Employers in Minnesota face a nuanced landscape, notably when it comes to overtime and worker classification.
State requirements can interact with federal standards, and in some areas, local rules may layer on additional obligations for employers.
Minnesota maintains comprehensive wage and hour regulations, including a statewide minimum wage and additional city-level rules that set higher standards.
The state also mandates paid sick leave under its new Earned Sick and Safe Time (ESST) law, along with strict requirements for meal and rest breaks. Employers must stay current on both state and local updates to ensure compliance.
Whether managing workers directly or through an Employer of Record (EOR) like HireArt, understanding these rules is critical to maintaining compliance and fair labor practices.
This blog is based on information available to HireArt as of October, 2025. HireArt does not provide tax, accounting or legal advice. This material has been prepared for informational purposes only, and should not be relied on for, tax, legal or accounting advice. Consult your own tax, legal and accounting advisors before engaging in any related activities or transactions.
Minnesota sets its own statewide minimum wage, with several cities enforcing higher local rates.
As of 2025, the state minimum wage is $11.13 per hour. However, both Minneapolis and St. Paul have adopted their own ordinances with higher rates that vary based on employer size.
Employers must follow the higher applicable rate between state and local law.
Minnesota requires paid sick leave for nearly all employees under the Earned Sick and Safe Time (ESST) law.
Employees accrue one hour of sick and safe time for every 30 hours worked, up to 48 hours per year. Unused hours may carry over annually. This leave can be used for personal illness, family care, safety-related absences, or school and workplace closures due to emergencies.
Minneapolis and St. Paul have their own local ordinances that expand upon state sick leave and wage laws.
Employers with workers in these cities must comply with both local and state standards, applying whichever law offers the most generous benefits to employees. Maintaining consistent tracking and accrual systems across jurisdictions helps avoid compliance issues.
Minnesota law requires both meal and rest breaks for most employees.
Workers must receive adequate unpaid meal periods and paid rest breaks that provide sufficient time to use the restroom and attend to personal needs. These rules are enforced by the Minnesota Department of Labor and Industry (DLI) and apply broadly across industries.
Payment of unused paid time off (PTO) at termination is governed by employer policy or contract.
If an employer’s written policy treats accrued PTO or vacation as wages, it must be paid out upon separation. Employers should clearly define payout rules in employee handbooks to prevent disputes and ensure consistency.
Reimbursement requirements in Minnesota are primarily policy-driven.
While there is no general statute mandating reimbursement for all business expenses, employers must comply with deduction limits and cannot withhold wages to cover expenses unless authorized in writing. Employers should outline reimbursement procedures and approved expense categories in their policies.
Minnesota law requires detailed wage statements and prompt payment of final wages.
Accurate pay records are essential to compliance and demonstrate transparency in payroll practices.
Minnesota applies both federal and state economic-realities tests to determine worker classification.
If an employer exercises significant direction or control over how, when, and where work is performed, the worker must be classified as an employee (W-2). Misclassification can lead to penalties, back pay, and tax liabilities under state and federal law.
HireArt acts as an Employer of Record (EOR) to help companies manage compliance with Minnesota’s employment laws. Through HireArt, employers can:
By partnering with HireArt, companies can streamline compliance, reduce administrative burden, and maintain consistency across Minnesota’s evolving labor landscape.
