Missouri Minimum Wage Laws: What Employers Need to Know

Missouri’s minimum wage laws have gone through significant updates in recent years, and staying informed is key for employers managing payroll and compliance. The latest adjustments impact a wide range of businesses, from retail to service industries, and carry important implications for labor costs and employee paychecks.

Starting in 2025, the minimum wage rate brings new thresholds for both hourly and tipped employees. Additional changes are already on the horizon, which means preparation is not just helpful—it's necessary. Employers should understand how these rates affect their workforce and ensure payroll systems are updated accordingly.

The evolution of Missouri's minimum wage reflects voter-driven decisions and legislative action. These changes highlight the importance of understanding historical trends and upcoming increases to maintain compliance and support fair pay practices.

Missouri Minimum Wage Overview

Missouri's minimum wage for 2025 is set at $13.75 per hour and took effect on January 1. This rate applies to private employers operating within the state. Proposition A, approved by voters in November 2024, established the increase and outlined specific rules for tipped employees. Employers must pay tipped workers at least $6.875 per hour, ensuring total compensation (including tips) equals or exceeds $13.75 per hour.

The state's next increase is scheduled for January 1, 2026, when the minimum wage will rise to $15.00 per hour. Beginning in 2027, annual adjustments will tie the rate to the Consumer Price Index to account for inflation. Employers should prepare for the 2026 increase by reviewing payroll budgets and updating employee wage structures to meet the upcoming requirement.

Missouri's minimum wage has steadily risen over the last decade, starting at $7.65 in 2015 and reaching $12.30 in 2024. Voter-approved Proposition B in 2018 set a gradual increase schedule through 2023, with annual adjustments tied to inflation. Proposition A in 2024 built on that framework, introducing higher rates for 2025 and 2026. These increases reflect a clear trend toward higher wages and align with broader efforts to improve compensation standards for workers statewide.

Employers Who Must Comply

Missouri's minimum wage laws apply to most private businesses, but not all employers are held to the same standards. Specific guidelines determine which organizations must adhere to the state-mandated $13.75 hourly rate in 2025. Knowing these requirements is key to avoiding payroll errors and compliance issues.

Annual Gross Income Threshold

Private employers with an annual gross income of $500,000 or more are required to follow Missouri's minimum wage laws. This threshold is calculated based on total gross income, not profits or net revenue. Businesses below this amount are exempt and may set wages independently.

For employers near the $500,000 mark, accurate financial reporting is non-negotiable. Misjudging annual income could lead to underpayment of wages and expose the business to penalties.

Federal and State Law Overlap

Many employers in Missouri must also comply with the federal Fair Labor Standards Act (FLSA). When state and federal minimum wage rates differ, the higher rate applies. In 2025, Missouri's $13.75 per hour exceeds the federal $7.25 rate, so most employers in the state must meet the higher standard.

Staying compliant means addressing common mistakes that arise when federal and state laws intersect:

• Employee misclassification: Non-exempt employees must receive the state minimum wage, even if classified incorrectly.

• Outdated payroll systems: Payroll errors often occur when new wage rates are not updated promptly after adjustments.

• Tipped employee compensation: Employers must ensure tipped workers earn at least $13.75 per hour, combining base pay and tips.

Understanding both state thresholds and federal rules ensures businesses pay employees correctly and avoid costly compliance risks.

Tipped Employees

Missouri's minimum wage laws set clear rules for compensating tipped employees. In 2025, employers must pay a minimum cash wage of $6.875 per hour, which is exactly half of the state's hourly minimum wage of $13.75. However, paying this reduced base rate comes with a non-negotiable condition: tips and the base wage combined must equal or exceed $13.75 per hour for every hour worked.

Employers are responsible for ensuring tipped employees receive at least the full minimum wage. If an employee's tips fall short of meeting the threshold, the employer must directly make up the difference. This requirement means employers need to be precise and diligent when tracking tip credits and wages.

Accurate recordkeeping is not optional. Employers must document tips reported by employees for every pay period. This includes maintaining detailed logs of total tips earned, reported amounts, and how those tips contribute to meeting the hourly minimum wage. Clear and consistent records protect both the employer and employee, especially during audits or disputes.

Employers should also educate employees on the importance of reporting tips accurately. Misreporting or failing to report tips can lead to paycheck discrepancies and compliance issues. Providing clear guidance on how tips are calculated and tracked helps avoid confusion and ensures everyone is on the same page.

