With the turn of the calendar, there's almost always a set of new laws on the books that businesses need to be aware of. As tends to be the case, many of the burdens of these new laws fall on small business owners disproportionately. However, as we've seen with the Corporate Transparency Act and the roller coaster enforcement ride that happened in December 2024 (where BOI reporting was suspended, then reinstated, then suspended again), it's important to keep up to date on the current status of the laws as well.
Let's take a look at the laws as of January 1, 2025, to see what small business owners want to pay attention to.
1. Statewide Minimum Wage Adjustment
Effective January 1, 2025, Minnesota's minimum wage has been adjusted for inflation, setting the rate at $11.13 per hour for all employers, regardless of size. This change eliminates the previous distinction between large and small employers, standardizing the wage. Additionally, the 90-day training wage for employees under 20 has increased to $9.08 per hour. It's important to note that this state minimum wage does not apply to work performed in cities like Minneapolis and St. Paul, which have established higher local minimum wage rates.
2. Salary Transparency in Job Postings
Starting January 1, 2025, employers with 30 or more employees in Minnesota are required to include the starting salary range or fixed pay rate in each job posting. This law requires transparency, prohibiting open-ended salary ranges and ensuring that prospective employees have a clear understanding of compensation. Employers must also provide a general description of all benefits and other compensation, including health and retirement benefits, offered for the position.
3. Earned Sick and Safe Time (ESST) Policy Integration
As of January 1, 2025, any employer that allows employees to use their paid time off (PTO) as sick time must treat the entire PTO balance as earned sick and safe time. This means that employers cannot limit the amount of PTO used for ESST-eligible purposes. Additionally, employers are required to keep records of leave time for three years, ensuring transparency and compliance with state regulations.
4. Unemployment Insurance Tax Rate Increase
In 2025, Minnesota has increased the base rate for unemployment insurance to 0.4%, with rates potentially reaching up to 8.9% for employers with higher unemployment insurance usage. This adjustment aims to bolster the state's unemployment insurance fund but may result in increased costs for businesses. Small businesses should assess their current financial strategies to accommodate this change and ensure compliance with the new tax rates.
5. Data Privacy Regulations
Coming into effect on July 1, 2025, Minnesota will implement new data privacy laws requiring businesses to limit personal data collection to what is necessary, maintain secure data practices, and obtain explicit consent before processing any sensitive data. Businesses must also provide clear mechanisms for revoking consent and allow consumers to opt out of the sale of their personal data. Small businesses handling consumer data should review and update their data privacy policies and practices to align with these new requirements.
6. Prompt Payment Program for Small Contractors
The Associated General Contractors of Minnesota has developed a "prompt payment" program aimed at facilitating timely payments to small businesses involved in large construction projects. This initiative addresses cash flow challenges faced by small contractors, ensuring they receive direct, partial payments from project owners promptly. While legislative action is anticipated in 2025, small contractors should stay informed about the program's progress and be prepared to leverage its benefits once enacted.
7. Prohibition of "Junk" Fees
A new law effective January 1, 2025, prohibits businesses from advertising or offering a price for goods or services that does not include all mandatory fees or surcharges. This legislation aims to enhance pricing transparency and protect consumers from hidden costs. Small businesses must review their pricing structures and advertising materials to ensure all fees are clearly disclosed, thereby maintaining compliance and fostering consumer trust.
You'll see this one come into effect the next time you're looking at tickets for events like concerts and shows. Those mandatory fees and surcharges used to get added once you had added your ticket to your cart and could often cause the ticket to almost double in price.
8. Secure Choice Retirement Program
Minnesota is introducing the Secure Choice Retirement Program, requiring employers who do not offer a retirement plan and have five or more employees to enroll their employees in the state-administered retirement plan. Payroll deductions will be deposited into individual retirement accounts (IRAs) for each employee, with investments overseen by the State Board of Investment. While this requirement was initially slated to begin on January 1, 2025, the program is now expected to be ready for enrollment in mid- to late-2025. Employers should monitor updates to ensure timely compliance once the program is implemented.
9. Paid Family and Medical Leave Program
Looking ahead to 2026, Minnesota will implement a Paid Family and Medical Leave program, providing workers with up to 12 weeks of paid leave for qualifying family and medical reasons. Although this program takes effect in 2026, small businesses should begin preparing by reviewing current leave policies, assessing potential impacts on operations, and planning for the integration of this program into their human resources practices.
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As with anything in the legal world, it's always a good idea to stay in touch with your attorney to make sure you are getting updates that may be relevant to your situation. If you'd like to get on my weekly email newsletter (it's free and has these types of updates throughout the year), simply click here to get on the list.
Do I Need a Business Attorney?
With the start of the new year, there are usually new laws on the books, and it's a great time to check in with your business attorney. If you don't have one, or if you'd like to discuss one of the laws above, let's schedule a Legal Strategy Session online or by calling my Edina, Minnesota office at (612) 294-6982 or my New York City office at (646) 847-3560. My office will be happy to find a convenient time for us to have a phone call to review the best options and next steps for you and your business.
