Minnesota Wage Theft Law Takes Effect on July 1, 2019

The State of Minnesota has enacted legislation to prevent “wage theft” that will require employers to take specific steps when it goes into effect on July 1, 2019. The requirements apply to employers in Minnesota with 10 or more employees. Key provisions of the law include:

Employers must provide all new employees with a written notice setting forth specific information regarding the employee’s employment status and terms of employment.
Earnings statements (paystubs) must include additional information such as the employee’s rate or rates of pay and allowances for meals and lodging.
Employers have new record-keeping requirements.
Employers must pay all wages, including salary, earnings and gratuities at least once every 31 days and must pay all commissions earned by an employee at least once every three months.

The law also amends the “responsible contractor” requirements for public contracts, prohibits retaliation against employees seeking to enforce their rights under the law, and makes “wage theft” a criminal act punishable by fine or imprisonment.

New Notice Requirements

The most immediate requirement and action item for employers is the notice form. A sample notice form is available on the website of the Minnesota Department of Labor and Industry (“DLI”). The DLI is strongly encouraging employers to provide this notice to all current employees once the law goes into effect, but it is not required.

Minnesota employers are reminded that they must also provide written notice to each new hire of the employee’s rights and remedies under the Minnesota Personnel Record Review and Access Act pursuant to a law that took effect on January 1, 2008. Minn. Stat. § 181.9631. Minnesota employers must also include a notice of employee rights and remedies under the Wage Disclosure Act in their employee handbook. Minn. Stat. § 181.72. The new notice required by the wage theft legislation is likely too specific as to each employee to be included as part of a generic handbook, but it could be provided at the same time as the employee receives a handbook or even as a customized page.

The new Wage Theft Law requires the following information be included in one notice:

The employee’s employment status, including whether they are exempt from minimum wage, overtime and other state wage and hour laws, and on what basis.
The number of days in the employee’s pay period and the regularly scheduled payday.
The date the employee will receive the first payment of wages earned.
The employee’s rate or rates of pay and 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.
Any allowances that may be claimed for permitted meals and lodging.
Provision of paid vacation, sick time or other paid time off (PTO), how the paid time off will accrue and terms for its use.
Any deductions that may be made from the employee’s pay.
The employer’s legal name and the operating name, if different.
The physical address of employer’s main office or principal place of business and a mailing address, if different.
The employer’s telephone number.

The notice must be in English, but must also include a statement in multiple languages informing employees that they may request the notice in another language. The DLI is preparing and will make available to employers the statement in multiple languages that must be included with the notice. Employers must provide the notice in another language if requested by the employee.

Employers are required to keep a copy of the notice signed by each employee. If an employer makes any changes to any of the items listed above, they must provide notice to the affected employee prior to the change taking effect and retain a signed copy.

Paystub Requirements

Minnesota Statute § 181.032 currently requires paystubs and statements to include the name of the employee, the hourly rate of pay (if applicable), the total number of hours worked by the employee unless exempt, the total amount of gross pay earned by the employee during that period, a list of deductions made from the employee’s pay, the net amount of pay after all deductions are made, the date on which the pay period ends, and the legal name of the employer and the operating name of the employer if different from the legal name. Minnesota’s new Wage Theft Law adds the following new requirements:

The employee’s rate or rates of pay, and the 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.
The employer’s telephone contact.
The physical address of employer’s main office or principal place of business and a mailing address, if different.

Record-Keeping Requirements

Employers are required to retain specific information as part of their record keeping practices as specified in Minnesota Statute § 177.30. In addition to keeping a copy of each employee’s signed notice as discussed above, additional record-keeping requirements are as follows:

Employers must keep 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 employee. This new requirement emphasizes the importance of having an up-to-date handbook and requiring all employees to sign policy acknowledgments for file retention.

Each employee’s hours worked each day and each workweek, including, for all employees paid at piece rate, the number of pieces completed at each piece rate.

