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Mary M. Krakow

Mary M. Krakow Employment & Labor

mkrakow@fredlaw.com
612.492.7164
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Minnesota Enacts Higher Minimum Wage

By: MARY M. KRAKOW

July 2005

Minnesota employers soon will be required to pay a higher minimum hourly wage to their non-exempt employees than federal law requires. How much more each Minnesota employer will be required to pay depends on each company's size.

Effective August 1, 2005, Minnesota's Fair Labor Standards Act will require employers with total gross annual sales or business of $625,000 or more to pay an hourly minimum wage of $6.15. For employers with total gross annual sales or business of less than $625,000, the new minimum wage will be $5.25 per hour.

The federal minimum hourly wage continues to be $5.15. Minnesota employers must pay the higher state minimum because employees are always entitled to receive the better benefit.

Employers can continue to pay employees under the age of 20 the so-called “opportunity wage” during the first 90 consecutive calendar days of employment. Effective August 1t, that wage will be $4.90 per hour, up from the current $4.25 under Minnesota and federal law. While designed to help employers maintain lower summer labor costs for their teenage workers, the wage applies throughout the year.

Minnesota joins 14 other states and the District of Columbia with minimum wages higher than the current federal rate: Alaska: $7.15; California: $6.75 (San Francisco: $8.50); Connecticut: $7.10; Delaware: $6.15; District of Columbia: $6.60 (1/1/06: $7.00); Florida: $6.15; Hawaii: $6.25; Illinois: $6.50; Maine: $6.35; Massachusetts: $6.75; New York: $6.00 (1/1/06: $6.75); Oregon: $7.25; Rhode Island: $6.75; Vermont: $7.00, and Washington: $7.35.

Non-exempt employees must receive no less than the applicable minimum wage for all hours worked as well as overtime at one and one-half times their regular rate for all hours worked over 40 in a workweek under federal law and over 48 under Minnesota law. (Some states also require overtime after a specified number of hours worked in a workday.) The “regular rate” includes all remuneration for the workweek unless specifically excluded by law.

The federal requirement to pay overtime after 40 hours applies to all companies with total annual gross sales or business volume of $500,000 or more, hospitals or other entities engaged in the residential care of the sick, aged or mentally ill, schools regardless of size, and public agencies.

Non-exempt employees must keep a weekly time record showing time in and out each day (twice a day if there is an unpaid lunch period), total daily and weekly hours, and total daily and weekly overtime hours.

Employers with questions regarding compliance with other federal and state wage laws (including, for example, classification of employees as exempt or non-exempt) are encouraged to contact employment counsel.