Legal Alert: Minnesota’s Wage Theft Bill with New Requirements for Employers to Take Effect July 1, 2019

June 2019

Governor Walz recently signed the bipartisan Jobs and Economic Development Omnibus bill, which includes wage theft protections for employees, imposes additional wage and hour record-keeping requirements on employers and includes increased civil and criminal enforcement for wage theft violations. Below are the key provisions of the bill that employers need to be aware of, in addition to recommended next steps employers should take to ensure compliance. 

New Record-Keeping Requirements for Employers

Most significantly for employers, the bill amends section 177.30 of the Minnesota Fair Labor Standards Act, which addresses record-keeping requirements for employers with respect to their employees’ wages. In addition to the records employers were already required to keep under that statute, employers are now also required to keep track of 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, including the date the policies were given to the employee and a brief description of the policies; and
  • A copy of the written notice provided to each employee at the start of the employee’s employment (addressed in further detail below), including any written changes to the notice.

These and other records required to be kept under Minn. Stat. § 177.30 must be readily available for inspection by the Commissioner upon demand and kept at a place employees are working or in a manner that allows for access by the Commissioner within 72 hours.

The bill further amends Minn. Stat. § 181.032 to require that the statement of earnings (typically referred to as a pay stub) employers issue to employees include the following additional information: 

  • 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; 
  • Allowances, if any, claimed pursuant to permitted meals and lodging; 
  • The physical address of the employer’s main office or principal place of business, and a mailing address if different; and
  • The telephone number of the employer.

Significantly, Minn. Stat. § 181.032 will now require employers provide each employee with a written notice at the start of their employment containing the following information: 

  • 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;
  • Allowances, if any, claimed pursuant to permitted meals and lodging; 
  • Paid vacation, sick time, or other paid time-off accruals and terms of use;
  • The employee’s employment status and whether the employee is exempt from minimum wage, overtime, and other provisions of chapter 177, and on what basis; 
  • A list of deductions that may be made from the employee’s pay; 
  • 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; 
  • The legal name of the employer and the operating name of the employer if different from the legal name; 
  • The physical address of the employer’s main office or principal place of business, and a mailing address if different; and 
  • The telephone number of the employer.

Employers are required to keep a copy of this notice, signed by each employee acknowledging receipt of the notice. The notice must be provided to each employee in English and must also include text provided by the Commissioner that informs employees that they may request (by indicating on the form) that the notice be provided in a particular language. Finally, employers must also provide the employee with any written changes to the information contained in the notice prior to the date the changes take effect.

Requirements Regarding the Timing of Paying Wages

In addition to the enhanced record-keeping requirements, the bill also amends Minn. Stat. § 181.101 to provide a substantive right for employees to the payment of wages, including salary, earnings, and gratuities, as well as commissions, and the right to be paid at certain times. The bill also amends Minn. Stat. § 181.101, which already provided that all “wages” were due to employees at least once every 31 days, to now include salary, earnings, and gratuities in the definition of “wages.” The bill further amended the statute to require employers pay commissions earned by employees at least once every three months.

The bill also removed the 15-day cap on the penalty imposed for failure to pay wages owed under Minn. Stat. § 181.101 within 10 days of service of a demand and added commissions to the type of payment that may be demanded by the Commissioner under the statute if not paid. Employers that fail to pay owed commissions within 10 days of service of a demand may be charged the commissions earned and a penalty equal to equal to 1/15th of the commissions earned but unpaid for each day beyond the 10-day limit by the Commissioner.

Civil Retaliation Protections

The law also amended the Minnesota Fair Labor Standards Act to provide new retaliation protections for employees that assert rights under the law, specifically, sections Minn. Stat. §§ 177.21 to 177.44, and Minn. Stat. §§ 181.01 to 181.723, or 181.79. The anti-retaliation protections extend to, but are not limited to, an employee filing a complaint with the department or telling an employer of the employee’s intention to file a complaint.

Criminal Penalties for Wage Theft

In addition to the enhanced record-keeping requirements, the bill provides for criminal liability for intentional wage theft violations, effective August 1, 2019. Specifically, the bill amends Minn. Stat. § 609.52 to include “wage theft” as a type of theft under the law for which there are criminal penalties, including imprisonment of up to 20 years and up to a $100,000 fine for any violation in excess of $35,000. “Wage theft” is defined under the law as occurring when an employer, with 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, including any applicable statute, regulation, rule, ordinance, government resolution or policy, contract, or other legal authority, whichever rate of pay 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; or 
  • 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. 

Enhanced Enforcement Mechanisms

The law also provides for additional enforcement mechanisms to the Department of Labor and Industry (“DOLI”) to investigate wage theft violations, including amending Minn. Stat. § 175.20 to provide the Commissioner with the authority to enter employers’ places of business, during working hours, to investigate potential violations of chapters 177, 181, 181A and 184. This authority includes the ability of the Commissioner to collect evidence and interview various witnesses
regarding the matter under investigation.

In addition to additional enforcement mechanisms included in the statute, $3.1 million in new funding will be invested over the next two years in the DOLI’s enforcement of the state’s wage and hour laws to allow the agency to increase targeted workplace enforcement and outreach and education for employers and workers.

Employers with Minneapolis-based employees should keep their eyes on the
development of an ordinance currently being contemplated by the Minneapolis City Council that would provide additional pay protections to employees, independent contractors, and freelance workers.

In light of these new requirements, employers should update any applicable record-keeping practices to include the information now required to be saved by Minn. Stat. § 177.30, ensure pay stubs provided to employees contain the information now required under Minn. Stat. § 181.032, and develop the written notice now required by Minn. Stat. § 181.032 for starting employees. Employers should also conduct a review of any employment policies, including employee handbooks, and revise as necessary in light of the new substantive rights afforded to employees now provided by Minn. Stat. § 181.032 and the Minnesota Fair Labor Standards Act, as outlined above. 

FMJ’s HR & Employment attorneys are available to assist you with your review of your workforce’s payroll documents, policies and record-keeping practices in light of the passage of this bill. For more information on the group, click here

If you have any questions about the above alert or are interested in learning more about how to comply with the new requirements, feel free to contact, Shannon McDonough, at shannon.mcdonough@fmjlaw.com or 952-995-9500.