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Minnesota Minimum Wage Laws Explained

Simplify payroll compliance in Minnesota. Learn 2025 wage rates and local ordinances to keep your business penalty-free.

Anna Coucke

by Anna Coucke - January 15th, 2025

Minnesota’s wage laws are among the most detailed in the country, balancing state, federal, and local requirements. Recent updates in January 2025 adjusted rates again, impacting employers across the state. Businesses operating in cities like Minneapolis and St. Paul face even stricter pay rules, adding complexity to payroll management.

Unlike the federal minimum wage, which has remained at $7.25 per hour for years, Minnesota’s state rates consistently trend higher. Local ordinances in larger cities push those wages even further, creating a unique wage framework that employers must navigate carefully. Understanding how these laws interact can help businesses avoid penalties and ensure employees are paid correctly.

From inflation-linked adjustments to specific rules for tipped workers and youth training wages, Minnesota's wage structure prioritizes clarity and fairness. Staying informed is key to meeting compliance requirements and maintaining trust with employees.

Understanding Minnesota's Minimum Wage Framework

Minnesota’s minimum wage is defined and enforced at multiple levels, including state, federal, and local jurisdictions. The statewide minimum wage increased to $11.13 per hour on January 1, 2025; significantly higher than the federal rate of $7.25 per hour. Employers subject to both state and federal laws must follow the higher state rate, ensuring workers receive the most favorable pay.

Cities like Minneapolis and St. Paul impose additional requirements through local wage ordinances. In January 2025, the minimum wage for larger businesses in both cities reached $15.97 per hour. These local laws apply to employees working within city boundaries, even if the business operates outside the city but assigns employees at least two hours of work within city limits in a week.

Minnesota prohibits tip credits, meaning employers cannot count tips toward meeting the minimum wage obligation. Every employee must be paid at least the full hourly wage set by state or local laws, regardless of additional earnings from tips. This approach ensures all workers earn a stable income without relying on gratuities to meet basic wage standards.

2025 Minnesota Statewide Wage Rates

Minnesota's statewide minimum wage increased to $11.13 per hour on January 1, 2025. This legally required rate applies to all hours worked, whether employees are paid hourly, salaried, or by commission. Full-time and part-time employees must both receive at least the state minimum wage for every hour they work.

For workers under the age of 20, Minnesota allows a 90-day training wage of $9.08 per hour. This reduced pay rate is strictly limited to the first 90 consecutive days of employment. Once the training period ends, employers must pay the standard $11.13 per hour rate, and accurate records of the training period are necessary to avoid compliance issues.

Minnesota law does not permit employers to offset wages with tips. Even for tipped employees, like servers or bartenders, the full $11.13 per hour must be paid directly by the employer. Any tips earned by the employee are additional income, ensuring a consistent and reliable base wage for all workers.

Large Versus Small Employers

Minnesota distinguishes large employers from small employers based on gross annual revenue. To determine employer size:

  1. Add up the gross revenue from the most recent four quarters.

  2. Exclude separately listed excise taxes from the total.

  3. If the final number exceeds $500,000, the business qualifies as a large employer.

Regardless of size, every employer in Minnesota is responsible for meeting the statewide minimum wage requirements. Businesses operating in Minneapolis or St. Paul must also adhere to local wage ordinances if those rates exceed the state's minimum.

Comparing Local Ordinances: Saint Paul and Minneapolis

Saint Paul and Minneapolis have implemented unique minimum wage requirements that go beyond Minnesota's statewide rates. Both cities continue to refine their wage structures, creating distinct rules for employers based on size and location. Businesses operating in either city need to stay informed and adjust payroll practices accordingly.

Saint Paul Minimum Wage Rates

In Saint Paul, Macro and Large businesses—those with more than 100 employees—must pay a minimum wage of $15.97 per hour starting January 1, 2025. Smaller employers follow a tiered schedule for wage increases:

  • Beginning July 1, 2025, Small businesses must pay at least $15.00 per hour.

  • Micro businesses, defined as those with 5 or fewer employees, will increase their minimum wage to $13.25 per hour on the same date.

Saint Paul's phased approach allows smaller employers more time to reach the $15.00 hourly threshold, ensuring that businesses of varying sizes can adapt to the changes. Employers should track employee counts carefully to determine the correct wage category and adjust payroll systems to meet compliance deadlines.

Minneapolis Minimum Wage

The Minneapolis ordinance sets a more uniform standard. As of January 1, 2025, every employer within city limits must pay a minimum wage of $15.97 per hour, regardless of business size. This flat rate eliminates the need for tiered adjustments, simplifying the process for employers.

The Minneapolis ordinance applies to any employee working at least two hours in a week within the city. This includes cases where the employer operates outside Minneapolis but assigns work within the city's boundaries. Employers must document time worked in Minneapolis to ensure compliance with wage requirements and avoid penalties.

Both cities require employers to maintain detailed wage and hour records to demonstrate compliance. Tracking employee hours worked within city limits and ensuring accurate pay rates are critical to meeting legal standards and avoiding enforcement actions.

Exemptions and Special Wages

Minnesota's minimum wage laws include specific provisions for certain workers, creating exceptions to the standard hourly rates. These rules apply based on employment type, age, and work authorization. Understanding how these exemptions work ensures businesses stay compliant while paying employees fairly.

Wage Provisions for Specific Worker Groups

Some categories of employees are subject to different wage requirements in Minnesota:

  • Agricultural Workers: Employees working on small family farms or performing seasonal agricultural tasks may not be covered by the standard state minimum wage. Employers must verify whether the work qualifies under these exemptions.

