On Friday, June 30, 2017, the Minneapolis City Council passed a $15 minimum wage ordinance on a vote of 11-1, amending Title 2, Chapter 40 of the Minneapolis Code of Ordinances relating to Administration: Workplace Regulations (link is to the draft ordinance). The Ordinance requires that large employers (100 or more employees) pay Minneapolis workers $15 per hour by July 1, 2022, and small employers pay $15 per hour by July 1, 2024, over a 5 and 7 year phase-in period (see table below). As with State law, employers may not take a tip credit for hospitality workers. So what does this mean? Only time will tell, but it may be a “be careful what you wish for” situation, similar to what Maine has recently went through. Restaurant employers in Maine saw a hit in their tips only a few weeks after that $12 minimum wage ordnance passed (even despite the fact that the higher wages didn’t yet go into effect), causing the Maine Senate and House to vote overwhelmingly in favor to repeal and restore the tip credit, which Governor LePage has indicated he will sign into law (there are a few more votes and steps in the process).
Who/What Does the Ordinance Apply To?
All employees (full-time, part-time, joint or temporary) are counted to determine size. A franchise is a large employer (no matter how many employees at a single location) if the brand has at least 10 national locations (no matter who operates the franchise). A full service restaurant in Minneapolis, with fewer than 10 national locations is a single employer. State, County, and local governments (except the City of Minneapolis) are exempt from the $15 minimum wage requirement. Notably, and ripe for debate (similar to the sick and safe leave ordinance that since has been limited to employers with an actual work location in the City), is the requirement that it applies to “all time worked within the geographic boundaries of the city”. Employees who work outside the City, but perform at least two (2) hours per week or more in Minneapolis, are covered by this ordinance.
Important for construction and other transportation industries typically passing through: “Time spent in the city solely for the purpose of travelling through the city from a point of origin outside the city to a destination outside the city, with no employment-related or commercial stops in the city, except for refueling or the employee’s personal meals or errands, is not covered by this article.” Thus, a charter bus picking up kids in Minneapolis for summer camps, but located elsewhere could be covered if that driver spends more than 2 hours in the City. A caterer from outside the City who is contracted to cater a party in the City could be covered, as could a construction company that delivers materials into the City. In short, as enacted, it seems the ordinance is going to affect a whole lot of employers located outside the City boundaries.
When Are the Wages Due?
The current tiered phase-in hourly wages are as follows:
|Date||Large business: five years||Small business: seven years|
|Jan. 1, 2018||$10||No increase|
|July 1, 2018||$11.25||$10.25|
|July 1, 2019||$12.25||$11|
|July 1, 2020||$13.25||$11.75|
|July 1, 2021||$14.25||$12.50|
|July 1, 2022||$15||$13.50|
|July 1, 2023||$15 indexed to inflation||$14.50|
|July 1, 2024||$15 indexed to inflation||$15|
There is a 90 day training wage for employees under the age of 20 of 85% of minimum wage.
What Happens Next?
The Minneapolis Department of Civil Rights is in charge of enforcement, though the Ordinance does allow a private right of action (employers may be sued by individuals for failing to pay the proper minimum wage). Employers must post notice of these rights, similar to the other State required notices. As with the sick and safe leave ordinance, chances are that St. Paul and Duluth are not far behind.