MARSHALL - Starting today, Minnesota's minimum wage will increase for the first time in almost 10 years. And while wage rates will go up to as much as $8 an hour, it's not the end of the planned increases, and that's an area of concern for local businesses.
A new law raising the minimum wage will be implemented in steps over the next three years, the Minnesota Chamber of Commerce said in a news release. The first step, which takes effect today, raises the minimum wage to $8 for large employers, with gross annual sales of $500,000 or more, the Minnesota Chamber of Commerce said. The minimum wage for small employers, and for workers younger than 18, will be $6.50.
State laws had previously set minimum wages at $6.15 for large employers.
Wage rates are set to rise over the next two years as well, topping out at $9.50 in 2016. Beginning in January 2018, wages will be indexed to inflation, which could mean more increases.
Several Marshall businesspeople said this week that while the new $8 or $6.50 minimum wage would have an impact on local employers, an even bigger concern would come in the next couple of years, as the rate climbs toward $9.50.
"We all are going to be affected, pretty much, in the retail sector," said Lonny Serreyn, manager of the County Fair supermarket in Marshall. However, the initial impact might not be as severe for all businesses. For example, Serreyn said, the minimum wage increase would affect mostly part-time employees or younger employees at the Marshall County Fair, and that would carry less of a cost.
However, he said, "I think the second and third (wage increase) is going to be worse."
"It'll have an impact, for sure," said Mike Sweetman, owner of Extra Innings in Marshall. "Restaurants and bars are all in the same boat here, we have the same issues to deal with."
Minnesota law doesn't allow employers to count their employees' tips toward payment of minimum wage. So the state wage increase definitely affects restaurants and restaurant servers, he said.
Eric Luther, owner of Burger King in Marshall, said the minimum wage increase would affect about half of the restaurant's employees. For now, he said, the increase would likely have the most impact on newer employees and teens.
"It's going to affect those entry-level workers right away," Luther said.
The bigger question, Sweetman and Luther said, is how rising payroll costs will affect the bottom line for Minnesota restaurants in the next few years.
"It's one more expense you have to watch," Luther said.
NEW MINIMUM WAGE LAW: WHAT YOU NEED TO KNOW
Large employers must pay at least $8 an hour. A large employer is defined as having $500,000 or more in sales exclusive of excise taxes - a significant decrease from the previous legal definition of $625,000. Businesses should meet with their certified public accountant or attorney to determine whether they meet or exceed the threshold.
Small employers must pay at least $6.50 an hour. A small employer is defined as having less than $500,000 in sales exclusive of excise taxes. Businesses should analyze when they may exceed the $500,000 threshold and plan to pay employees accordingly, and then contact their payroll providers with sufficient notice to make the change.
The youth wage rate is at least $6.50 an hour. Employers may pay this wage to employees under age 18. They should make sure their payroll system starts paying the adult wage the day employees turn 18. Employers will likely have to request payroll changes weeks in advance of birthdays.
The training wage rate is $6.50 an hour. Employers may pay employees under age 20 this wage for their first 90 days on the job.
Summer work travel employee exemption
Employers in the hotel or motel, lodging establishment or resort industry may pay this wage to employees working under the authority of a summer work travel exchange visitor program (J) nonimmigrant visa. Because this law allows employers to pay workers from other countries less, it is unclear whether the Minnesota Department of Human Rights or the Federal Equal Employment Opportunity Commission will take the position that the law raises issues of national origin discrimination.
Beginning Jan. 1, 2018, all minimum wage rates will increase by the national implicit price deflator or 2.5 percent, whichever is lower. The Department of Labor and Industry Commissioner may stop an annual increase only after significant executive branch and public input.
Other minimum-wage laws
Minimum-wage rates apply to all hours worked, whether part time or full time.
Employees must be paid at least the minimum-wage rate, no matter how they are paid.
No employer may take a tip credit against wages in Minnesota.
Examples of workers exempt from minimum-wage requirements include: bona fide executive, administrative or professional workers; babysitters; and volunteers of nonprofit organizations.