E-Alert – City of Saint Paul Enacts Minimum Wage

11/30/2018 / Phyllis Karasov

Saint Paul has enacted a phased higher minimum wage ordinance which begins in 2020.  The size and type of business determines when the $15 per hour minimum wage applies.

The schedule for implementation of the $15 minimum wage is:

  • Employees who work for the City of Saint Paul will be paid the minimum wage by July 1, 2022, with the phase-in period beginning in 2020.
  • Businesses with more than 100 employees must pay the $15 minimum wage by July 1, 2023. The minimum wage will be indexed for inflation beginning in 2021.
  • Small businesses (more than 5 employees) must pay the minimum wage by July 1, 2025. The minimum wage for small businesses will be indexed for inflation beginning in 2026.
  • “Micro” businesses which employ 5 or fewer employees must pay the minimum wage by July 1, 2027, and the adjustment for inflation begins in 2028.

The ordinance applies to an employer who has an employee who works at least two hours a week in Saint Paul.

There are exceptions to the application of the minimum wage. These exceptions include contract workers, employees with disabilities who work in certified employment programs, and ball players for the Saint Paul Saints. There is also a 90-day exemption for youths employed in City-approved enrichment programs and to youth trainees.

If an employer is a locally-owned franchise, the size of the employer is determined by the size of the franchise rather than the larger franchise organization.  Despite a lot of debate and controversy, the Saint Paul ordinance does not have a tip credit.

For employers of employees who work both in Minneapolis and Saint Paul, they may decide to increase the minimum wage for all employees rather than paying two different rates to the employees who work in each city.

The City of Minneapolis ordinance is effective now for employers with 100 employees or more.  The Minneapolis minimum wage ordinance has been challenged and is in front of the Minnesota Court of Appeals.  If the Minneapolis minimum wage ordinance is found to be preempted by the state minimum wage law, we can expect that the Saint Paul ordinance will also be preempted.

Because of the labor shortage, many employers are already paying a minimum of $15 per hour or close to that hourly rate. On the other hand, smaller employers and non-profit organizations may be hurt by this ordinance.  The fact that this ordinance does not apply to small businesses for up to 8½ years may reduce the burden it has on that group.