wage ordinance, but in December 2017 a Hennepin County judge declined to temporarily block the ordinance from taking effect on January 1st. The lawsuit is still ongoing, and it’s too early to know what the final outcome will be.

How is the increase implemented?

The increase is phased in over then the next six years as follows:

Large businesses Small businesses
January 1, 2018 $10 No change
July 1, 2018 $11.25 $10.25
July 1, 2019 $12.25 $11
July 1, 2020 $13.25 $11.75
July 1, 2021 $14.25 $12.50
July 1, 2022 $15 $13.50
January 1, 2023 Increase indexed to inflation
July 1, 2023 $14.50
January 1, 2024 Increase indexed to inflation
July 1, 2024 Equal to large businesses

 

How do I determine business size?

Business size determines which incremental increases apply to you. “Large businesses” must pay $15/hour by 2022, while “small business” have until 2024.

Large businesses are those that had over 100 employees in the previous calendar year. The number of people on payroll  does not determine how many employees a business has had in a year. Instead, the City requires employers to calculate the number of employees using a formula that’s available here. For employers with high numbers of seasonal or temporary employees, the formula can actually reflect a smaller business size. Small businesses are those that had less than 100 employees in the previous calendar year.

What records do I have to keep?

Employers must keep records of: (1) the hours worked by employees; and (2) the wages paid. While the ordinance doesn’t specify, it’s probably wisest to track both total hours worked and hours worked in Minneapolis. Employees should be allowed to view those records. Records must be kept for 3 years from the date the hours were worked.

Why can’t I just pay the statewide or federal minimum wage?

Cities generally have authority to pass local laws that are more stringent than parallel state or federal laws, as long as the city law doesn’t contradict the state or federal law. In this case, the Minneapolis ordinance doesn’t necessarily conflict with the state or federal minimum wage; it just requires employers to go beyond the state and federal minimums.

Where can I find more information?

The City of Minneapolis’ website has several resources, including the mandatory workplace posters that businesses must display.

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