Minnesota Wage Laws Explained
Table of contents:
If you believe you’ve been denied the compensation to which you’re legally entitled, please contact the Lore Law Firm. We represent Minnesota employees who have been the victim of wage theft and subjected to workplace wage and hour violations. We take cases on a contingent fee basis – you pay nothing unless we recover your backpay.
Understanding Minnesota Wage and Overtime Laws
Minnesota state labor laws differ in some respects from the federal Fair Labor Standards Act (FLSA) for issues like minimum wage. However, for the most part, the federal law applies to just about every workplace compensation-related issue in the state.
In May 2019, a new Minnesota Wage Theft Prevention Act was passed to create additional protections for workers, including adding criminal penalties for employers that commit wage theft, which occurs when employers do not pay their workers what is owed them for the work they have performed.
While the current federal minimum wage is $7.25 per hour, Minnesota has set the state minimum wage as follows for 2023:
- LARGE EMPLOYER: $10.59/hour (was $10.33 for 2022; $10.08 for 2021; $10 for 2020) – Any enterprise with annual gross revenues of $500,000 or more
- SMALL EMPLOYER: $8.63/hour (was $8.42 for 2022; $8.21 for 2021; $8.15 for 2020) Any enterprise with annual gross revenues of less than $500,000
- TRAINING RATE: $8.63/hour (was $8.42 for 2022; $8.21 for 2021; $8.15 for 2020) May be paid to employees aged 18 and 19 the first 90 consecutive days of employment
- YOUTH RATE: $8.63/hour (was $8.42 for 2022; $8.21 for 2021; $8.15 for 2020) Paid to employees aged 17 or younger who are not covered under federal law
Minneapolis and Saint Paul have set their own minimum wage rates which are higher than the MN state law. If you work in one of these cities, you should check the specific minimum wage rate for that city.
There are no tip credits against the minimum wage allowed in Minnesota. Employers of wait staff or other tipped employees may not use employee tips to offset the minimum wage. Tipped employees must be paid the minimum wage for all hours worked.
Tip Pools / Tip Sharing
- No employer may require an employee to contribute or share a gratuity received by the employee with the employer or other employees or to contribute any gratuity to a fund or pool.
- • Tips are the sole property of the direct service employee. Employers cannot require employees to share their tips with indirect service employees.
- A direct service employee is one who performs direct service for a customer.
- Indirect service employees include, yet are not limited to, bus people, dishwashers, cooks or hosts.
- When more than one direct service employee provides direct service to a customer in a given situation such as banquets, money presented by customers as a gratuity and divided among the direct service employees is not a violation of Minnesota tip laws.
Minnesota has its own state Fair Labor Standards Act that requires all employers to pay overtime for all hours worked in excess of 48 per workweek, unless the employee is specifically exempt under Minnesota Statutes 177.23, subdivision 7. Unlike federal law, the Minnesota Fair Labor Standards Act requires all employers, regardless of gross annual revenue, to pay overtime according to state law.
Overtime pay must be at least one-and-one-half times the employee’s regular rate of pay. The regular rate of pay is determined by dividing the employee’s total pay in any workweek by the total hours worked in the workweek. An employee’s pay includes credits allowed against the minimum wage for meals and/or lodging.
Overtime is based on actual hours worked in a seven-day workweek, so holiday hours, vacation time and sick leave are not counted.
Both state and federal laws prohibit any agreement to not pay overtime to non-exempt employees. All firms must pay Minnesota’s overtime wage regardless of:
- the firm’s size, location or gross sales;
- the method of compensation (hourly, salary, commission, piece rate or other); or
- designations such as part time, temporary, seasonal or contract
Minnesota state labor laws on overtime pay require employers to pay time and a-half for all overtime hours worked, unless an employee is properly classified as exempt. Some employees are exempt from Minnesota’s overtime wages, including:
- executive, administrative or professional employees who meet the salary and duty requirements under the applicable rules;
- an outside salesperson;
- a salesperson, partsperson or mechanic for a vehicle dealership who sells or services automobiles, trailers, trucks or farm implements, and is paid on a commission or incentive basis, and is employed by a dealer selling to the consumer; and
- an agricultural worker paid a salary of at least $724.71 a week for large employers grossing $500,000 a year or more, or $590.94 a week for small employers grossing less than $500,000 a year.
When greater worker protections or benefits are provided under federal law, the federal wage and hour law (FLSA) applies and requires overtime pay to covered, nonexempt employees under that law. An employer that either requires or permits an employee to work overtime is generally required to pay that employee overtime for those hours. Under federal law, Overtime is considered any hours worked over 40 hours per workweek, and the pay for overtime hours is at least one and one-half times an employee’s regular pay rate.
An employer doesn’t violate overtime laws by requiring employees to work overtime, (ie “mandatory overtime”), as long as they are properly compensated at the premium rate required by law.
When Overtime Doesn’t Apply
Most workers in Minnesota are entitled to overtime pay when they work more than 40 hours per week. In certain circumstances, however, there are exceptions.
