Minnesota to Increase Minimum Wage to $9.50 by 2016 and Adjust for Inflation Thereafter

Author: Michael Cardman, XpertHR Legal Editor

April 8, 2014

Another state is poised to raise its minimum wage beyond the current federal minimum of $7.25, after Minnesota legislators on April 7 announced that they have reached a deal on a minimum wage increase.

According to a press release from the Minnesota House Speaker, the legislature is expected to pass a bill this week that will:

• Increase the minimum wage for businesses with gross sales of more than $500,000 to $8.00 in August 2014, to $8.50 in August 2015, and to $9.50 in 2016;
• Increase the minimum wage for businesses with gross sales of less than $500,000 (or businesses with gross sales of more than $500,000 employing 18- and 19-year-olds during a 90-day training period, all 16- and 17-year-olds, and employees working under a J1 visa) to $6.50 in August 2014, to $7.25 in August 2015, and to $7.75 in 2016; and
• Beginning in 2018, increase the minimum wage on January 1 of each year by the rate of inflation, as measured by the "implicit price deflator capped at 2.5 %" (which increase can be suspended by the state labor department in the event of a downturn).

Once the bill is passed, Governor Mark Dayton has stated that he will sign it into law.

At that time, Minnesota would become the fifth state to enact legislation increasing the minimum wage this year, following in the footsteps of Connecticut, Delaware, Maryland and West Virginia.