As 2025 begins, this article provides an overview of new laws and regulations impacting Minnesota employers, effective January 1 and beyond. It covers updates on federal laws, Minnesota state laws, and ordinances specific to Minneapolis and St. Paul.
1. Minnesota’s New Pay Transparency Law
Effective January 1, 2025, Minnesota employers with 30 or more employees must now disclose pay ranges and benefits in their job postings. The salary must include the minimum and maximum rates of compensation and be a “good faith estimate” of the starting salary. In addition, postings must include a general description of all benefits and compensation.
2. New Minimum Wage Increases for Minnesota, Minneapolis, and St. Paul
New State Minimum Wage
Effective January 1, 2025, the state minimum wage increases to $11.13 per hour for all workers, regardless of employer size. The law still allows for a 90-day training wage for workers under age 20 at $9.08 per hour.
New City of Minneapolis Minimum Wage
Employers must pay at least the Minneapolis minimum wage rate of $15.97 (up from $15.57 per hour in 2024) to any employee who performs at least two hours of work in a calendar week within the City of Minneapolis. This rate must be paid regardless of employer size.
New City of St. Paul Minimum Wage
The City of St. Paul has introduced two minimum wage increases, one effective January 1, 2025, and the other on July 1, 2025. The employee’s minimum wage depends on the size of the employer. The new wage requirements apply to all employees who perform at least two hours of work in St. Paul in one week.
The following table shows the new effective minimum rates:
|
Employer Size |
2024 Rate | As of January 1, 2025 |
As of July 1, 2025 |
|
Macro 10,001+ employees |
$15.57 | $15.97 |
$15.97 |
|
Large 101-10,000 employees |
$15.57 | $15.97 |
$15.97 |
|
Small 6-100 employees |
$14.00 | $14.00 |
$15.00 |
|
Micro 5 or fewer employees |
$12.25 | $12.25 |
$13.25 |
Employees ages 14-17 must be paid at least 85% of the city minimum wage for small employers for 90 days after their hire.
3. New Changes to Earned Sick and Safe Time (ESST) in Minnesota
The ESST law first went into effect on January 1, 2024, and requires Minnesota employers to provide each eligible employee at least one hour of paid leave for every 30 hours worked, and up to 48 hours of accrued ESST per year. An employee is eligible if they are anticipated to work at least 80 hours per year.
As of January 1, 2025, employers who provide employees with paid time off (PTO) or other paid leave that is more than the amount required under the ESST law must ensure the additional PTO meets the same requirements as the ESST hours when used for an ESST-qualifying purpose. The category of ESST-qualifying purposes has also been expanded to include funeral and memorial services related to the death of a family member.
In addition, the 2025 changes bring new penalties for noncompliance. For companies that fail to provide ESST, they must pay the employee an amount equal to the time the employee should have received plus an additional equal amount as liquidated damages. For companies that fail to retain required ESST records, the employer must pay the equivalent of 48 hours of ESST at the employer’s regular rate of pay plus an equal amount as liquidated damages.
4. Minnesota Secure Choice Retirement Program
Under this program, Minnesota employers are required to enroll their employees in a state-administered retirement plan and begin payroll deduction if they both (1) have five or more employees and (2) do not currently offer a retirement plan.
This was scheduled to be implemented on January 1, 2025, but the Minnesota Legislative Commission on Pensions and Retirement has delayed enrollment to Q3-Q4 of 2025.
5. Fair Labor Standards Act (FLSA) Salary Threshold for Exemptions
The Department of Labor (DOL) has raised the salary threshold for most FLSA-exempt employees—those not eligible for overtime—who perform specific executive, administrative, or professional duties. The salary threshold for exempt positions was set to take effect on January 1, 2025, with a rate of $1,128 per week or $58,656 per year.
These requirements were struck down on November 15, 2024, in the District Court for the Eastern District of Texas, vacating the rule effective immediately nationwide. It is unclear whether the incoming Trump administration will continue to appeal, abandon the appeal, rescind the final rule, or issue a new rule in its place.
In the meantime, the DOL is enforcing the 2019 rule’s minimum salary level of $684 per week or $107,432 per year.
6. Independent Contractor Classifications in Building Construction and Improvement Services
Starting March 1, 2025, the criteria for determining whether an individual providing building construction or improvement services is an independent contractor or employee will expand from a nine-factor test to a fourteen-factor test. All factors must be met for an individual to be considered an independent contractor. The new test measures compliance “at the time services are provided.”
Contact Ellen Brinkman at ebrinkman@grsm.com, Suzanne Jones at sjones@grsm.com, or a member of Gordon Rees Scully Mansukhani’s Employment practice with questions or for additional guidance on these laws and regulations.