Small Business Voice E-newsletter

August 2007

Small businesses represent more than 80 percent of the Minnesota Chamber of Commerce membership. This e-newsletter is distributed periodically to address issues that have the greatest impact on businesses with 100 and fewer employees. If you have any questions, please contact Jennifer Byers at (651) 292-4673, (800) 821-2230, or jbyers@mnchamber.com.

New federal minimum wage has twist for Minnesota small employers
Effective July 24, 2007, the federal minimum wage increased from $5.15 to $5.85 per hour. Additional increases are scheduled in 2008 and 2009. Since Minnesota has different minimum wages for large and small businesses, the minimum wage for small employers rose but the wage for large employers did not change (see below).

The table above outlines the current federal minimum wage, Minnesota’s minimum wage, and the new minimum wage effective dates. The table does not apply to Minnesota employers with less than $500,000 in annual sales that do not engage in interstate commerce.

States are allowed to set their minimum wage rates above or below the federal level; however, the law most favorable to the employee takes precedence. The federal minimum wage applies to businesses with more than $500,000 in annual sales. Minnesota sets separate minimum wages for large and small businesses. State law defines small businesses as having annual sales under $625,000.

That’s the clearest part of the law, and it becomes much more complicated for small businesses.

The federal minimum wage applies to employers with more than $500,000 in annual sales, and employers with less than $500,000 in annual sales that engage in interstate commerce. In other words, the new rates do not apply to employers that fall below this $500,000 and do not engage in interstate commerce.

The catch, however, is that the U.S. Department of Labor broadly defines “interstate commerce.” For example, servicing customers from other states may qualify as interstate commerce, as well as processing credit card transaction for customers that have banks headquartered in other states.

For employers that fall below the $500,000 annual sales, yet still engage in interstate commerce, two methods can be used to comply with the new federal law. First, employers may segment their employees into two categories – those who engage in interstate commerce (i.e. cashiers processing credit cards), and those who do not. Employers could pay the one set of workers (who engage in interstate commerce) the new federal minimum wage, while still paying the lower state minimum wage rate to the other workers. Second, employers could choose “enterprise” treatment of their employees and pay them all the new federal minimum wage, even though they do not all participate in interstate commerce.

For more information on the federal Fair Labor Standards Act, please visit http://www.dol.gov/compliance/laws/comp-flsa.htm or contact Dave Dederichs, manager of fiscal policy at the Minnesota Chamber, (651) 292-4682, (800) 821-2230, or ddederichs@mnchamber.com.

2007 Annual Meeting & Issue Conference
Wednesday, September 26, 2007
7:30 a.m.-1:30 p.m.
Hilton Minneapolis
1001 Marquette Avenue South, Minneapolis

Mark this date now, and seize this opportunity to hear Frank Luntz, one of America’s premier corporate and political consultants and pollsters. He will deliver the keynote speech at the Minnesota Chamber’s Annual Meeting which follows the Issue Conference.

Hear Luntz’s views on the 2008 presidential race and the national political scene. Author of “Words that Work: It’s Not What You Say, it’s What People Hear,” Luntz’s clients range from Fortune 100 companies to all three major television networks. He served as the primary election night commentator for “The News with Brian Williams” in 2000 and for “Hardball” in 2004.

The Issue Conference, which will convene in the morning, will focus on business issues including an economic outlook and a preview of business community priorities for the 2008 legislative session.

Would you like to receive a one month premium holiday on your company’s disability insurance?

The Minnesota Chamber, through its affiliate Business Services, has partnered with ING Employee Benefits to offer our members basic and supplemental life insurance as well as short- and long-term disability group insurance plans at cost-competitive rates. These plans are available to employers with two or more employees and come with multiyear rate guarantees as well as an annual one-month premium free on your long-term disability insurance payment.

We will work directly with a business or through your agent to provide you with a no-obligation quote. To learn more about this program, contact Mary Bethke at (651) 292-4672, (800) 821-2230, mbethke@mnchamber.com, or visit our Web site at www.mnchamber.com/benefits.

This web site is developed and owned by the Minnesota Chamber of Commerce. Any use or reprinting is strictly prohibited without prior consent of the Minnesota Chamber of Commerce.

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