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Minnesota Wage Theft Law Subjects Employers to New and Expanded Requirements

Compliance
Article
08/16/2019

The Minnesota Jobs and Economic Development Omnibus bill, signed into law by Gov. Tim Walz, includes wage theft protections for employees and imposes new requirements for employers.

Under the law, employers must disclose additional information to an employee at the time of hire and throughout the employment relationship. In addition, the law creates additional disclosures on wage statements, imposes additional recordkeeping requirements, clarifies when wages must be paid, sets forth anti-retaliation provisions, and creates criminal liability for violations of the law.

While many of these requirements took effect on July 1, 2019, the Minnesota Department of Labor and Industry stated in its published Q&A web page: “The department’s primary focus for the next few months will be on providing employers with the information and assistance they need to understand and implement the requirements of the new law.” Below is a summary of revisions and expansions of the law. The criminal enforcement sanctions were effective August 1, 2019.

Minneapolis Adopts Ordinance that Expands Requirements 

In addition to the state wage theft law, the City of Minneapolis passed its own Wage Theft Prevention Ordinance creating expanded obligations for Minneapolis employers. The city ordinance incorporates the state wage theft law and also includes the Minneapolis minimum wages and sick leave. Unlike the state wage theft law, the Minneapolis ordinance requires city employers to:

  • Post a wage theft notice that is to be created by the city
  • Provide additional information on the pre-hire notice
  • Include additional information on the earnings statement
  • Keep a list of personnel policies provided to employees

The ordinance also creates a rebuttable presumption that retaliation occurred if an employer changes the terms or conditions of the employee’s employment within 90 days of the employee’s exercise of rights under the ordinance.

The Minneapolis ordinance is effective January 1, 2020.

What are the requirements under the new Minnesota Jobs and Economic Development law?

Notice to employees

Employers must provide employees with a written notice at the start of employment. The notice must contain specific information about the employee’s employment status and terms of employment. Specifically, the notice must include:

  • Employee’s employment status and whether an employee is exempt from minimum wage, overtime, and other state wage and hour laws, and on what basis
  • Number of days in the employee’s pay period and the regularly scheduled payday
  • Date the employee will receive the first payment of wages earned
  • Employee’s rate or rates of pay, including whether the employee is paid by the hour, shift, day, week, salary, piece, commission, or other method, and the specific application of any additional rates
  • Allowances, if any, that may be claimed for permitted meals and lodging
  • Provisions of paid vacation, sick time, or other paid time off (PTO), how the PTO will accrue, and terms of its use
  • A list of deductions that may be made from the employee’s pay
  • Employer’s legal name and operating name (if different)
  • Physical address of employer’s main office or principle place of business and a mailing address (if different)
  • Employer’s telephone number

This notice must be provided in English with a statement, in multiple languages, that informs employees that they may request the notice be provided to them in a different language. If requested by an employee, the employer must provide the notice in another language. The Minnesota DLI has issued a model notice for employers that includes all of the required elements. Employers are required to keep a copy of the notice that is signed by the employee.

Employers must also provide an updated notice — and keep a copy of the notice signed by the employee — whenever information changes. For example, if an employee’s rate of pay changes, an employer is required to provide a new notice to the employee. If a written notice has been provided to an employee, then only the changes to the information in the written notice would need to be provided to the employee in writing prior to changes taking effect.

Earnings statements

Minnesota employers have been required to provide an earnings statement to employees at the end of each pay period, either in writing or electronically, covering that pay period. The law required — and continues to require — that the following information be included on the earnings statements:

  • Name of employee
  • Total hours worked by the employee in the pay period
  • Total amount of gross pay earned by employee in the pay period
  • Net amount of pay after all deductions are made
  • List of deductions made from the employee’s pay
  • Date pay period ended
  • Employer’s legal and operating name

Under the expansion of the law, employers must now also provide the following on wage statements:

  • Employee’s rate or rates of pay and basis thereof, including whether the employee is paid by the hour, shift, day, week, salary, piece, commission, or other method
  • Allowances claimed for permitted meals and lodging
  • Employer’s telephone contact
  • Physical address of employer’s main office or principal place of business and a mailing address (if different)

If an employee provides notice to the employer that the employee prefers to receive a written earnings statement (e.g., a paper copy or non-electronic statement), the employer must provide the employee with a written copy of the statement and continue to provide the written statement for that employee on an ongoing basis.

Recordkeeping

Under the new law, employers have expanded responsibility regarding recordkeeping. Employers have been required to keep records for a three-year-period that included the name, address, occupation, rate of pay, amount paid to each employee during each pay period, and the hours worked each day and workweek by the employee. These records must be kept by an employer for a three-year period. Under the new law, employers must additionally keep the following:

  • For employees paid at piece rate, the number of pieces completed at each piece rate
  • A list of personnel policies provided to the employee and a brief description of the policies
  • A copy of the required notice provided to the employee at the beginning of employment, including any written changes to the notice

All records must be made readily available, upon request, for the Minnesota DLI. The records must be kept where the employees are working or in a manner that allows the employer to comply with the requirement within 72 hours. An employer could be fined $5,000 for each repeated failure to maintain the required records.

The Minnesota Attorney General’s office, in addition to the Minnesota DLI, will have the authority to enforce certain laws pertaining to the payment of wages and wage theft.

What are the wage payment requirements under the Minnesota Jobs and Economic Development law?

The law clarifies that employers must pay all wages — including salary, earnings, and gratuities — to employees at least once every 31 days. The law also requires that all commissions must be paid by the employer at least once every three months on a regular payday.

Criminal culpability added under the new law

The law adds a criminal offense for any employer found guilty of wage theft. For purposes of the law, an employer is defined as “any individual, partnership, association, corporation, business trust, or any person or group of persons acting directly or indirectly in the interest of an employer in relation to an employee.” The crime of “wage theft” occurs when an employer, with the intent to defraud (e.g., not a mistake):

  • Fails to pay an employee all wages, salary, gratuities, earnings, or commissions at the employee’s rate or rates of pay or at the rate or rates required by law, whichever is greater.
  • Directly or indirectly causes any employee to give a receipt of wages for a greater amount than that paid to the employee for services rendered.
  • Directly or indirectly demands or receives from any employee any rebate or refund from the wages owed the employee under contract of employment with the employer.
  • Makes or attempts to make it appear in any manner the wages paid to any employee were greater than the amount paid to the employee.

Sanctions for committing wage theft vary depending on the value of the wages stolen. They include a maximum sanction of not more than 20 years’ imprisonment, payment of a fine up to $100,000, or both if the value of the wages is more than $35,000. When determining the wages stolen, the law allows for the amount of employee wages that were stolen through wage theft to be aggregated within any six-month period.

Are there anti-retaliation measures under the Jobs and Economic Development law?

The law includes an anti-retaliation provision. Employers are prohibited from retaliating against any employee who asserts rights or seeks remedies under enumerated Minnesota laws, from filing a complaint with the Minnesota DLI or telling the employer or the employee’s intention to file a complaint. Civil penalties for violations are in an amount between $700 and $3,000 per violation.

What’s next?

Minnesota employers already should have begun to take the necessary steps to comply with providing information, recordkeeping, and wage payment under the law. Paychex will continue to monitor for developments.

Additional resources

The Minnesota DLI has published an FAQ document.

Kate Hill is a compliance analyst who concentrates on the impact of legislative and regulatory changes on employment law for Paychex, Inc.
This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.