In April the Minnesota legislature passed legislation establishing incremental increases to the state minimum wage over the next three years. The first increase takes effect on August 1, 2014. The new minimum wage impacts employers differently. Here are several key provisions and the impact they are expected to have on employers.

Large Employer Versus Small Employer

A “large employer” is defined as having $500,000 or more in sales exclusive of excise taxes. Conversely, a “small employer” is defined as having less than $500,000 in sales exclusive of excise taxes. This amount is different than in the past, when the cut-off for a small employer was defined as having less than $625,000 in sales exclusive of excise taxes. Employers need to determine whether their business meets or exceeds the new lower threshold.

Youth Wage
Employers may pay the youth wage to employees under the age of 18. Employers should make sure that their payroll system starts paying the adult minimum wage to these employees on the day that their employees turn 18.  Employers will likely have to request payroll changes weeks in advance of employees’ birthdays.

Training Wage
Employers may pay the training wage to employees under the age of 20 for their first 90 days.

Summer Work Travel Employee Exemption
Employers in the hotel or motel, lodging establishment, or resort industries may pay this wage to employees working under the authority of a summer work travel exchange visitor program (J) nonimmigrant visa. We recommend that employers contact legal counsel before implementing this wage.

Inflation Index
Beginning January 1, 2018, all minimum wage rates will increase by the national implicit price deflator or 2.5 percent, whichever is lower. The Minnesota Department of Labor and Industry commissioner may stop an annual increase, but only after significant executive branch and public input.