New St. Paul Minimum Wage Law

Last week, St. Paul enacted a new minimum-wage ordinance which will take effect on December 14. The ordinance creates a minimum wage of $15/hour. However, businesses don’t have pay that wage immediately. Instead, the minimum wage will increase gradually over several years until every employer pays that wage. The ordinance is enforced by the St. Paul Department of Human Rights and Equal Economic Opportunity (the “Department”).

What are the phases and which ones apply to my business? The timing depends on how many employees you have. There are four categories:

  1. Macro businesses: over 10,000 employees
  2. Large businesses: over 100 employees
  3. Small businesses: over 100 employees
  4. Micro businesses: 5 or fewer employees

 

The gradual wage increases are:

  LARGE SMALL MICRO
July 1, 2020 $11.50 $10.00 $9.25
July 1, 2021 $12.50 $11.00 $10.00
July 1, 2022 $13.50 $12.00 $10.75
July 1, 2023 $15.00 $13.00 $11.50
July 1, 2024 CMW* $14.00 $12.25
July 1, 2025 CMW* $15.00 $13.25
July 1, 2026 CMW* CMW* $14.25
July 1, 2027 CMW* CMW* $15.00
July 1, 2028 CMW* CMW* CMW*
   MACRO
January 1, 2020     $12.50
July 1, 2022     $15.00
January 1, 2023     CMW*

*CMW is the City Minimum Wage. It will be adjusted and published by the Department by September 1st of every year. Adjusted rates take effect the following January.

How should my business determine the number of employees we have? For each calendar year, you should use the average number of employees you had per week in the previous year (whether or not they worked in St. Paul). Include seasonal, temporary, and joint employees. A few exceptions:

  • Franchises: Count all the employees at all the franchises that you own (not at all franchises nationwide).
  • Non-franchise, full-service restaurants in St. Paul with more than 1 and fewer than 10 locations nationwide: Count all the employees at your location (not at all locations nationwide).
  • New businesses: Count the average number of employees per week during the first 90 days after the first person working for compensation began work.

 

My business isn’t located in St. Paul. Does the ordinance apply? Yes, if your employees work in St. Paul.  You must pay the St. Paul minimum wage for all the hours they work in the city boundaries. As with the other labor-related ordinances passed by Minneapolis and St. Paul in recent years, the ordinance purports to apply to employees who work in the city, regardless of where the employer is based.  Court challenges are still pending regarding this type of provision in earlier ordinances and are expected on this ordinance as well.

For employees who only work intermittently in St. Paul, the ordinance applies if the employee works at least two hours in a given week in the city.

Do tips count against the minimum wage? No. Nor do mandatory gratuities or charges that a customer would reasonably assume are gratuities that will be paid to the employee.

Do I have to do anything besides raising wages? Yes. First, you’re required to maintain records of wages paid to all employees for at least 3 years after those wages are paid.

Second, there are several notices to give employees. The Department is creating a workplace poster which must be conspicuously displayed, as well as a notice of rights that must be given to employees annually. (We’ll post links when the Department publishes those items.) Finally, if an employer has an employee handbook, the handbook must inform employees of their minimum-wage rights under the new law and the remedies for violation of those rights.

What are the penalties for violating the ordinance? The Department can investigate suspected violations and seek penalties, including payment of wages that were not paid, liquidated damages, and multiple fines up to $1,000.00 each. Repeated violations against the same employee may result in additional fines of $1,000.00 payable to the employee and city. Employees can sue the employer even if the Department determines that there was no violation.

Are there employees who aren’t covered by the ordinance? There are exceptions for disabled persons who are employed through certain supported-employment programs, members of certain vocational rehabilitation programs, and certain baseball players.

Lower rates apply to the following workers: youth ages 14-17 during the first 90 days of hire (85% of the small-business rate, rounded up to the nearest nickel), and youth under age 20 in city-approved, youth-focused training or apprenticeship programs (same rate as previous, as long as that rate doesn’t violate state laws). The City will publish a minimum training wage and a minimum youth wage annually.

There are already state and federal minimum-wage rates. Can I disregard the St. Paul rate as long as I pay the state or federal rate?  Not unless the state or federal rate is higher. The St. Paul ordinance says that if the state minimum wage is higher, you have to pay that rate. The federal minimum wage doesn’t bar states and cities from imposing a higher rate, so as long as those rates are higher, you have to comply with those rates.

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