During its 2019 Special Session, the Minnesota Legislature passed a new law that imposes significant new wage theft, recordkeeping and payroll requirements on employers. These new obligations will go into effect on July 1 (the criminal sanction parts go into effect August 1). Therefore, Minnesota employers should act quickly to bring their employment-related documentation and processes into compliance.
Here is what the new law requires.
All employers must provide each employee with a written notice at the start of their employment. It appears that this notice must also be provided whenever there is a change in employment (promotion, transfer, etc.). The new law requires that:
- Employers must 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 Minnesota Department of Labor and Industry (DOLI) reports that it is preparing and will make available to employers the statement in multiple languages that must be included with the notice. The employer must provide the notice in another language if requested by the employee.
The start-of-employment notice must contain the following new information about an employee's employment status and terms of employment:
- 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.
Note: Minnesota law already requires certain information to be provided at time-of-hire; the 2019 law mandates additional requirements. Also, if there are changes to the information listed in the start-of-employment notice, written notice of the changes must be given to the employees prior to them taking effect.
Employers must provide the following new information to employees on their earnings 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.
Employers must maintain new records for each employee. 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 DOLI Commissioner's demand within 72 hours. 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. These are the new records that must be maintained:
- 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;
- 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;
- 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.
Employers have new obligations relating to what wages and commissions an employer must pay and when employers must pay them. 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 employees for asserting rights or remedies under Minnesota's wage and hour laws. In addition to any other remedies provided by law, an employer who retaliates is liable for a civil penalty of not less than $700 nor more than $3,000 per violation.
To be considered eligible to bid on public contracts, employers must verify compliance with these new laws, among the others already listed for responsible contractor verification.
Employers are subject to new enforcement and penalty authority for violations of the law. The new law clarifies the application of remedies and the increase in penalties for repeated violations of these laws. For example, employers may be fined up to $1,000 for each failure to maintain records and up to $5,000 for each repeated failure.
The Commissioner of DOLI is now required to share certain enforcement action information with licensing or regulatory authorities, any public contracting authority with which the employer is party to a public contract, and any affected employees.
The Minnesota Attorney General has been granted enforcement authority.
Employers can now be held criminally liable for "wage theft." The law says "wage theft" occurs when "an employer with intent to defraud:
(i) 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;
(ii) 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;
(iii) 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
(iv) 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.
It appears that the severity of the criminal act (misdemeanor, gross misdemeanor, or felony) would depend on the amount of the "wage theft."
Employers can also be held criminally liable for any act to hinder or delay the DOLI Commissioner in the performance of duties required under specified wage laws. A violation would be a misdemeanor.
As a practical matter, these new laws mean that Minnesota employers should:
- Review and update their offer letters and / or other hiring documentation to make sure it includes the old and new information that is required.
- Review and update their earnings statements to include the old and new information that is required. Employers who outsource their payroll function to a third party should make sure their vendors update their forms as needed.
- Review and update their personnel recordkeeping methods to include the old and new information that is required.
- Review and update any and all employment policies, handbooks and similar documentation to bring them into compliance with these new requirements.
- Review their payroll cycles to ensure they are in compliance, and change them if needed.
- Be aware of the enhanced consequences for noncompliance.
For more information, see DOLI's Summary of Minnesota's new Wage Theft Law, as well as Guidance for employers on Minnesota's new Wage Theft Law.
Attorney Tom Jacobson is available to work with you to help bring your forms, checklists, policies and procedures into compliance, so please contact him (320.763.3141) at your earliest convenience so that he can help you work through these new requirements before July 1.
Disclaimer: This article is provided for general information purposes only and is not to be interpreted as legal advice. For legal advice regarding the issues noted in this letter, please contact Tom Jacobson or another attorney.