
Minnesota’s minimum wage is based
on the size of the employer, as determined by gross sales, with large employers
paying more than small employers. Under Minnesota’s amended 2014 law, a large
employer is one that has gross sales of more than $500,000 in annual business
per year. In contrast, a small employer is defined to have gross sales of less
than $500,000 in annual business per year.
For large employers, the
Minnesota hourly minimum wage will increase to $9.50 per hour on Monday, Aug.
1, 2016. For large employers, the new state rate is significantly higher than
the federal minimum wage of $7.25 per hour. For small employers, the Aug. 1,
2016 rate is $7.75 per hour. Minnesota employees are entitled to receive the
highest applicable minimum wage when both the state and federal law apply
(which is nearly everyone). Any small employer who had been paying the federal
minimum wage must now pay the higher Minnesota wage.
Starting on Jan. 1, 2018, the
state minimum wage will include an inflation index that will be used to
increase the minimum wage in relation to inflation. The inflationary increase
is capped at 2.5 percent per year. The inflation index will not be used to
reduce the minimum wage in any year with negative inflation.
As described here,
in May 2016 the U.S. Department of Labor increased the minimum salary required for
most FLSA exempt categories from $455 per week ($23,660 annually) to $913 per week
($47,476 annually). The change is effective December 1, 2016 and will be
adjusted by the DOL every three years.
Employers should act now to
determine if they are large or small employers under Minnesota law and to
prepare for the December 1, 2016, change. Small employers must now adjust to
the higher rate, and those employers who have been small employers in the past
and may be large employers under the new definition should take steps to adjust
rates in a timely manner.
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