The Minneapolis City Council approved a $15 minimum wage ordinance that will affect hundreds of businesses and thousands of workers. Minneapolis becomes the first city in Minnesota to adopt a minimum wage higher than the statewide level (currently $9.50 an hour for large employers), joining Seattle, San Francisco, Washington, D.C., and other large cities that have approved similar measures in recent years.
Key Provisions of the Ordinance
The $15 minimum wage will be phased in over five years for large businesses and seven years for small businesses. Large businesses are defined as having more than 100 employees, and small businesses as 100 or fewer workers.
- The new minimum wage will apply to employers with locations in the geographic boundaries of the city of Minneapolis. It does not apply to federal, state, county, or local government employers, except for employees of the city of Minneapolis.
- Employees who are typically based outside the city, yet perform work in the city on an occasional basis (two hours a week), are required to comply.
- The ordinance does not include an exception for tipped workers in the hospitality industry. This means all workers in the hospitality industry will be subject to the minimum wage, regardless of tips.
- Employees under the age of 20 in a “city-approved training program” will receive a lower “training wage” for the first 90 days of a job. Details will follow in the coming months.
- The ordinance does not apply to employees who are classified as exempt under the Minnesota Fair Labor Standards Act. However, most exempt employees earn more than $15 per hour, so the potential impact is likely minimal.
- The new law also imposes new notice, posting, recordkeeping, and anti-retaliation obligations with which employers must comply.
Next Steps for Employers
MRA expects a legal challenge to the requirement that employees outside of the City are covered by the ordinance. Nonetheless, employers based in Minneapolis, or employers who regularly send employees to Minneapolis to work, should start planning to comply with the new ordinance, with the first implementation deadline of January 1, 2018.
Editor’s Note: On February 28, 2018, a Hennepin County judge said the new $15 an hour minimum wage rule in Minneapolis is valid, ending the first legal challenge of the plan since it was passed in June 2017. The judge ruled that Minnesota’s Fair Labor Act doesn’t preclude towns and cities from passing local wage ordinances to meet the needs of their residents. The decision means the city’s ordinance—of which the first phase took effect January 1, 2018—will continue.
Source: Michael Hyatt, HR Government Affairs Director, MRA - The Management Association