Complete Guide to Minnesota Overtime Laws: Rules, Rights & Requirements

Understanding overtime laws in Minnesota is key to staying compliant and paying employees fairly. Employers face unique requirements under both state and federal regulations, which can sometimes overlap. Knowing the differences is the first step to avoiding payroll errors and penalties.

Minnesota stands out with its own overtime rules, which differ from the federal Fair Labor Standards Act (FLSA). Employers need to assess which law applies to their workforce to ensure accuracy in overtime calculations. Getting it wrong could mean underpaying employees or facing compliance issues.

Let's break down how Minnesota's overtime regulations compare to federal requirements, who must follow them, and how businesses can stay on the right track.

Minnesota's Overtime Law vs. Federal Requirements

The federal Fair Labor Standards Act requires overtime after 40 hours in a single workweek. This applies to employers engaged in interstate commerce, those with annual gross sales exceeding $500,000, and specific industries such as healthcare, education, and government. Employees covered by the FLSA must receive overtime pay at 1.5 times their regular hourly rate for any hours worked over 40.

Minnesota’s overtime law applies to employees not covered by the FLSA and sets the threshold at 48 hours in a workweek. Like the federal rule, Minnesota mandates a pay rate of 1.5 times the employee's regular hourly rate for overtime. However, Minnesota law excludes hours like vacation, sick leave, and holiday pay from the calculation. Only physical hours worked count toward the 48-hour threshold.

Employers must comply with the stricter requirement between the two laws. For most businesses, this means following federal law for FLSA-covered employees and using Minnesota's 48-hour threshold for others. Missteps in applying the correct standard can result in penalties and back pay, making it critical to evaluate workforce coverage carefully.

Exemptions and Non-Exempt Employees in Minnesota

Not all employees in Minnesota qualify for overtime pay. Some roles are classified as exempt, meaning employers are not obligated to pay overtime, even if those employees work more than the standard threshold. Knowing who is exempt versus non-exempt ensures accurate payroll practices and compliance with applicable laws.

Common Exemptions

Executive, administrative, and professional employees often qualify as exempt. To meet exemption requirements, employees must:

• Receive a salary that meets or exceeds federal or state minimum thresholds.

• Perform qualifying duties tied to their role. For example, executives must oversee teams or departments, administrative employees must handle decision-making tasks linked to business operations, and professionals like engineers or accountants must apply advanced knowledge in their work.

If an employee doesn't meet both the salary and duty requirements, they cannot be classified as exempt.

Industry-Specific Exemptions

Certain industries and job types also include specific exemptions. Agricultural workers are commonly exempt if their work involves smaller employers or meets other statutory criteria. Outside sales employees, who primarily work offsite and focus on generating sales, also fall under exemptions.

Other exempt categories include seasonal employees or workers in transportation roles, depending on job duties and industry standards. Each exemption has precise conditions that must be satisfied, often tied to the nature of the work performed.

Determining Exemption Status

Classifying employees incorrectly can lead to compliance issues and financial penalties. Employers should start with a detailed review of the employee's responsibilities. Job titles alone are not enough; focus on the actual tasks performed.

Evaluate salary levels to confirm they meet exemption thresholds. For industries like agriculture or transportation, pay attention to statutory requirements to ensure classifications align with either state or federal law. Accurate classification avoids errors and ensures employees are compensated properly.

Calculating Overtime Pay

Understanding how to calculate overtime pay correctly ensures employees are compensated fairly and keeps payroll compliant with Minnesota overtime laws. The process requires careful attention to regular pay rates, applicable thresholds, and any additional considerations like fringe benefits for specific workers. Here's a straightforward breakdown.

Regular Rate of Pay

The regular rate of pay is the starting point for calculating overtime. Begin by adding up all compensation earned in a workweek, including hourly wages, non-discretionary bonuses, and commissions. Exclude payments for vacation, holiday hours, or sick leave. Divide the total weekly earnings by the number of hours actually worked. This determines the regular hourly pay rate.

For example, if an employee works 45 hours during the week and earns $900 in total compensation, their regular rate would be $20 per hour ($900 ÷ 45 hours). This serves as the foundation for overtime calculations.

Overtime Rate

The overtime rate is 1.5 times the regular hourly rate. Minnesota law applies overtime after 48 hours in a workweek for employees not covered by the FLSA. For FLSA-covered employees, overtime starts after 40 hours in a workweek. Employers must determine which threshold applies based on the employee's coverage under either law.

