New Minnesota Wage and Hour Updates to Take Effect on August 1, 2024

The Minnesota Legislature passed another substantial omnibus labor and industry policy bill, SF 3852, which was signed by Governor Tim Walz on May 17, 2024. The omnibus bill brings a variety of significant labor law changes to employers in the North Star State, including updates to pay transparency, pregnancy accommodations, and noncompete agreements.  

In addition to the above updates, there are also several changes to its wage and hour laws under the Minnesota Fair Labor Standards Act, which go into effect on August 1, 2024.  

Updated Indexing Requirements for Minnesota Employers

Minnesota is eliminating its two tiers of minimum wage rates, which are dependent on an employer’s revenue. Under the current minimum wage requirements, large employers, or businesses with an annual gross volume of sales of $500,000 or more, must pay covered employees at least $10.85 per hour. Small employers, or businesses with revenue of less than $500,000, are currently required to pay their employees a minimum wage of at least $8.85 per hour.  

In 2025, both large and small employers will pay their employees the same minimum wage of at least $10.85 plus an adjustment dependent on the increase in inflation over the last year. The lower minimum wage of $8.85 for minor workers and J-1 visa workers will also be eliminated.  

While these changes do not go into effect until next year, the updates to the state’s indexing requirements, specifically increasing the inflation cap when calculating the annual minimum wage adjustment, are effective August 1, 2024. Moving forward, the new minimum wage will increase each year by the lesser of 5% (previously 2.5%) or the percentage increase calculated by the commissioner using the applicable consumer price index.  

These indexing changes will now impact the minimum wage paid by all employers, regardless of their business size.  

New Gratuity Requirements

Minnesota also added a new provision to its minimum wage law for gratuities. As of August 1, 2024, all tips received by an employee via electronic payment, i.e. debit charge, credit card, etc., must be credited to the employee in that pay period and must be distributed by the next scheduled pay period.  

New Recordkeeping Requirements

Finally, there are new recordkeeping requirements. Minnesota employers must now keep a record of earning statements for employees for each pay period for at least three years.  

What’s Next for Minnesota Employers?

With the variety of employment and labor law changes occurring in Minnesota, employers should review their wage rates applied to minors, J-1 visa workers, or more generally for small businesses.  They should also confirm their recordkeeping and gratuities procedures where applicable. To maintain compliance with the ever-changing wage and hour landscape in Minnesota and other jurisdictions across the United States, check out GovDocs Minimum Wage.