In the 2019 legislative session, Minnesota legislators from the Democrat majority in the House and Democrat minority in the Senate prioritized passing several workforce mandate initiatives. The Republican-controlled Senate did not support most of this legislation. However, wage theft legislation had bipartisan support in both the House and Senate, but the two bodies differed in their approach to address the issue. The final compromise included language from both the House and Senate bills.
The new law makes it a crime for an employer to practice wage theft with an intent to defraud the employee. Importantly, the new law imposes a number of new requirements on the information that is provided to employees when and employer hires an employee and pays the employee.
Here is a summary of some of the key provisions of the law, which applies to all Minnesota employers:
1. Start of Work Notice Required
At the start of employment, employers are required to provide all employees with a written notice containing specified information. The Minnesota Department of Labor has provided a sample “Start of Work Notice” that is attached in electronic form at Link to Start of Work Employee Notice Example. The specific requirement of this document includes:
- 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 and the basis thereof, 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.
- Provision of paid vacation, sick time or other paid time off (PTO), how the paid time off will accrue and terms for its use.
- A list of deductions that may be made from the employee’s pay.
- Employer’s legal name and the operating name, if different.
- Physical address of employer’s main office or principal place of business and a mailing address, if different.
- Employer’s telephone number.
2. Additional Requirements Relating to Start of Work Notice
- Employers are required to keep a copy of the notice signed by each employee.
- All employers must provide the notice to employees in English. The notice must include a statement, in multiple languages, that informs employees they may request the notice be provided to them in another language. The employer must provide the notice in another language if requested by the employee.
The Department of Labor is preparing and will make available to employers the statement in multiple languages that must be included with the notice. Employers are also required to provide employees in writing any changes to the information in the notice before the date the changes take effect. An employee notice example is online at Link to Start of Work Employee Notice Example.
3. Required Information on Earning Statements / Pay Stubs
Existing law required specific information to be included on employee earning statements. The new law expands the information that is required on employee earning statements provided to employees each pay period:
- Name of the 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.
New Required information on earning 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.
4. Record Keeping Requirements
Under existing law, employers are required to keep various records for three years. The new law requires the additional records be kept by an employer. Set out below are is the current law and the new law which is bolded and highlighted:
- Each employee’s name, address and occupation. (current law).
- Each employee’s rate of pay and the amount paid each pay period. (current law).
- 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. (underlined portion is new).
- 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. (underlined portion is new).
- A copy of the new notice that is required to be provided to and signed by each employee at the start of employment and a copy of any written changes to the notice that were provided to each employee. (underlined portion is new).
- For each employer subject to Minn. Stat. §§ 177.41 to 177.44 (Minnesota Prevailing Wage Act), and while performing work on public works projects funded in whole or in part with state funds, the employer shall furnish under oath signed by an owner or officer of an employer to the contracting authority and the project owner every two weeks, a certified payroll report with respect to the wages and benefits paid each employee during the preceding weeks specifying for each employee: name; identifying number; prevailing wage master job classification; hours worked each day; total hours; rate of pay; gross amount earned; each deduction for taxes; total deductions; net pay for week; dollars contributed per hour for each benefit, including name and address of administrator; benefit account number; and telephone number for health and welfare, vacation or holiday, apprenticeship training, pension and other benefit programs. (current law).
- Other information the commissioner finds necessary and appropriate to enforce Minn. Stat. §§ 177.21 to 177.435. These and other records that are required to be kept by an employer must be available for inspection by the commissioner upon demand. The records must be either kept at the place where employees are working or kept in a manner that allows the employer to comply with the commissioner’s demand within 72 hours.(underlined portion is new).
If records maintained by the employer do not provide sufficient information to determine the exact amount of back wages due, the commissioner may make a determination of wages due based on available evidence. (underlined portion is new).
5. Payment of Wages
A number of changes have been made as to what wages an employer must pay and when and employer must pay wages. Set out below are is the current law and the new law which is bolded and highlighted:
- Employers must pay all wages, including salary, earnings and gratuities earned by an employee at least once every 31 days and all commissions earned by an employee at least once every three months on a regular payday.