To illustrate, an employee earning $20 per hour who works 50 hours in a week would have an overtime rate of $30 per hour. If FLSA rules apply, they would receive 40 hours at their regular rate and 10 hours at the overtime rate. If Minnesota's 48-hour rule applies, only 2 hours would be paid at the overtime rate.

Fringe Benefits and Prevailing Wage

Some workers, particularly those on government contracts or prevailing wage projects, require additional considerations when calculating overtime. Fringe benefits, such as health insurance or retirement contributions, must be added to the base hourly rate for these employees. Overtime calculations must include both the base pay and the fringe benefit value.

For instance, a construction worker on a prevailing wage project earning $30 per hour with a $10 hourly fringe benefit would have an adjusted base rate of $40 per hour. Their overtime rate would be $60 per hour, ensuring that both their base pay and fringe benefits are accounted for. This guarantees compliance with prevailing wage requirements.

Special Rules for Tipped and Salaried Employees

Minnesota applies clear and specific rules for overtime pay when it comes to tipped and salaried employees. These rules ensure workers are compensated fairly, regardless of how their earnings are structured.

Tipped Workers

In Minnesota, tipped employees must receive the full minimum wage as their base pay. Employers cannot use a tip credit to offset wages, meaning tips cannot count toward meeting minimum wage requirements. This policy differs from federal rules, which allow tip credits under certain conditions.

For tipped employees working more than the applicable overtime threshold, overtime pay must reflect at least the full minimum wage as the regular rate. Employers are required to calculate overtime at 1.5 times the regular hourly wage, excluding tips from the equation.

For instance, if a restaurant employee earns $12 per hour as their base pay and works 50 hours in a week, the first 40 hours are paid at $12 per hour. The remaining 10 hours must be paid at an overtime rate of $18 per hour, regardless of how much the employee earns in tips. Employers must ensure tipped employees receive accurate overtime pay based on the state's wage laws.

Salaried Employees

Salaried employees are sometimes eligible for overtime, depending on their role and how their salary is structured. Exemption from overtime is not automatic and must meet strict criteria under both Minnesota and federal regulations. Employers must evaluate whether the employee's duties, salary basis, and salary level align with exemption standards.

Key considerations for determining exemption include:

• Job Duties: Review whether the employee's responsibilities fall under recognized exemption categories, such as executive or administrative roles.

• Salary Basis: Confirm the employee is paid a fixed salary exceeding the required threshold.

• Actual Work: Assess whether the tasks performed align with exemption criteria, not just the job title.

Non-exempt salaried employees are entitled to overtime pay. To calculate overtime, the annual salary is first converted into an hourly rate. Divide the annual salary by 52 weeks, then by the standard 40-hour workweek. Employers must apply 1.5 times this rate to hours worked beyond the applicable threshold.

For example, a salaried employee earning $50,000 annually would have a weekly pay of $961.54. If they worked 45 hours in one week, their regular hourly rate would be $24.04. The overtime rate for the additional 5 hours would be $36.06 per hour. Employers must calculate this accurately to comply with Minnesota's wage requirements.

Mandatory Overtime, Maximum Hours, and Break Requirements

Employers in Minnesota have specific obligations when it comes to overtime, work hours, and employee breaks. These rules shape how you manage schedules, compensate employees, and maintain compliance. Here's what you need to know to stay on track.

Mandatory Overtime

Minnesota employers can legally require employees to work beyond their scheduled hours. Refusing overtime may lead to disciplinary action unless a union contract or written agreement protects the employee.

When employees work overtime, the correct pay rate must apply. For workers covered by the FLSA, overtime kicks in after 40 hours in a single workweek. For employees subject only to Minnesota law, overtime pay begins after 48 hours in a week. Mandatory overtime policies should be clear and consistently enforced to avoid payroll disputes or compliance risks.

Daily Hour Limits

Minnesota does not limit the number of hours an employee can work in a day. Still, employers must monitor total weekly hours to comply with overtime laws. For example, exceeding the 40-hour or 48-hour thresholds triggers overtime pay obligations based on the applicable law.

Certain industries, like healthcare or transportation, may impose additional restrictions on daily or weekly hours. These are often tied to safety standards or collective bargaining agreements. Employers in these fields should verify compliance with industry-specific regulations to avoid penalties.