Regularly reviewing payroll and tip records ensures no gaps in compensation. Adjustments should be made immediately if tips vary significantly, ensuring every employee's total pay meets the legal requirement. Staying proactive keeps payroll compliant and employees paid fairly.

Exemptions

Missouri's minimum wage laws do not apply universally to every employer. Certain businesses and job categories are exempt from the $13.75 per hour requirement, often due to revenue thresholds or the nature of the work performed. Knowing where exemptions apply ensures businesses remain compliant without overextending payroll obligations.

Retail or Service Businesses Below $500,000

Retail and service businesses generating less than $500,000 in annual gross income are not required to follow Missouri's minimum wage laws. Gross revenue, not profit, determines eligibility under this exemption. For employers close to the $500,000 threshold, accurate tracking of income is essential. Crossing the threshold means becoming subject to the state's wage regulations.

Small businesses should also be aware of year-to-year fluctuations. A single period of higher-than-expected revenue could result in compliance requirements. Monitoring income consistently helps avoid unintentional violations.

Federal vs. State Exemptions

Employers exempt under Missouri's minimum wage laws may still need to comply with federal wage standards under the FLSA. Federal exemptions depend on specific factors, including whether the business engages in interstate commerce or employs workers in federally governed roles.

For instance, a local business handling goods shipped across state lines must meet federal wage requirements, even if Missouri's exemptions apply. Employers not involved in interstate activities may remain exempt, but assumptions can lead to compliance issues. Carefully evaluating both state and federal standards is the best way to determine obligations.

Special Categories

Certain types of employees are also exempt from Missouri's minimum wage requirements:

• Full-time students: Students employed in retail, agriculture, or service jobs may qualify for reduced wages if the employer has obtained proper authorization.

• Agricultural workers: Some roles in farming are exempt, particularly for small or family-run farms. Seasonal agricultural employees may also qualify under specific conditions.

• Casual laborers: Workers hired for occasional tasks, such as babysitting or yard work, are not covered by state wage laws.

Each exemption comes with strict criteria. Misclassifying employees or assuming an exemption applies without verification can result in wage disputes or penalties. Employers should review exemptions carefully and consult with compliance professionals if needed.

Paid Leave Requirements

Missouri's Proposition A introduces paid leave requirements starting May 1, 2025. These regulations set clear guidelines for how employees earn and use paid leave, as well as how employers must manage and document the process. Businesses need to align their policies with these changes to remain compliant.

Who is Covered

Proposition A applies differently depending on the size of the business:

• Employers with 15 or more employees: Must provide paid leave to all eligible workers without exceptions.

• Employers with fewer than 15 employees: Exempt from the mandate but encouraged to follow the guidelines to stay competitive in hiring and retention.

Both full-time and part-time employees are eligible as long as they meet the criteria for accruing leave hours.

Accrual Rate, Usage Limits, and Carryover

Employees earn one hour of paid leave for every 30 hours worked. This accrual applies consistently across all eligible employers, regardless of industry or role.

Employers may limit the use of paid leave to 40 hours per year. If an employee accrues more than 40 hours, the unused balance must carry over into the next calendar year. However, businesses are not required to allow employees to use more than 40 hours annually, even with carryover.

Employers can simplify tracking by granting the full 40 hours at the start of the year instead of using the accrual method. In this case, carryover rules do not apply, streamlining the process further.

Documentation Requirements

Employers may request documentation to confirm an employee's use of leave for qualifying reasons. Acceptable documents include medical certificates, court orders, or other official records directly tied to the reason for leave. Documentation policies must be reasonable and clearly communicated to employees.

Providing examples of acceptable records in employee handbooks or policy documents can reduce confusion and ensure compliance.

Posting Requirements

Employers must display a notice outlining the paid leave rules in a visible location within the workplace, such as a breakroom or near time clocks. The notice should summarize key details like accrual rates, usage limits, and employee rights under the law.

Including paid leave policies in employee handbooks or distributing them electronically ensures all workers have access to the information. Failing to provide clear, accessible notices could lead to compliance issues or employee disputes.

Posting and Notification

Employers in Missouri must follow clear guidelines for posting and notifying employees about minimum wage laws and related workplace policies. These rules are straightforward but require attention to detail to maintain compliance.