Employers are prohibited from retaliating against an employee for asserting rights or remedies under the new wage theft law. This includes filing a complaint with the DLI or informing the employer of the employee’s intention to file a complaint. In addition to any other remedies provided by law, an employer who is found to retaliate is liable for a civil penalty of $700 to $3,000 per violation.
The new law provides new and expanded enforcement to the Attorney General and the Commissioner of the Department of Labor. Specifically, the new law provides.
Commissioner of the Department of Labor Enforcement Authority: The new law allows the Department of Labor to enter and inspect places of employment during normal working hours and investigate facts, conditions, and practices or matters the DLI commissioner deems appropriate to enforce the laws. The Department of Labor has broad powers to investigate violations, including issuing subpoenas.
Attorney General: The new law provides the Minnesota Attorney General’s Office, in addition to the Department of Labor and Industry, with the authority to enforce Minn. Stat., Chapters 177 (Minnesota Fair Labor Standards Act and Prevailing Wage Act) and 181 (Payment of Wages) under Minn. Stat. § 8.31.
8. Civil Penalties
The new law creates civil penalties for its violation. The civil components of the new law, including the notice and record-keeping requirements described above, go into effect July 1, 2019.
The new law clarifies the commissioner may order the employer to:
- Pay wages or commissions owed to an employee.
- Pay an amount equal to the wages or commissions owed as liquidated damages.
- Pay compensatory damages incurred by an employee.
- Cease and desist in the violative practice.
- Pay a civil penalty for repeated or willful violations.
- The commissioner may also now order an employer to pay a penalty equal to either the employee’s average daily wages earned or an amount equal to 1/15 of the commissions earned for each day payment is not made in accordance with the commissioner’s order.
- Penalize an employer up to $5,000 for each repeated failure to submit or deliver records to the commissioner as required by law.
- Penalize an employer up to $5,000 for each repeated failure to keep and maintain records as required by law.
9. Criminal Penalties
The new law additionally creates criminal penalties for its violation. They include:
Under existing law, an employer found to have hindered or delayed the Department of Labor in the performance of duties required under the Minnesota Fair Labor Standards Act or the Prevailing Wage Act was guilty of a misdemeanor. The new Wage Theft Law adds that any employer hindering or delaying the Department of Labor in the performance of duties required under the new law is also guilty of a misdemeanor.
New Criminal Statute
The new law imposes criminal sanctions for committing “wage theft.” Specifically, the law states that the crime of “wage theft” occurs when an employer, with an intent to defraud:
- 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 for wages for a greater amount than that actually 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 actually paid to the employee.
“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.”
“Employee” is defined as “any individual employed by an employer.”
“Wage theft” has been added to the criminal definition of theft under Minn. Stat. § 609.52, subd. 2(19), and sanctions for committing wage theft 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.
When determining the value of 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.
The criminal provisions become effective August 1, 2019 and apply to all wage theft crimes committed on or after that date.
10. What an Employer Should Do Now
The Department of Labor has issued some limited guidance for employers, the most significant of which is the “Start of Work Notice” example. Currently, employers at a minimum should do the following:
- Use the Department “Start of Work” notice form or create the required wage notice, including all of the required information, and provide a wage notice to all new employees hired after July 1, 2019, and to all current employees if any of the information required to be included in the wage notice changes (with such notices being provided prior to the date any change takes effect).
- Create or revise a policy acknowledgement form, such as the employee handbook acknowledgement, that satisfies the new law’s requirements (i.e., includes a list of the policies that are included in the employee handbook, and a brief description of the policies). If personnel policies are maintained electronically, such as on the employer’s intranet, then the employer should consider creating an annual acknowledgment form that includes a list of all of the policies (including a short description of each policy) and have employees acknowledge that they have received access to the policies.
- Ensure that earnings statements/pay stubs comply with the new law.
- Employers that contract with professional employer organizations or payroll vendors should contact those providers to ensure information provided to employees complies with the new law.