In case, you aren’t aware, the Minnesota minimum wage was adjusted for inflation effective January 1, 2018.  The new large employer minimum wage is $9.65/hour, an increase of $0.15.  Small employer minimum wage went up $0.12 to $7.87/hour.  $7.87/hour is also the new 90-day training wage for employees under age 20 and youth wage for employees under the age of 18.  A “large employer” is defined as any enterprise with an annual gross revenue of $500,000 or more.  “Small employers” are defined as any enterprise with annual gross revenue of less than $500,000.

Minnesota’s minimum wage is higher than the federal minimum wage, so it is important for employers to know that if they have employees who are covered by both federal and state law the employer is required to pay the higher state wage.  Employees must be paid the new minimum wage for all hours worked, whether they are employed part-time or full-time.

The Minnesota Department of Labor and Industry has helpful information to aid employers.

For small business owners, if your business was thriving and growing in 2017, it is important to check your annual gross revenue and see if your status as a “small employer” changed under the minimum wage laws.  If so, your employees may be entitled to a higher minimum wage.    

US%20Department%20of%20Labor%20logoThe final overtime regulations on exempt employees were issued by the Department of Labor last week, raising the salary test from $23,660 annually to $47,476.  It is estimated this will result in an additional 4.2 million more employees qualifying for overtime.

The new salary threshold has sparked controversy and claims by both labor and management suggesting the sky was falling.  Others have predicted the true impact has yet to be determined.  No one seems to dispute the changes were long overdue.  The previous salary test has not changed in over 10 years.  The good news is they built in an automatic update to occur every three years based on wage growth in the lowest-income census region, which is currently in the south.

The DOL has provided guidance for non-profits, public sector, and private sector employers to assist in applying the new salary test.  In general the DOL suggested options for addressing the new regulation including: 1) limit exempt employee hours to 40 hours per week, 2) pay the employees time and one half for work over 40 hours, or 3) raise the employee’s salary to exceed the new salary threshold..

All employers should review the salaries of their exempt employees and determine the impact of the new DOL regulations now, so they can be ready for implementation December 1, 2016.  

Earlier this year, the Minnesota Court of Appeals held a per diem payment does not fall within the definition of wages under Minnesota Statute § 181.13, resulting in the reversal of a penalty against the employer issued for non-payment of wages.

In Schreader v. D, C & D Enterprises, LLC, Case #: A15-1140 (Minn. Ct. App. 2016), Ms. Schreader was terminated from her employment.  On the day of her termination she e-mailed DC & D Enterprises LLC and notified them she had forgotten to add five days of per diem to her last time sheet.  She received a per diem rate of $30 for each day she was out of town for work.  She also requested payment of ten hours of paid time off and her full wages to the date of her termination.  She received payment for her full wages, but was not paid the per diem rate for 5 days or the ten hours of paid time off.  Ms. Schreader sued and was awarded judgment of $3,109.62.  $2,884.62 of the $3,109.62 was the penalty for failure to make the per diem payments.  DC & D Enterprises appealed the Court’s imposition of the 15 day wage penalty.

Minnesota Statute § 181.13 provides, “…If the employee’s earned wages and commissions are not paid within 24 hours after demand… the employer is in default. In addition to recovering the wages and commissions actually earned and unpaid, the discharged employee may charge and collect a penalty equal to the amount of the employee’s average daily earnings at the employee’s regular rate of pay or the rate required by law, whichever rate is greater, for each day up to 15 days, that the employer is in default, until full payment or other settlement…”

According to the Court of Appeals when a statute provides for a penalty, it must be strictly construed.  Therefore, the plain meaning of the words “per diem” and “wages” prevail.  The common definition of “per diem” is a daily allowance used to cover expenses.  The Court relied on the common definition of wages when it determined the per diem payments are not considered wages within the meaning of Minn. Stat. 181.13.

Minnesota employers should refer to Minnesota Statute 181.13 so they don’t run the risk of having to pay penalties in regards to compensating a terminated employee.  Don’t forget to pay them within 24 hours of a request from the terminated employee.