Employees engaged in executive, administrative, or professional capacities (and paid at least $455 per week on a salary basis) are exempt from the overtime requirement. Note that new minimum salary requirements for these overtime exemptions take effect in January 2020 and increase the minimum salary threshold to $684 per week (or $35,568 annually). This change in federal law will also apply to most workers in Minnesota when making the determination of whether they are classified as exempt or non-exempt from the overtime pay laws.
Misclassification of Independent Contractors
While there are situations in which workers are legitimately running their own business and properly treated as independent contractors who are not entitled to receive overtime, employers are not allowed to mischaracterize employee roles to avoid paying overtime compensation.
Merely labeling a worker as an independent contractor, or even entering into a written agreement, is not enough to avoid the labor laws on overtime pay. While there is no single definition of “independent contractor” in Minnesota labor laws. There are several factors to be considered in determining if a worker in Minnesota is an employee or independent contractor (a/k/a 1099 employee)
If properly classified as an independent contractor under Minnesota law, workers are typically eligible for only the specific compensation bargained for in a contract.
Determining The Hours Actually Worked
Except for rest periods of 20 minutes or more, all hours the employee is required to be on the premises of the employer or performing work-related tasks are counted for overtime purposes. Employees working more than one job under the control of the same employer must have all hours worked counted toward overtime.
Holiday hours, vacation time or sick leave are not counted in figuring overtime hours. Overtime is computed on a seven-day workweek basis regardless of the length of the pay period. Hours worked may not be averaged over the pay period or used to offset shorter workweeks. The workweek can be any consecutive seven-day period that the employer chooses, but may not vary once chosen.
Employers are required to provide all employees with a written statement of earnings. Earnings statements (or paystubs, check stubs) are important payroll records for employers and employees that document information about wages paid, hours worked, deductions made and benefits accrued by an employee.
State law requires earning statements be provided to employees in writing or by electronic means at the end of each pay period and must include:
- Name of the employee.
- Total hours worked by the employee in the pay period.
- Rate or rates of pay, including whether the employee is paid by the hour, shift, day, week, salary, piece, commission or other method.
- Allowances claimed for meals and lodging under Minnesota Rules 5200.
- Gross pay earned by the employee in the pay period.
- Net pay after all deductions are made.
- List of deductions (taxes, insurance, union dues, other) made from the employee’s pay.
- Date pay period ended.
- Employer’s legal and operating name.
- Employer’s telephone number.
- Physical address of main office or principal place of business and a mailing address, if different.
Employee Notice Law
Minnesota labor law requires employers to provide each employee with a written notice detailing important terms of employment, including how much the employee will earn, when they will be paid and who owns the company they will be working for. The notice must be issued at the start of employment. Employers are also required to provide employees in writing any changes to the information in the notice before the date the changes take
effect. For those employees hired before the notice requirement was established (before July 1, 2019), a notice should be issued the first time any of the terms covered by the notice change, such as a pay-rate change. Employers are required to keep a signed copy of the notice for each employee.
Information required in the employee notice:
- Employee’s employment status (whether the employee is exempt from minimum wage, overtime and other state wage and hour laws, and on what basis;
- Number of days in the employee’s pay period and the regularly scheduled payday.
- Date the employee will receive the first payment of wages.
- Employee’s rate or rates of pay, including whether the employee is paid by the hour, shift day, week, salary, piece, commission or other method, and when and how these rates apply.
- Allowances that may be claimed for meals and lodging (see Minnesota Rules 5200).
- Provision of paid vacation, sick time or other paid time off (PTO), how the paid time off will accrue and terms for its use.
- List of deductions that may be made from the employee’s pay.
- Employer’s legal name and the operating name, if different.
- Address of employer’s main office or principal place of business and a mailing address, if different.
- Employer’s telephone number.
- Employee’s signature acknowledging receipt of the notice.
Meal / Rest Breaks
Minnesota state law requires employers give employees who work 8 or more consecutive hours sufficient time to eat a meal. In addition, employees must be allowed a restroom break for each four consecutive hours of work.
Minnesota’s deadline for filing an overtime claim adheres to the FLSA, which requires those seeking to recover unpaid back overtime wages file a lawsuit within two years from the date of the employer’s wage violation. So a lawsuit filed today would be able to seek recovery of back overtime for only the prior 2 (sometimes 3) years
As an example, suppose you believe that your employer has failed to pay you proper overtime wages since January 1, 2016. Waiting until June 1, 2019, to file your lawsuit means you are only allowed to seek unpaid wages from June 1, 2017, to June 1, 2019.
The statute of limitations may be extended to three years if an employer’s violation of the FLSA was willful. An FLSA violation is deemed willful if the employer knew that its conduct was prohibited by the FLSA or showed reckless disregard.
Lore Law Firm is On Your Side
At the Lore Law Firm, we represent salaried, hourly, and day-rate workers in an array of employment litigation matters, including unpaid overtime compensation claims in Minnesota. Our attorneys, and the Minnesota overtime law attorneys we associate with, are passionate about protecting the rights of workers and have helped recover millions of dollars in unpaid overtime wages for our clients.
Contact us for a free and confidential review of your situation.