On April 9, 2025, a Lakeville, Minnesota owner of a painting company was handed the first criminal conviction in state history under the Minnesota Wage Theft Prevention Act. In 2019, Minnesota passed what was one of the most stringent wage theft laws in the U.S. at the time. However, there have been few cases and no convictions under the Minnesota Wage Theft Prevention Act, which is largely considered to be due to (1) a lack of resources for investigations in these types of cases and (2) the prioritization of violent crimes over financial fraud.
What Happened in This Landmark Case?
Frederick Leon Newell was convicted of felony wage theft, as well as theft by swindle for deceiving the general contractor that retained Newell’s painting company as a subcontractor. Newell was accused of stealing more than $35,000.00 in wages from five workers at an affordable housing development project in Minneapolis and continuing to accept payments from the general contractor over the course of the project. In 2021, Newell reached an agreement with the Minneapolis Department of Human Rights to pay the five workers what they were owed. However, Newell never paid, leading to this case.
Newell’s painting company was a subcontractor at an affordable housing development that received public funding through tax increment financing. This required Newell’s painting company to pay the prevailing minimum wage set by the state for painters and general laborers. Newell was found to have paid painters and general laborers $10.00 to $20.00 per hour less than the prevailing minimum wage. As a result, Newell underpaid one worker nearly $14,000.00. Newell was also found to have known that his company was in financial distress, that he was not paying the prevailing wage to workers, and he submitted falsified payroll records to cover his tracks.
Under state sentencing guidelines for wage theft, Newell faces a presumptive term of probation, but because the judge found that Newell committed “major economic offenses,” jail time may be possible. Newell will be sentenced in June.
Although this was the first criminal conviction under the Minnesota Wage Theft Prevention Act in state history, authorities have promised that this will not be the last. There is currently a separate case against a Richmond, Minnesota dairy farmer led by Minnesota Attorney General Keith Ellison, involving charges of racketeering and wage theft from at least eighteen migrant workers. A hearing is scheduled in June for that case.
What is the Minnesota Wage Theft Prevention Act?
In July 2019, Minnesota passed the Minnesota Wage Theft Prevention Act that applies to all employers, regardless of size, with Minnesota employees. Click here to read more about it. The Act also included wage theft protections for employees, imposed additional wage and hour recordkeeping requirements on employers, and included increased civil and criminal enforcement for wage theft violations. The Minnesota Wage Theft Prevention Act also amended other laws, including the Minnesota Fair Labor Standards Act. As a refresher, please see below for the recordkeeping requirements under the Minnesota Wage Theft Prevention Act, which can often be overlooked by employers.
- Under the Minnesota Wage Theft Prevention Act, employers are required to keep track of the following:
- For employees paid at a 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 and a written notice of any changes to rate of pay, allowances related to meals and lodging, paid time off (including vacation and sick time), exemption status, deductions that may be made, the number of the days in the pay period, the regularly scheduled payday, the first pay for employees, and contact information for the employer (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).
What Can Employers do to Ensure Ongoing Compliance?
While the facts in the first criminal conviction under the Minnesota Wage Theft Prevention Act in state history may be unique, it is an important reminder to all employers of their ongoing compliance obligations with the Minnesota Wage Theft Prevention Act and the potential criminal exposure for violations of the same. If you have questions about the requirements of the Minnesota Wage Theft Prevention Act, including recordkeeping, or anything else related to employment law, please contact Shannon McDonough or the rest of our HR & Employment Team.
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