Legal Update: Minnesota Wage Theft Statute Changes
Employers in Minnesota should be prepared for sweeping changes that go into effect next week.
On July 1, 2019, Minnesota will 1) start requiring employers to provide written wage-related information to employees, 2) change existing law governing when employees must be paid and the penalty for failing to pay wages and commission owed, as well as 3) implement a variety of record-keeping obligations. This new law creates enhanced civil penalties and for the first time imposes significant criminal penalties for some violations.
Both employers and employees are encouraged to become informed about these changes and how they may affect their rights. This article highlights a few of the key changes that will impact employers and employees as the deadline approaches.
Wage Notices to Employees
a. New Employees
Under the newly enacted statutes, at the start of employment, Minnesota employers must now provide their new employees with a written wage notice that includes the following information:
1) the 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, and the specific application of any additional rates;
2) allowances, if any, that may be claimed for permitted meals and lodging;
3) paid vacation, sick time, or other paid time-off accruals and terms of use;
4) the employee’s employment status and whether the employee is exempt from minimum wage, overtime, and other provisions of [the Minnesota Fair Labor Standards Act], and on what basis;
5) a list of deductions that may be made from the employee’s pay;
6) the number of days in the pay period, the regularly scheduled payday, and the payday on which the employee will receive the first payment of wages earned;
7) the legal name of the employer and the operating name of the employer if different;
8) the physical address of the employer’s main office or principal place of business, and a mailing address if different; and
9) the telephone number of the employer.
The wage notice need not be provided in any specific format, as long as all the required information is included. The Department of Labor and Industry (DLI) has provided an example of an Employee Wage Notice, which employers may elect to use. Employers must keep a copy of the notice signed by the employee acknowledging receipt.
b. Current Employees
Under the new law, Minnesota employers are not required to provide wage notices to current employees when the law goes into effect. However, employers will need to provide compliant wage notices to current employees when they intend to change any of the information that must otherwise be included in a wage notice under the statute, as described above. Even though employers are not required to immediately provide new wage notices to their current employees, the DLI has “strongly” encouraged employers to do so.
Earning Statements
After July 1, 2019, employers should also be careful to ensure that earning statements provided to their employees include the following new information: 1) the rate, basis, and method of pay; 2) any allowances for meals and lodging; 3) the physical address of the employer or principal place of business, and 4) a telephone number of the employer. The earnings statement should explain why the employee is being paid at the rate shown in the statement. However, earning statements are not required to state whether the employee is “exempt” or “non-exempt” from minimum wage, overtime, or other provisions of the Minnesota Fair Labor Standards Act.
Timing and Payment of Wages
The newly amended Wage Theft Statute now expressly includes “salary, earnings, and gratuities” within the types of wages that must be paid at least every 31 days. The law further requires that “all commissions earned by an employee” must be paid at least once every three months. Moreover, in the past, employers withholding wages were able to rely on a 15-day cap on the damage penalty for failing to pay wages following an employee’s demand. With the recent changes, that is no longer the case. Now, there is no limit on the penalty that can be imposed.
Recordkeeping
With changes made to Minnesota’s general employer recordkeeping statute, employers must now maintain “a list of the personnel policies provided to the employee, including the date the policies were given to the employee and a brief description of the policies.” In addition, employers must keep their records in a manner readily available for inspection within 72 hours of demand. Failure to properly keep records could result in civil penalties. The statute allows for a $1,000 fine against an employer for each failure to maintain records, and up to a $5,000 fine for each repeated failure.
Criminal Wage Theft
The most significant change imposed by the Minnesota Wage Theft Statute is the potential imposition of criminal penalties, which will go into effect on August 1, 2019. Under the new law, criminal wage theft now occurs when an employer, “with an intent to defraud,” does any of the following:
1) 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, including any applicable statute, regulation, rule, ordinance, government resolution or policy, contract, or other legal authority, whichever rate of pay is greater;
2) 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;
3) 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; or
4) makes or attempts to make it appear in any manner that the wages paid to any employee were greater than the amount actually paid to the employee.
The definition of an “employer” under the criminal theft provisions is exceedingly broad, and there may be hefty consequences for any employer who violates these provisions. In particular, criminal wage theft in excess of $35,000 may include imprisonment of up to 20 years and up to a $100,000 fine. The minimum penalty, which only requires $500 in stolen employee wages over a six-month period, is up to one-year imprisonment and a $3,000 fine.
Given the potential criminal implications, employers should take extra care to understand and follow the new wage-theft laws, so that they do not inadvertently end up in violation. Unlike their criminal counterpart, all other provisions of the new law will take effect on July 1st, and the penalties for noncompliance with these provisions do not require intent.
These are just some of the key changes to Minnesota’s Wage Theft Statute that will impact employers and employees. Given the approaching deadlines, employers should become informed on the new law to ensure their practices are in compliance when the statutory changes take effect.
Henson Efron can advise you on the steps to take to ensure compliance and on ways to protect your rights as an employer or employee. Contact us for more information.
The purpose of this article is merely to provide general information and should not be construed as legal advice.
This article was co-authored by law clerk, Alex Henson.
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