Whether Minnesota employers want to or not, this Friday, they are required to increase the wages of employees working for minimum wage. The Minnesota legislature made several changes to Minn. Stat. § 177.24, including modifying the definition of “large employer” and “small employer” for purposes of determining minimum wage. Previously a “large employer” was an enterprise whose gross volume of business was $625,000. This amount has been reduced to $500,000. This has the effect of making businesses which were previously considered “small employers” to now fall in the “large employer” category, and therefore have to pay a significantly higher minimum wage. Businesses with less than $500,000 in gross annual business are defined as “small employers.”

Effective August 1, 2014 large employers will be required to increase the minimum wage from $6.15/hour to $8.00/hour. The minimum wage will increase August 1, 2015 to $9.00/hour and to $9.50 on August 1, 2016. Small employers will pay $6.50/hour in 2014, $7.25/hour in 2015, and $7.75/hour in 2016. Effective January 1, 2018 the minimum wage may be adjusted for inflation.

There are some notable exceptions to the new minimum wages. For example, large employers whose employees are under the age of 18 may pay the minimum wage set out for small employers. Additionally, large employers who have employees under the age of 20 may pay the minimum wage set out for small employers for the first 90 days of employment. After that the wage reverts to the standard for large employers. There is also a detailed exception for hotels, motels or “lodging establishments” with a summer work travel exchange visitor program.

Now is the time to review your payroll protocols and determine which minimum wage is applicable to your employees.