Effective January 1, 2018, Minnesota large employers (annual gross revenue of $500,000 or more) must pay a minimum wage of $9.65 per hour; small employers must pay $7.87 per hour. This is HIGHER than federal minimum wage of $7.25 per hour. Accordingly, Minnesota law applies, and so generally no Minnesota employee (with some exceptions) should earn less than $7.87 per hour (and, I know you know this, but there is no “tip credit” allowed in Minnesota).
But wait – there’s more! As I wrote about earlier, Minnesota employers subject to the Minneapolis Minimum Wage Ordinance must pay an even higher minimum wage starting January 1, 2018. Thus, for those employers, Minneapolis’ ordinance will trump both Minnesota state law and Federal law (hence, the Chamber of Commerce’s lawsuit that is pending). Starting January 1, 2018, large businesses (more than 100 employees) that fall under the Minneapolis ordinance will need to pay a minimum wage of $10 per hour. Starting July 1, 2018, small businesses that fall under the Minneapolis ordinance will need to pay $10.25 per hour, and large businesses $11.25 per hour. Thereafter, the hourly wages increase each July 1 until 2024, when all employers that fall under the Minneapolis ordinance will need to pay the minimum wage of $15 per hour. You can read more about it on the City’s website here.
Minnesota employers should be careful to be familiar with all wages laws and ordinances that may apply to your business. For example, a business can be a small employer under the $7.87 Minnesota State minimum wage (based on annual gross revenue), but a large business (more than 100 employees) under the Minneapolis Ordinance; in this case the employer would need to pay the higher of the minimum wage rates – the $10 per hour under the Minneapolis Ordinance.