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By Ashleigh Leitch | December 3, 2018
Employment Law Update: Minimum Wage Keeps Climbing

One recent trend in labor and employment law is the rise of wages for workers in the public and private sectors.

Wages Rise in the Public Sector

Across the country, cities have voted to raise the minimum wage for workers. On November 14, 2018, the City of Saint Paul, MN became the latest municipality to raise the minimum wage for workers within city limits. Saint Paul joins the City of Minneapolis, which passed a $15 minimum wage in 2017, and over 40 other cities, such as San Francisco, New York City, Seattle, Los Angeles, Missoula, Pittsburgh, Greensboro, Portland, and Washington, D.C.  Government leaders in other Minnesota cities, such as Rochester, are considering an increase.

By July 2027, the minimum wage in Saint Paul will rise to $15 per hour. For reference, Minnesota’s minimum wage is currently $9.65 per hour. Saint Paul’s ordinance exempts some youth workers (defined as workers between the ages 14 to 17), franchises, and workers subject to a collective bargaining agreement. Of course, independent contractors are also not eligible for the wage increase.  The ordinance does not exempt tipped workers, such as restaurant servers.

Saint Paul’s Mayor, Melvin Carter, estimated the new law will increase wages for 56,000 low-income people working in Saint Paul.

The wage increases will phase in over time, as shown in the table below:

Type of Business

Minneapolis

Will reach $15 per hour:

St. Paul

Will reach $15 per hour:

Macro businesses and St. Paul City Government (10,000 or more employees) N/A July 2022
Large Businesses 
(more than 100 employees)
July 2022 July 2023
Small Businesses 
(100 or fewer employees)
July 2024 July 2025
Micro Businesses 
(5 or fewer employees)
N/A July 2027

Wages Rise in the Private Sector

In October 2018, Minnesota’s seasonally adjusted unemployment rate was 2.8%, almost a full percentage point below the national rate of 3.7%.  Facing such low unemployment rates, private employers have announced wage increases as a way to attract job applicants and to retain valuable employees. 

The biggest example of this trend is Amazon, which announced it would raise its starting wages to $15 per hour, effective November 2018. The new wage hike would affect almost 50% of Amazon’s workers, including part-time, temporary, and seasonal employees.   It is unclear how many of Amazon’s 2,300 employees in Minnesota will get a raise.  

Amazon’s news influenced other national retailers. For example, Walmart announced its plans to raise starting wages to $11 per hour. Similarly, Target announced that its starting wage will be $15 by 2020. Costco already raised its starting wage to $14 per hour in June 2018. 

Conclusion

Raising wages is one method to attracting new talent and retaining valuable employees during this period of record low unemployment. If you or your company have any questions about complying with federal, state, or local minimum wage laws, like St. Paul’s new ordinance, please contact Ashleigh Leitch or Sarah Crippen at Best & Flanagan’s Employment and Labor Law Group.

This article originally appeared as a guest blog for Marsh & McLennan Agency on December 3, 2018. Ashleigh Leitch & Sarah Crippen will be the guest speakers at MMA's Employment Law Landscape 2019 seminar. Registration is open now.

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