Minnesota has been raising the minimum wage over the years. It did so again in 2020, joining a group of like-minded states including neighboring state South Dakota. Minnesota’s minimum rate of pay differs based on a number of factors, including the size of the employer.
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2020 Minimum Wage in Minnesota: $10 per hour
The Minnesota minimum wage is $2.75 higher than the federal minimum of $7.25 per hour. By state law, the minimum wage for large employers is $10 per hour. However, for small employers, it’s $8.15 an hour. This represents a 1.41% increase over the rate in 2019, in accordance with the Consumer Price Index (CPI).
The state classifies a large employer as any business with over $500,000 in annual gross revenue, while a small employer generates less than $500,000. Regardless of the size of the employer, the state stipulates that they can pay $8.15 per hour to minors, as well as to individuals under the age of 20 during the first 90 calendar days of their employment.
The same stipulations apply to city employees. The state draws a distinction between large and small employers, and this can vary based on the city you work for. If you work for a city with a budget greater than $500,000 per year, there’s a good chance you’ll earn at least $10 per hour. However, there are some exceptions, and some employees are exempt from the minimum wage requirement.
As a Minnesota resident, your employer doesn’t have to pay you the minimum wage if:
- You’re an agricultural worker who earns a salary or is under the age of 18;
- You’re a seasonal worker at a youth camp, carnival, circus, fair, or ski facility;
- You’re an executive, administrator, professional who earns a salary, or an outside salesperson;
- You’re an employee at a nonprofit organization, an elected official, a police officer or firefighter, a taxi driver, a babysitter, a state conservation officer, a maritime employee on a private or U.S. vessel, a worker with a disability that limits your productivity, or a member of a religious order employed at an institution operated by the church;
- You’re employed by a city recreational program, are under 18, and work for less than 20 hours a week;
- You’re a driver, driver’s helper, mechanic, or loader subject to the provisions of the U.S. Department of Transportation;
- You’re employed at a single-family residence owned by a county home school.
Tipped: $10 per hour
In most states, tipped employees may be paid at a rate lower than the minimum wage, with the understanding that tips will compensate for the difference. If they do not, the employer must pay the employee more to ensure they are earning at least the minimum wage.
However, Minnesota doesn’t allow tip credits. This means employers whose employees earn tips must pay them the minimum wage that applies to their organization. In other words, large employers must pay their tipped employees $10 per hour, and small employers must pay $8.15 per hour. Employees take home their tips in addition to the hourly wage.
An employee who earns the Minnesota minimum wage and works a 40-hour workweek will earn a total of $400 before taxes.
An employee who earns the Minnesota minimum wage and works full-time for an entire year will earn $20,800 before taxes. However, if the employer isn’t open for business on any of the federally mandated holidays and the employee doesn’t earn holiday pay, the employee’s yearly income will be less.
An employee who earns the Minnesota minimum wage will earn the federal overtime wage rate of 1.5 times the wage for any hours worked over 48 in a week, meaning they will earn $15 per hour for overtime. Unlike the federal overtime regulation, which specifies overtime as any hours worked in excess of 40 in a seven-day workweek, Minnesota specifies 48 hours as the boundary line between regular time and overtime.
That said, the state does adhere to the federal overtime mandate for certain employers. These types of employers must pay overtime for any hours worked over 40 in a seven-day workweek:
- Those who produce and handle goods for interstate commerce;
- Large employers with over $500,000 in gross annual sales;
- Hospitals, nursing homes, private and public schools, as well as government agencies;
- Employees in Minnesota who are exempt from the standard minimum wage are also exempt.
Minneapolis Minimum Wage: $12.25 per hour
Minneapolis sets its own minimum wage, which applies to all businesses. Workers of businesses with over 100 employees are entitled to a minimum wage of $12.25 per hour, while those working for businesses with fewer than 100 employees are entitled to $11.00. As with the state minimum wage, tipped employees cannot be paid a lower amount than this rate.
The minimum wage in Minneapolis will continue to increase each year. These increases will become effective on July 1 each respective year.
|Year||Large Businesses||Small Businesses|
In 2024, an equal minimum wage will be applied to both large and small businesses, with regular increases each subsequent January 1 to account for inflation.
Saint Paul Minimum Wage: $12.50 per hour
The city of Saint Paul also sets its own minimum wage, beginning this year. To understand these changes, it’s necessary to understand that Saint Paul categorizes employers into four groups:
- Macro businesses (more than 10,000 employees);
- Large businesses (101 to 10,000 employees);
- Small businesses (6 to 100 employees);
- Micro businesses (fewer than 6 employees);
The $12.50 rate went into effect for all macro business employees and City of Saint Paul employees on January 1, 2020. It will increase again for these workers on July 1, 2022, when it will increase to $15. Each subsequent year, it will increase on January 1, which will be announced by September 1 of the previous year.
Employees of large, small, and micro businesses can refer to the chart below to determine their effective minimum wage. These changes go into effect on July 1 of the respective year.
|Year||Large Businesses||Small Businesses||Micro Businesses|
These rates will continue to increase each subsequent year to account for inflation. Such increases will be announced by September 1 of the previous year.
Minnesota Minimum Wage Increase News
In Minnesota, the Department of Labor and Industry is required to announce the amount the minimum wage will increase by August 1 of every year. As the CPI rises, wages in the state will increase proportionately. There’s one caveat: the increase can’t be more than 2.5% of the previous year’s minimum wage. This means that the minimum wage in 2021 cannot exceed $10.25 — though the increase will likely be lower.
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