Minnesota Minimum Wage, Tip Credits & Deductions

Employee holding wages

Minnesota Minimum Wage

The minimum wage for non-exempt employees of federally-covered employers is currently $7.25 per hour.89 The minimum wage for non-exempt employees of state-covered large employers is currently $6.15 per hour.90 The minimum wage for non-exempt employees of state-covered small employers (those with gross annual sales less than $625,000) and certain employees (i.e., sheltered workers, trainees) is $5.25 per hour.91 Employers should note, however, that state and federal minimum wage requirements may be subject to increase. Minimum wage provisions apply to part-time employees.92 The minimum wage law for both federal-covered and state-covered employers also provides that during the first 90 consecutive days of employment, an employer may pay an employee under the age of 20 years an “opportunity” wage. The minimum wage for these federal-covered employees is currently $4.25 per hour and $4.90 per hour for state- covered employees. Employers may not take any action to displace an employee in order to hire an employee at this lower rate.93

Minnesota Tip Credits

There are no “tip credits” in Minnesota.94 Employers must pay minimum wage even to employees who earn tips. Further, employers may not require employees to contribute or share gratuities received with the employer or other employees or to contribute any or all of their gratuities to a fund or pool operated for the benefit of the employer or employees. Employees may voluntarily share their gratuities with other employees, if the agreement to do so is made without employer participation.95 The agreement to share gratuities must be made by the employees without the employer’s coercion or participation. Upon the request of employees an employer may participate in an agreement to share gratuities by safeguarding gratuities to be shared by employees, disbursing shared gratuities to employees participating in the agreement, and reporting the amounts received as required for tax purposes. 95

Deductions from Wages in Minnesota

Employers may only deduct certain items from an employee’s wages. If the employee makes the proper written authorization, the employer may make the following deductions:

  • Union dues
  • Premiums for:
    • Life insurance
    • Hospitalization and surgical insurance
    • Group accident and health insurance
    • Group term life insurance
    • Group annuities
  • Contributions to:
    • Credit unions or a community chest fund
    • A local arts and science council or a local science council
    • Minnesota benefit association
    • A federally or state registered political action committee
  • Participation in an employee stock purchase plan or savings plan for periods longer than 60 days, including gopher state bonds.96

No deductions, direct or indirect, may be made for the following items if the deduction would reduce an employee’s wages below minimum wage, or if the deduction exceeds $50.00:

  • Purchased or rented uniforms or specially designed clothing required by the employer, by the nature of the employment, or by law, which is not generally appropriate for use except in that employment;
  • Purchased or rented equipment used in employment, except tools of a trade, a motor vehicle, or any other equipment which may be used outside the employment;
  • Consumable supplies required in the course of that employment; and
  • Travel expenses incurred in the course of employment except those incurred in traveling to and from the employee’s residence and place of employment.97

When the employee’s employment is terminated, the employer must reimburse the full amount deducted for any of the items listed above. When reimbursement is made, the employer may require the employee to surrender any existing items for which the employer provided reimbursement. The employer may not hold the employee’s final check if the employee fails to return such items.

An employer may not deduct from wages due or earned by an employee any amount for lost, stolen or damaged property, or recover any claimed amount owed by the employee to the employer, unless the employee voluntarily authorizes the employer in writing to make the deduction after the loss has occurred, or unless the employee is found liable by a court for the loss or indebtedness.98 Wage assignments for married employees require spousal written consent.

Any written authorization must set forth the amount to be deducted from the employee’s wages during each pay period. There are specific statutory limits on the amount which may be deducted in each pay period.

The prohibitions on wage deductions do not apply to:

  • Independent contractors;
  • Cases where a contrary provision in a collective bargaining agreement exists;
  • Employees who are commissioned sales people, where the rules are established for purposes of discipline, or where the employee has committed errors or omissions in performing his or her duties; or
  • Cases where an employee, prior to making a purchase or taking a loan from the employer, authorizes in writing that the cost of the purchase or loan shall be deducted from the employee’s wages at certain intervals, or upon termination of employment.

CREDITS: The content of this and any related posts has been copied or adopted from An Employer’s Guide to Employment Issues in Minnesota, provided by the Minnesota Department of Employment and Economic Development & Linquist & Vennum P.L.L.P., Tenth Edition, 2009. Copies are available without charge from the Minnesota Department of Employment and Economic Development, Small Business Assistance Office.

This post is also part of a series of posts on Minnesota wage and hour issues.

89. 29 U.S.C. § 206 (2008) (Federal Fair Labor Standards Act).
90. Minn. Stat. § 177.24 (2007).
91. Id.
92. 29 U.S.C. § 206 (a) (2007); Minn. Stat. § 177.24, subd. 1(b)(2007).
93. Minn. Stat. § 177.24, subd. 1(c) (2007); 29 USC § 206(g) (2007).
94. Minn. Stat. § 177.24, subd. 2 (2007).
95. Minn. Stat. § 177.24, subd. 3 (2007).
96. Minn. Stat. § 181.06, subd. 2 (2007).
97. Minn. Stat. § 177.24, subd. 4 (2007).
98. Minn. Stat. § 181.79 (2007).