Missouri Department of Labor's Minimum Wage Summary Posters

The Missouri Department of Labor provides official summary posters outlining the current minimum wage rate, employee rights, and compliance requirements. These posters are mandatory for any employer subject to Missouri's minimum wage laws.

Employers can download the most recent posters directly from the Missouri Department of Labor’s website or request physical copies. Using outdated versions is not acceptable. Always confirm the poster reflects the current wage rate—$13.75 per hour for 2025—to avoid compliance issues.

Requirements for Conspicuous Placement at the Workplace

Missouri law requires employers to display minimum wage posters in locations where employees can easily view and read them during their workday. Approved areas include:

• Breakrooms: Common spaces where employees gather during shifts.

• Time clock stations: Locations employees visit at the start or end of their shifts.

• Main entrances or exits: High-traffic areas seen by all employees.

The posters must remain unobstructed. Do not place them behind doors, furniture, or equipment. Regularly inspect the workplace to ensure the display remains visible and properly positioned.

Advanced Notice to Employees Regarding Accrued Leave or Wage Adjustments

Employers are also responsible for notifying employees about any changes to wages or accrued leave policies. For wage adjustments, such as the 2025 increase to $13.75 per hour, communicate updates clearly before the new rate takes effect. This ensures employees understand the impact on their pay.

For paid leave, inform employees about:

• Accrued leave balances: Regularly provide updates on earned leave.

• Usage rules: Clearly explain procedures for requesting and using leave.

Written notices, updates through payroll systems, or handbook revisions work well for sharing updates. Ensure all employees, including those without regular computer access, receive the information. Proactive and transparent communication minimizes confusion and keeps the workplace running smoothly.

Recordkeeping

Recordkeeping plays a foundational role in adhering to Missouri's minimum wage laws. Employers are required to maintain detailed and accurate documentation for hours worked, tips received, and leave balances. Organized and thorough records ensure compliance, minimize disputes, and protect your business from potential penalties.

Hours Worked

Track every hour an employee spends on the clock, including overtime and any paid breaks. Use timekeeping methods that capture exact start and end times without rounding or estimating. Employees working beyond their scheduled hours should have this reflected clearly in the records. Regularly review time entries for accuracy to catch errors before payroll is processed.

Tips

For tipped employees, maintain clear documentation of all reported tips and how they factor into meeting the $13.75-per-hour minimum wage requirement. Employers need to record:

• Employee-reported tips: Ensure tips are logged daily or per shift for precision.

• Tip credits applied: Document how much of the employee's compensation relies on tips and verify it meets wage requirements.

• Additional employer compensation: Include any amounts paid to make up the difference when tips fall short of the minimum wage.

Accurate tip tracking not only ensures compliance but also builds trust with employees regarding their pay.

Leave Taken

For paid leave, employers must monitor accrual, usage, and carryover balances. Record each hour of leave earned under Proposition A, which grants one hour of leave for every 30 hours worked. Include specifics such as:

• Dates and hours of leave taken: Document every instance an employee uses paid leave.

• Supporting documentation: Keep copies of any medical notes, court orders, or other required proof for leave requests.

• Unused leave balances: Track what remains at the end of the year, especially for carryover purposes.

Clear leave records simplify compliance and reduce the likelihood of disputes over balances or eligibility.

Retention Timelines

Employers must retain payroll-related records, including timecards, tip logs, and leave documentation, for at least three years. These records should be easily accessible during audits or if an employee raises a claim. Federal requirements may necessitate longer retention for specific documents, such as wage and hour data under the FLSA. Review both state and federal guidelines to ensure compliance with retention obligations.

Digital vs. Physical Record Storage

Choose between digital or physical storage methods based on your business needs, but always prioritize security and accessibility.

• Digital storage: Offers quick retrieval and secure backup options. Use platforms with encryption to safeguard against data breaches.

• Physical storage: Requires organized filing systems in a secure location. Protect paper records from damage or loss with fireproof cabinets or similar safeguards.

A combination of both methods works well for many businesses. Whichever approach you use, ensure records are well-labeled, regularly updated, and readily available when needed.

Navigating Missouri's evolving minimum wage landscape requires diligence and a proactive approach. By staying informed, updating payroll practices, and leveraging the right tools, you can ensure compliance and support fair compensation for your employees. If you're looking for a partner to streamline your HR processes and maintain compliance, book a demo with us today—we're here to help you thrive.