Sweeping changes for Minnesota employers are now in place as Minnesota’s new wage theft law took effect last week. Widely considered one of the country’s toughest wage theft laws, Minnesota’s new law amended existing state labor laws to provide new wage and hour requirements, employee protections, and for criminal and civil penalties against employers who commit “wage theft.”
Under the law, criminal wage theft occurs if the employer engages in certain actions with an intent to defraud an employee. While this includes the typical failure to pay an employee all wages, salary, gratuities, etc. as required by law, criminal wage theft also occurs if the employer demands or receives from an employee any rebate or refund from the wages owed to the employee, or if the employer makes it appear that wages paid to any employee were greater than the amount actually paid to the employee.
To combat wage theft, Minnesota’s new law creates more transparency and clarity of payment calculations for employees, especially those who are overtime eligible. Employers now must provide employees with additional information about compensation, overtime eligibility status, and timing for wage payments, among other things. This article addresses many of the compliance considerations for employers as they confront their legal obligations under the new law.
Earnings Statement. Though many employers already provided an Earnings Statement to their employees that contains the information enumerated below (as a best practice), the new Minnesota law now requires that employers provide their employees with an Earnings Statement—at the end of each pay period—with the following information (on top of previously required information):
- The rate of pay, including the basis of that rate—i.e., whether the employee is paid hourly, by shift, by week, by salary, by commission, etc.;
- Allowances for permitted meals and lodging;
- The address for the employer’s main office or principal place of business, and mailing address (if different); and
- The employer’s telephone number.
Wage Notice. When a new employee begins employment, the new law requires that employers provide written notice to the employee containing the following notifications:
- The rate of pay and basis of that rate—whether the employee is paid hourly, by shift, by week, by salary, by commission, etc.;
- Allowances for permitted meals and lodging;
- Paid vacation time, sick time, or other paid time-off accruals, and the governing terms of use;
- Employee’s employment status and whether the employee is exempt from minimum wage or overtime, and on what basis;
- List of available deductions from the employee’s pay;
- Number of days in each pay period, the regularly scheduled pay day, and the day in which the employee will first receive payment of wages earned;
- The employer’s legal name and operating name (if different from legal name);
- The address for the employer’s main office or principal place of business, and mailing address (if different); and
- The employer’s telephone number.
Under the new law, employers must keep the employee-signed notices on file. Employers also must provide employees with any changes to this information in writing before the changes take effect.
Translation Requirements. All employers must provide the wage notice to employees in English. The notice must also contain a statement in multiple languages informing the employee that they may request the notice be provided in another language. If an employee requests the notice in another language, the employer must provide it.1
Timing for Wage Payments. The new law requires that employers pay non-commission earnings (i.e., salary, earnings, and gratuities) at least once every 31 days and all earned commissions at least once every three months. Wages and commissions must be paid on a regular payday.
Should an employer fail to pay wages or commission earned by an employee, the Commissioner of the Department of Labor and Industry (“DOLI”) may demand payment on the employee’s behalf. If payment is not made within 10 days of the demand’s service date, the Commissioner may charge and collect wages and commissions earned and seek a penalty against the employer. Ultimately, money collected by the Commissioner must be paid to the at-issue employee.
Additional Recordkeeping. In addition to the currently required information, the new law requires that employers must also keep record of:
- The number of pieces completed at each piece rate for all employees paid at a piece rate;
- A list of personnel policies with brief descriptions of each policy that were provided to each employee, including the date the policies were given to the new employee; and
- A copy of the new wage notice and any updated noticed provided to and signed by the employee.
These records must be available for inspection within 72 hours of demand of demand by the DOLI Commissioner. The Commissioner may penalize an employer up to $5,000.00 for each repeated failure to keep and maintain records or a repeated failure to submit or deliver records requested by the Commissioner. If the records maintained by the employer are not enough for the Commissioner to determine the exact amount of back wages due to the employee, the Commissioner may decide the wages due based on the evidence available.
Enforcement. The Commissioner has the authority to enter and inspect places of business to investigate and interview employees in private about potential violations of wage and hour laws.
For failure to pay wages or commissions, the Commissioner may order the employer to:
- Pay wages or commissions owed to the employee;
- Pay an amount equal to the wages or commissions owed as liquidated damages;
- Pay compensatory damages incurred by an employee;
- Cease and desist the violative practice;
- Pay a civil penalty for repeated or willful violations; and
- Pay a penalty equal to either the employee’s average daily wages or an amount equal to 1/15 of the commissions eared for each day payment is not made in accordance with the Commissioner’s order.
The Minnesota Attorney General’s Office also has the authority to enforce state wage and hour laws.
Criminal Penalties. The new provision that would impose criminal penalties for “wage theft” takes effect on August 1, 2019. Under this new provision, criminal conduct includes:
- Failing to pay an employee all wages or commissions at the employee’s rate(s) of pay or at the rate(s) required by law—whichever is greater;
- Directly or indirectly causing an employee to give a receipt for wages for a greater amount than actually paid to the employee;
- Directly or indirectly demanding or receiving from any employee any rebate or refund from the wages owed the employee under contract of employment with the employer; and
- Making or attempting to make it appear in any manner the wages paid to any employee were greater than the amount actually paid to the employee.
The penalty for committing wage theft varies upon the amount stolen with a maximum sentence of 20 years and/or payment of a fine up to $20,000.00.
If you have any questions regarding compliance with these new legal requirements or other employment law concerns, please contact the authors or one of the other attorneys in HAWS-KM’s Employment Law Group at (651) 227-9411.
