Here’s What You Should Know About the Minimum Wage in Minnesota

This article doesn’t constitute legal advice. Please consult a lawyer or accountant in your state to learn more about minimum wage legislation as it applies to your business.

You have a lot to keep track of every day. Sales, schedules, cash flow, inventory — your list is probably a mile long. Add to that list all the laws and regulations that govern your business, which often change. One of the most talked-about nationwide is the minimum wage.

To help small-business owners in the North Star state stay up to date on Minnesota minimum wage rules, we’ve put together this quick guide for minimum wage requirements in 2022.

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What is the minimum wage in Minnesota in 2022?

For businesses categorized as small employers, the Minnesota minimum wage is currently $8.42 per hour, which is $1.18 more than the federal minimum wage of $7.25 per hour and $2.83 less than the federal minimum wage for covered contracts which is $11.25 an hour in 2022. Small employers are any enterprises with annual gross revenues of $500,000 or less. The Minnesota minimum wage for large employers (gross annual revenues of more than $500,000) is rising 25 cents to 10.33.

For businesses with younger employees, there are some additional Minnesota labor laws that apply:

  • The youth wage (for employees under 18) is $8.42 per hour.
  • The 90-day training wage (for employees under 20) is $8.42 per hour.

It’s important to note that tipped employees are not exempt from the minimum wage in Minnesota, which is unlike the practice in many other states. Instead, state law dictates that employees must be paid at least the minimum wage per hour, plus any tips they might earn.

When does the minimum wage go up in Minnesota in 2022?

State law requires Minnesota’s minimum wage increase to be based on economic conditions with potential increases made on January 1 of each year. In August 2021, officials announced that on January 1, 2022, the minimum wage in Minnesota will increase to $8.42 an hour for small employers and $10.33 an hour for large employers. Since the Minnesota state minimum wage is adjusted each year for inflation, it is possible that Minnesota raises the minimum wage in 2023 and beyond.

In Minneapolis, the largest city in the state, the city council voted in 2017 to raise the minimum wage to $15. This year, the state supreme court unanimously upheld the $15 minimum wage phased increase through 2024 for Minneapolis.

Here’s the minimum wage increase schedule for Minneapolis:

Date Small Business (100 employees or fewer) Large Business (100+ employees)
July 1, 2020 $11.75 $13.25
July 1, 2021 $12.50 $14.25
July 1, 2022 $13.50 $15.001
July 1, 2023 $14.50 Index to inflation
July 1, 2024 Equal to large businesses1 Index to inflation

1Increases will account for inflation every January 1.

How should small business owners prepare for potential changes to them Minnesota minimum wages in 2022?

It is unclear by how much Minnesota’s minimum wage will increase each year, but here are some other steps you can take to make sure your business is ready for anything:

  • Evaluate your staffing: Take a look at your hourly, weekly, and monthly sales to determine if your current staffing levels are appropriate. Based on those sales and the rest of your finances, make a plan for any future hiring. Maybe you need to add a new full-time employee each year. Or maybe your sales are seasonal and hiring contract employees during your busy seasons makes more sense.
  • Hire the best: Hiring the right people is always important, but doubly so when you operate a small business. So take your time and cast a wide net when recruiting new employees. And once you have your team in place, make employee retention a priority by offering them a path to growth and development and by making your business an attractive place to work.
  • Upgrade your technology: When you automate complicated, time-consuming aspects of management, like payroll, you can spend more time focusing on issues like staffing and growing your business.

Whether you want to keep up to date with Minnesota minimum wage laws, get an EIN, or learn more about COVID-19 small business resources, Square is here to help you grow your business.

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