Today at 2:30 p.m., Governor Dayton will sign into law new legislation that will increase Minnesota’s minimum wage to $9.50, phasing the increase in by 2016. In addition, beginning in 2018, the minimum wage will be indexed to inflation under the oversight of the Minnesota Department of Labor and Industry (“DOLI”).
When the 2014 legislative session kicked-off in February, an increase to the minimum wage appeared certain — the only questions were (a) how much the increase would be and (b) whether it would be indexed for inflation. After the House and the Senate passed different minimum wage bills, a conference committee was empaneled to hammer out the differences between the House and Senate versions.
After lengthy negotiations, legislators agreed on a minimum wage bill (H.F. 2091 / S.F. 1775) that includes the following:
- Beginning August 1, 2016, there will be a $9.50 minimum wage for businesses with gross sales over $500,000 in 2016. This wage will be phased in as follows: the wage will increase to $8.00 beginning August 1, 2014 and then to $9.00 on August 1, 2015.
- Beginning August 1, 2016, there will be a $7.75 minimum wage for businesses under $500,000 in gross sales in 2016. This wage will be phased in as follows: the wage will increase to $6.50 beginning August 1, 2014 and then to $7.25 on August 1, 2015.
- The $7.75 minimum wage rate would also apply to large businesses in the following circumstances: 90 day training wage for 18 and 19 year olds, all 16 and 17 year olds and employees working under a J1 visa.
- Beginning in 2018, all wages would increase each year on January 1st by inflation measured by the implicit price deflator capped at 2.5%. The indexed increase could be suspended for one year by the DOLI if leading economic indicators indicate the possibility of a substantial downturn in the economy. The suspension could only be implemented after a public hearing and public comment period.
On April 9, 2014, the legislation passed in the Senate (35-31) and then passed in the House (71-60) on the next day.
Bottom Line
Minnesota’s new minimum wage bill will go into effect on August 1, 2014. On that date, Minnesota employers with gross sales over $500,000 must pay their employees at least $8.00 per hour.
Stay tuned for more information regarding Minnesota’s minimum wage hike.