Rest and Meal Breaks

Minnesota law requires employers to provide specific rest and meal periods to employees. These breaks ensure workers have time to meet basic needs during their shifts.

• Rest Breaks: Employees must receive a reasonable, paid restroom break every four hours worked. The timing and length should allow enough time for the employee to use the restroom without interruption.

• Meal Breaks: Employees working eight or more hours must be offered a 30-minute meal break. For the break to remain unpaid, the employee must be completely free from work duties. If they are required to remain on call or perform any tasks, you must pay for the break.

Clear policies around break scheduling and compensation help avoid misunderstandings and wage complaints. Keeping accurate records of rest and meal periods ensures compliance and provides clarity in case of disputes.

Recordkeeping and Transparency

Clear and accurate recordkeeping is a cornerstone of compliance with overtime laws in Minnesota. Employers must document every detail of hours worked and pay issued to ensure both compliance and trust in the workplace. Proper processes prevent payroll errors and protect employers during audits or disputes.

Accurate Timekeeping

Employers must track all hours employees work, including time spent working remotely, off-site, or while on-call. If an employee performs any work, even outside regular hours or in non-traditional locations, employers must record it. Daily records should capture all start and end times, break periods, and any overtime hours worked beyond the legal thresholds.

Time-tracking systems should calculate hours consistently and allow for adjustments when errors occur. Missing clock-ins or misreported hours need immediate review and correction, with clear documentation of the changes. Employers must treat timekeeping as a precise, ongoing responsibility.

Pay Statements

Minnesota law requires employers to provide detailed pay statements with every paycheck. These statements must give employees a clear breakdown of how their wages were calculated.

Pay statements must include:

• Total hours worked for the pay period.

• Regular and overtime hourly rates.

• Gross earnings before deductions.

• Itemized deductions, such as taxes, benefits, or garnishments.

• Net pay after deductions.

For employees working overtime, the pay statement must also show the number of overtime hours worked and the exact overtime rate used. Leaving out this information can lead to misunderstandings and wage disputes.

Posting Requirements

Employers need to post specific notices about employee rights in visible areas. Workplaces must display information on minimum wage rates, overtime rules, and wage theft protections.

For remote teams, employers should provide digital access to mandatory postings through employee portals or shared platforms. Making these notices accessible ensures employees understand their rights and eliminates compliance risks.

Accurate records and transparent communication lay the groundwork for fair and compliant payroll practices in the workplace.

Penalties, Enforcement, and Wage Theft Implications

Minnesota enforces overtime laws with precision, holding employers accountable for compliance. Employers who fail to meet requirements may face financial consequences and legal action, making accurate payroll practices non-negotiable.

State Enforcement

The Minnesota Department of Labor and Industry (DLI) actively enforces overtime regulations by investigating complaints and conducting audits. When violations occur, DLI can order employers to pay back wages for unpaid overtime, along with additional damages such as interest or liquidated amounts.

Penalties for repeated or willful violations are more severe. Civil monetary fines may be assessed, and failing to address compliance issues quickly can increase liabilities. Employers must maintain accurate timekeeping and payroll records to avoid triggering state investigations.

Wage Theft Ordinances

Saint Paul’s wage theft ordinance, effective January 1, 2025, adds stricter protections for workers within the city. Employers must pay all earned wages, including overtime, by the scheduled payday. Late or incomplete payments are violations under the ordinance.

Consequences for wage theft include:

• Reimbursement of unpaid wages owed to employees.

• Administrative fines issued by the city.

• Criminal charges in cases involving deliberate non-payment.

The ordinance also prohibits any form of retaliation against employees who report wage theft. Employers operating in Saint Paul must ensure payroll processes meet local requirements to avoid penalties.

Statute of Limitations

Employees have a limited window to file claims for unpaid overtime. Minnesota law allows two years for most wage claims, but the period extends to three years if the violation is deemed willful.

Employers should keep time and payroll records for at least three years to defend against potential claims. Missing documentation often tilts rulings in favor of employees, leading to additional financial liabilities. Accurate recordkeeping is the best way to avoid disputes.

Navigating overtime laws in Minnesota requires a keen eye for detail and a commitment to accurate payroll practices. At GoCo, we understand the challenges employers face in maintaining compliance while managing their workforce. Book a demo with us today to learn how our HR platform can simplify overtime calculations, streamline recordkeeping, and keep your business on the right side of Minnesota's wage and hour regulations.