After
significant debate and discussion over a period of several months, the St. Paul
City Council approved a new wage ordinance this week that will require a $15
minimum wage within the city of St. Paul for covered nonexempt workers. The
City Council voted unanimously in favor of the wage change and St. Paul Mayor
Melvin Carter signed
it into law soon
after.
Covered
Employers and Phase-In Requirements
Similar to
the Minneapolis $15 minimum wage ordinance, the St. Paul ordinance will phase
in the $15 minimum wage increase over time, and the wage requirement will apply
to all time worked within the city by a covered employee. All covered employers
will have new minimum wage requirements by 2020, but the rate of phased-in increases
will depend on the employer’s size. The ordinance distinguishes between “macro,”
“large,” “small,” and “micro” businesses based on their number of employees,
with different applicable phase-in requirements. Under the ordinance, an
employer’s business size is based on the average number of employees it had per
week during the previous calendar year. For brand new businesses, the size will
be based on the average number of employees per week during the first 90 days
after the first person begins working for the business. In addition, in determining
an employer’s size, all employees on a full-time, part-time, joint, or
temporary basis must be counted whether or not located in St. Paul.
The
ordinance provides that the city of St. Paul and “macro” employers must
increase hourly wages to $12.50 effective January 1, 2020, and later increase
hourly wages to $15 per hour effective July 1, 2022. “Macro businesses” include
employers with 10,000 or more employees. Under the ordinance, “large businesses”
include employers with more than 100 employees, and such businesses will be
required to pay covered employees $15 per hour by July 1, 2023. “Small
businesses,” defined as employers with 100 or fewer employees, must reach the $15
per hour rate by July 1, 2025. Finally, “micro businesses,” defined as employers
with five employees or less, must meet the $15 hourly wage rate by July 1,
2027. Additional wage schedule details for each type of business can be found
in the ordinance.
Comparatively,
Minnesota’s 2019 statewide minimum wage, which is adjusted for inflation, will
be $9.86 per hour for employees at large companies and just over $8.04 per hour
for smaller companies. That being said, the new Minnesota governor-elect, Tim
Walz, has indicated his support for exploring a statewide $15 minimum wage.
There are
some exceptions in the ordinance that permit lower minimum wage rates for youth
training and apprenticeship programs, young workers at small employers, and
players on an independent baseball team, paid pursuant to a negotiated
contract. Like the Minneapolis ordinance and Minnesota state law, the St. Paul
ordinance does not include a “tip credit” that would allow employers to count
tips toward the minimum hourly wage.
Covered
Employees
Notably, the
St. Paul ordinance’s coverage of employees is extremely broad. The ordinance purports
to cover workers based in and outside the city’s geographic boundaries. With
respect to employees based outside of St. Paul, but who occasionally perform
work in St. Paul, the ordinance states that they are covered if, over the
course of one week, the employee performs “at least two hours of work for an
employer within the geographic boundaries of the city.” An extraterritorial
provision in the Minneapolis safe and sick ordinance was struck down as an
overreach of that city’s police powers, so it is likely that there may be legal
challenges to the extraterritorial application of the St. Paul wage ordinance. For
now, though, employers will want to review their employee rosters to determine
potentially covered employees and prepare to update their pay practices as
needed to comply with the new law.
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