  • Special Certificate Holders: Employers can apply for state-approved certificates to pay employees with disabilities below the state minimum wage. These certificates are granted for specific roles and must comply with strict state guidelines.

Reduced Training Wage for Young Workers

Employees under 20 years old can be paid a reduced training wage of $9.08 per hour for their first 90 days of employment. This reduced rate applies only within the initial training period, after which the hourly wage must increase to at least $11.13 or a higher local minimum if applicable. Employers need to track the start and end dates of the 90-day period to ensure accurate payroll records.

Special Rates for J-1 Visa Holders in Lodging

J-1 visa holders working in hotels, motels, and similar lodging facilities qualify for a reduced wage rate under specific conditions. This applies to roles such as housekeeping or guest services and requires clear documentation of job duties. Employers hiring J-1 workers must confirm eligibility and adhere to state wage guidelines.

Prohibition of Tip Credits

Minnesota law prohibits tip credits, meaning employers cannot count tips toward meeting hourly wage obligations. Workers in tipped positions, such as servers and bartenders, must receive the full minimum wage directly from employers. Tips earned are treated as additional income, ensuring employees have a stable base wage regardless of gratuities.

These exemptions and special wage rules highlight the importance of accurate classifications and payroll practices. Employers should regularly review employee roles and wage rates to maintain compliance with Minnesota's labor laws.

Overtime, Recordkeeping, and Posters

Minnesota employers must navigate specific overtime laws that differ from federal regulations. State law requires employers to pay employees time-and-a-half for any hours worked beyond 48 in a single workweek. In contrast, federal laws enforce overtime pay after 40 hours per week. When both laws apply, the lower threshold of 40 hours must be used. Knowing which rule governs each employee's situation is key to staying compliant and avoiding payroll mistakes.

Keeping accurate and thorough records is a non-negotiable requirement under Minnesota's wage laws. Employers are responsible for tracking and maintaining detailed information about employee hours, wages, and work locations. For businesses operating in cities like Minneapolis or St. Paul, where local ordinances may set higher wage rates, precise documentation ensures employees are paid correctly. Required records include:

  • Employee details: Full legal name, current address, and job title.

  • Work activity: Daily and weekly hours worked, including any overtime.

  • Wage breakdown: Hourly pay rate, total wages paid, and itemized deductions.

  • Payment dates: Payroll periods and corresponding payment dates.

Employers must retain these records for at least three years. Gaps or inaccuracies in documentation can trigger audits, fines, or legal disputes.

Posting legally required notices is another obligation under Minnesota law. Employers must display updated minimum wage notices prominently in areas where employees can easily view them, such as break rooms or near time clocks. The notice must clearly outline the current state or local minimum wage rates, ensuring employees are informed of their rights. Updates are required whenever wage rates change, so employers should review postings regularly to remain compliant.

Penalties for Non-Compliance

Non-compliance with Minnesota's overtime, recordkeeping, or posting requirements can lead to significant penalties. Employers may face fines, back payment of wages, or lawsuits if violations occur. Legal action can be initiated by employees or government agencies, and penalties often include additional damages beyond owed wages.

Employers can reduce risks by seeking guidance from payroll or HR professionals. These experts can review policies, audit records, and provide advice on meeting state and local wage requirements. Taking proactive steps to maintain compliance protects businesses from costly errors and legal challenges.

Best Practices for Employers

Managing Minnesota's minimum wage laws requires careful attention and consistent action. Employers can stay compliant and avoid payroll errors by focusing on a few specific practices that address wage calculations, payroll updates, and employee communication.

Review Gross Revenue Calculations Regularly

Gross revenue determines whether a business qualifies as a large or small employer under Minnesota law, which directly impacts wage requirements. Conducting an annual review of gross revenue ensures accurate classification.

  • Use the last four quarters of gross revenue to calculate your total.

  • Exclude excise taxes that are listed separately in the records.

  • Document calculations clearly to maintain accurate and accessible records for future reference.

Regular reviews help employers stay compliant with wage tiers and avoid penalties from misclassification.

Update Payroll Systems for Wage Changes

Payroll systems must reflect current wage rates to ensure employees are paid correctly for every hour worked. Outdated systems can lead to errors, non-compliance, and dissatisfaction among staff. Employers should update payroll systems to:

  • Incorporate statewide and local wage rates, including city-specific ordinances.

  • Adjust training wages for employees under the age of 20 after the 90-day period.

  • Account for employees working in multiple jurisdictions, ensuring accurate pay based on location-specific rates.

HR or payroll platforms with automated rate updates can simplify compliance. These systems can also track hours, manage deductions, and ensure consistency across different wage categories.

Communicate Wage Adjustments Clearly

Clear communication about wage changes builds trust and reduces confusion. Employees should always understand how wage adjustments affect their pay. Employers can create transparency by:

  • Informing employees about upcoming wage changes well in advance.

  • Explaining how wage rates are determined, particularly for roles with different classifications or local requirements.

  • Sharing updates through multiple channels, such as emails, team meetings, and posted notices in common areas.

Proactive communication demonstrates accountability and ensures employees feel informed about adjustments to their pay.

Navigating Minnesota's complex wage laws requires careful attention and expert support. We're here to help you stay compliant, avoid costly errors, and focus on what matters most—your people. Book a demo today to see how our platform simplifies HR, payroll, and benefits management, so you can grow your business with confidence.

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