What Employers Need to Know For 2023
As we close out 2022, it’s important for employers in Minnesota to be aware of the upcoming changes to minimum wage rates in the state. On January 1, 2023, the Minnesota minimum wage rate will increase from $10.33 per hour to $10.59 per hour for large employers, and from $8.42 per hour to $8.63 per hour for small employers.
In addition to these statewide changes, the cities of Minneapolis and St. Paul also have their own minimum wage rates that are set to increase in 2023. Here’s a quick breakdown of what to expect, with more details below:
- Large Employers: $10.33 to $10.59 per hour (as of January 1, 2023)
- Small Employers: $8.42 to $8.63 per hour (as of January 1, 2023)
- 90-day Training Wage (under 20 years of age): $8.42 to $8.63 per hour (as of January 1, 2023)
- Youth Wage (under 18 years of age): $8.42 to $8.63 per hour (as of January 1, 2023)
- Small businesses (1-100 employees): $13.50 per hour to $14.50 per hour on July 1, 2023
- Large businesses (over 100 employees): $15.00 per hour to $15.19 per hour on January 1, 2023
- Macro businesses (10,001 or more & City of Saint Paul employees): $15.00 per hour to $15.19 per hour on January 1, 2023
- Large businesses (101-10,000 employees): $13.50 per hour to $15.00 per hour on July 1, 2023
- Small businesses (6-100 employees): $12.00 per hour to $13.00 per hour on July 1, 2023
- Micro businesses (5 or fewer employees): $10.75 per hour to $11.50 per hour on July 1, 2023
Minnesota statewide increases
Minnesota’s changes to its minimum wage rates will go into effect on January 1, 2023. In this blog post, we will outline the new minimum wage rates for large and small employers, as well as provide information about exemptions and tip credits.
Starting on January 1, 2023, the minimum wage in Minnesota will be adjusted for inflation to $10.59 per hour for large employers and $8.63 per hour for small employers. This represents an increase from the current minimum wage rates, which are:
$10.08 per hour for large employers
$8.21 increases to $8.63 per hour for small employers.
It is important to note that some employees may be exempt from the minimum wage requirement, such as bona fide executive, administrative, or professional workers, babysitters, volunteers of nonprofit organizations, and employees subject to the provisions of the U.S. Department of Transportation.
How do I know if my business is micro, small, large, or macro?
Regarding the state’s wage increases, the only two business sizes are large or small. That large or small size determines the minimum wage rate that must be paid to employees.
A large employer is defined by the state of Minnesota as a business that has gross revenues of more than $500,000 in the previous year, while a small employer is defined as a business that has gross revenues of $500,000 or less in the previous year.
To determine the size of your business and the applicable minimum wage rate, you can review your past four quarterly tax estimates or the previous year’s audit statement. Add up the gross revenue for the four most recent quarters and exclude any excise taxes that are listed separately.
If the combined amount of gross revenue is more than $500,000, your business is considered a large employer and must pay the large employer minimum wage rate. If the combined amount of gross revenue is $500,000 or less, your business is considered a small employer and will pay the small employer minimum wage rate.
Minneapolis & St Paul
Here is a summary of the definitions of macro, large, small, and micro businesses in Minneapolis and St. Paul, along with the range of employees that determine the size of a business in each city.
- Large Business: 101 or more employees
- Small Business: 1 to 100 employees
- Macro Business: 10,000 or more employees
- Large Business: 101 to 9,999 employees
- Small Business: 6 to 100 employees
- Micro Business: 1 to 5 employees
Impact on food service & other industries that rely on tips
It’s important for employers to review their pay practices to ensure compliance with these new changes and update their posting locations to reflect the new minimum wage rates. This is especially important for industries like food service, where many employees are paid at or near the minimum wage.
In Minnesota, employers are not allowed to take a tip credit against the minimum wage and must pay employees at least the minimum wage per hour, in addition to any tips the employee may earn. This means that employees must be paid at least the current minimum wage rate, whether they earn a significant amount of tips on top of that wage, or not.
Get Expert Help With Express Employment Professionals
Wtih minimum wages increasing, the difference between your wage and the minimum will be lower. That may make it more difficult for your business to compete for employees in 2023 than it was in 2022.
We can help! With Express Employment Professionals you have the hiring partner you need to help you stand out from the crowd and hire the candidates you’re looking for. Contact us today to get started!