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

Colleen Egan, Writer

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 minimum wage rules in their state, we’ve put together this quick guide.

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What is the minimum wage in Minnesota?

The minimum wage in Minnesota is currently $7.87 per hour, 62 cents higher than the federal rate of $7.25. This rate applies to small employers, those with annual gross revenues of less than $500,000 a year. For those businesses that gross more than $500,000 a year — called large employers — the minimum wage is $9.65.

For businesses with younger employees, there are some additional minimum wage rules:

  • The youth wage (for employees under 18) is $7.87 per hour.
  • The 90-day training wage (for employees under 20) is $7.87 per hour.

It’s important to note that tipped employees are not exempt from the minimum wage, 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.

Are there plans to change the minimum wage in 2019 and after?

A state law requires Minnesota’s minimum wage to be based on economic conditions with potential increases made on January 1 of each year. In August 2018, officials announced that on January 1, 2019, the minimum wage in Minnesota will increase to $8.04 an hour for small employers and $9.86 an hour for large employers.

In Minneapolis, the largest city in the state, the city council voted to raise the minimum wage to $15 an hour in 2017. Large employers must comply by July 1, 2022, while small businesses have until July 1, 2024.

Here’s the minimum wage increase schedule for Minneapolis:

Date Small Business (100 employees or fewer) Large Business (100+ employees)
January 1, 2018 $10.00
July 1, 2018 $10.25 $11.25
July 1, 2019 $11.00 $12.25
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 the minimum wage?

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.

Colleen writes for Square, where she covers everything from how aspiring entrepreneurs can turn their passion into a career to the best marketing strategies for small businesses who are ready to take their enterprise to the next level.