Overtime compensation must be paid in cash wages. There is an exception for public sector employees who can accrue hours worked over 40 as compensatory time to be paid out at a rate of time and one-half, in lieu of cash wages. Minnesota Overtime Pay Requirements (Minn. Stat. § 177.25) As a general rule, employers covered by the Minnesota act are required to pay nonexempt employees time and a half for all time worked in excess of 48 hours in one workweek. Each workweek stands by itself. The employer may not average the worker’s hours over the two weeks. A special overtime law, Minn. Stat. § 177.25, subd. 2, applies to hospitals and the health care field. Exemptions from the Minnesota overtime pay requirements are addressed earlier in this section. An exception to the 48 hour rule for payment of overtime appears at Minn. Stats. §§ 177.41 to 177.44. This statute, the Minnesota Prevailing Wage Law, requires that employees who work on state-funded construction projects be paid time-and-one-half for all time worked in excess of eight hours per day and 40 hours per week. Premium pay need not be made for a period when no work is performed, such as sick days, holidays, and vacations. Overtime applies only after 48 hours of actual work, not hours paid. PREVAILING WAGE LAWS Both the federal government and the State of Minnesota by law require contractors who are awarded government funds for public works projects to pay their employees the prevailing wage for the locality in which the project is located. The Minnesota Legislature extended the provisions of its prevailing wage law to recipients of state funds for certain economic development projects. The law applies to three forms of state financial assistance: • Economic development grants where a single business receives $200,000 or more of the grant proceeds; • Loans made by a state agency for economic development purposes where the loan recipient receives $500,000 or more of the loan proceeds, and • Sales tax reductions or abatements made for economic development purposes in certain geographic areas. Economic development is defined as financial assistance provided to a person directly or to a local unit of government or nonprofit organization on behalf of a person who is engaged in the manufacture or sale of goods and services, except for financial assistance provided for certain housing projects. The law requires the person receiving or benefiting from the financial assistance, as a condition of receiving the assistance, to certify to the Commissioner of Labor and Industry that laborers and mechanics assigned to the project will be paid the prevailing wage rate for the area. The prevailing wage rate is determined periodically by the Department of Labor and Industry.
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