All required records must be available for inspection by the DLI Commissioner (“Commissioner”) upon demand.

Payment of Wages and Commissions

Minnesota Statute § 181.101 requires employers to pay all wages earned by an employee at least once every 31 days on a regular payday designated in advance by the employer. The new law clarifies wages to include salary, earnings, and gratuities. The new law also requires all commissions earned by an employee be paid at least once every three months on a regular payday. The new Wage Theft Law further clarifies that Minn. Stat. § 181.101 provides a substantive right to the payment of commissions and wages, at the employee’s rate or rates of pay or the rate or rates required by law, whichever is greater, as well as the right to be paid wages and commissions earned on a regular payday.

New Requirements for Employers under the Responsible Contractor Law

The “responsible contractor” requirements have been amended as a result of the new law. The requirements now include Minn. Stat. §§ 181.03 (prohibited wage practices and retaliation), 181.101 (payment of wages) and 609.52, subd. 2 (19) (criminal wage theft), in the list of laws that contractors must verify they follow and have not violated within the last three years in order to be qualified to bid on public contracts.

New Enforcement Authority and Penalties

The Commissioner is designated as the authority and has the ability to enter and inspect places of employment, interview non-management employees in private, and order employers to pay wages, commissions, and damages. The Minnesota Attorney General’s Office also has authority to enforce the statutes.

Minnesota Statute Section 181.101 has been amended to allow for penalties if the Commissioner serves a demand for payment and the employer does not pay within ten days. The penalty for non-payment of wages is the amount of the employee’s average daily wage for each day after the initial ten days and the penalty for non-payment of commissions is 1/15^th of the amount of commissions due for each day beyond the initial ten-day period (which after 15 days of non-payment becomes a penalty equal to the full amount of the commissions.) These penalties only apply when the Commissioner makes a demand on behalf of the employee, but we may expect the DLI become more involved in non-payment of wages claims as this issue has become a political priority. Additional penalties include $5,000 for each repeated failure to submit or deliver records to the commissioner or keep and maintain required records. The new Wage Theft Law adds that any employer hindering or delaying the commissioner in the performance of duties is also guilty of a misdemeanor

Criminal Wage Theft

The provisions providing for criminal wage theft and criminal sanctions become effective on Aug. 1, 2019. Wage theft becomes a criminal offense when an employer, with intent to defraud:

Fails to pay an employee all earnings at the rate or rates required by law.
Provides an employee with a receipt for wages for a greater amount than actually paid.
Demands or receives any rebate or refund from wages paid under a contract of employment.

When determining the value of the wages stolen, the law allows wages to be calculated within any six-month period. Penalties are as follows:

Imprisonment for not more than 20 years, payment of a fine of not more than $100,000 or both if the value of the wages stolen is more than $35,000.
Imprisonment for not more than 10 years, payment of a fine of not more than $20,000 or both if the value of the wages stolen exceeds $5,000.
Imprisonment for not more than five years, payment of a fine of not more than $10,000 or both if the value of wages stolen is more than $1,000 but not more than $5,000.
Imprisonment for not more than one year, payment of a fine of not more than $3,000 or both if the value of the property or services stolen is more than $500 but not more than $1,000.

City Ordinances

The City of Minneapolis is also considering a new ordinance requiring all agreements regarding pay or compensation to be in writing and to provide regular written or electronic earnings statements. One version of the proposal would also apply to independent contractors.

Conclusion

Minnesota’s new Wage Theft Law creates a number of new record-keeping, notice and wage payment requirements for employers. The new legislation emphasizes the importance of having up-to-date policies, handbooks, and acknowledgment forms. Employers should act now to prepare a notification form for each new employee and contact their payroll provider to ensure that paystubs are compliant.

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If you have questions about the new law or need assistance implementing the changes, contact one of the Minnesota employment attorneys at Trepanier MacGillis Battina P.A. 612.455.0500. The Firm’s employment law attorneys can review your current policy, record keeping, wage, and handbook practices.