Minnesota's minimum wage is $11.41, and the small-employer rate is gone

By David J.S. Madgett

Minnesota attorney, license no. 390494 · Published August 7, 2026

If you are working from a payroll template, a handbook, or advice written before 2025, it probably still contains a “small employer” minimum wage. Delete it. That distinction no longer exists.

The current numbers

Effective January 1, 2026, per the Department of Labor and Industry:

The state rate applies to all employers in Minnesota. The former structure — a lower rate for employers under a revenue threshold — was eliminated as of January 1, 2025.

It moves every year, automatically

Minn. Stat. § 177.24 does not fix a dollar figure. It sets an inflation-adjustment mechanism: the rate is adjusted annually, capped at 5 percent in any year, and rounded to the nearest cent.

The practical consequence is that any document stating a hard number has a shelf life of about twelve months. Handbooks, offer letters, and job postings that quote a rate need an annual review, or they should reference “the applicable Minnesota minimum wage” instead.

The training wage has a guardrail

The reduced rate for employees under 20 applies only during the first 90 consecutive days of employment. And the statute anticipates the obvious abuse:

No employer may take any action to displace an employee, including a partial displacement through a reduction in hours, wages, or employment benefits, in order to hire an employee at the wage authorized in this paragraph.

Cutting a current employee’s hours to bring on someone at the training rate is expressly prohibited. So is a rolling series of 90-day workers hired to keep the position permanently below the standard rate.

The city rates are higher, and they are not optional

Minneapolis and Saint Paul have their own minimum wage ordinances, and they require more than the state rate. If you employ anyone working within either city, the city rate governs their hours worked there — the state figure is a floor, not a ceiling.

This is the single most common minimum wage error for a business that operates across the metro: one payroll rate applied uniformly, with no attention to where the work is physically performed. A delivery driver, a mobile service technician, or a crew that works a job site inside city limits can all raise the question.

Check the current ordinance rates directly with each city before setting pay. They adjust on their own schedules, which are not the state’s schedule.

What to do

• Use the state number as a floor, then check the city where the work happens.
• Stop quoting a fixed dollar figure in handbooks and templates, or diary an annual update every December.
• Purge “small employer” from every document you have. There is no such rate.
• Track hours by work location if any employee works in Minneapolis or Saint Paul.
• Do not lean on the training wage as a cost strategy. Ninety consecutive days, under 20, and no displacement — three conditions, all easy to fail.

Related: the written notice you must give every new hire has to state the rate of pay and its basis, which means an incorrect rate becomes a documented, signed incorrect rate.