Has the Dust Settled? Interpreting Minnesota’s New Wage Theft Law in the Face of Constantly-Changing DOLI Guidance

It has been nearly three months since Minnesota’s Wage Theft Statute took effect, and the initial confusion felt by employers and employees alike is starting to subside. The Minnesota Department of Labor and Industry (DOLI) has updated online guidance, Q&A, and summaries several times and, although the DOLI will continue to revise these resources, employers should take action now to ensure compliance if they haven’t already.

The Wage Theft Statute requires Minnesota employers to provide employees with a written notice outlining specific terms of employment, including things like the employee’s rate of pay, paid time off and vacation policies, and whether the employee is exempt from Minnesota’s minimum wage, overtime, and other provisions. The statute also adds requirements to recordkeeping, the frequency of pay, and earnings statements.

Here are the basics of the new law. Use the links to skip sections.

  1. Wage Notice: Timing Requirements
  2. Wage Notice: Content
  3. Wage Notice: Format and Definitions of Required Content
  4. Changes to Information in the Wage Notice
  5. Earnings Statements
  6. Timing of wage payments
  7. Recordkeeping
  8. Civil Enforcement Provisions
  9. Criminal Provisions
  10. Minneapolis Wage Theft Ordinance

Wage Notice: Timing Requirements

  • Employers must provide wage notices to employees at the “start” of employment, meaning no later than the date the employee begins performing services for the employer.
  • Employers are not required to provide wage notices to current employees automatically, but they must do so before changing any of the information that is otherwise included in an initial wage notice. Before employers change employment terms, such as changing pay rate or the PTO policy, they must give the employee a notice with all of the information required in an initial wage notice. The DOLI recommends that this notice be signed by the employee, though the statute does not explicitly require a signature. Subsequent changes must be communicated in writing prior to taking effect.
  • If an employee requests a translated wage notice (see below), employers should provide one as close as possible to the “start” of employment.

Wage Notice: Content

Employers must provide a “wage notice” that provides the following information:

  • Employee-specific information
    • rate(s) of pay and the basis of that pay, 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 claimed for meals and lodging;
    • paid vacation time, sick time, or other PTO accruals and terms of use;
    • employee’s employment status, including whether the employee is exempt from minimum wage, overtime, and/or other provisions of Minnesota Statutes, Chapter 177, and all of the bases under Minnesota law for the exemption (e.g., executive, administrative, professional, etc.).
    • the list of deductions that may be made from the employee’s pay; and
    • 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.
  • Employer information
    • the legal name of the employer and, if different, the operating name of the employer;
    • the physical address of the employer’s main office or principal place of business, and, if different, a mailing address; and
    • the telephone number of the employer.

Wage Notice: Format and Definitions of Required Content

  • The wage notice need not be provided in a specific format or form, but all of the required information—including information specific to the employee—must be included. The DOLI has issued an Employee Wage Notice example (in English and 12 other languages) which employers may, but are not required, to use.
  • The wage notice must be provided in English and must include text provided by the DOLI regarding an employee’s ability to request a translated notice, which currently reads: “This document contains important information about your employment. Check the box at left to receive this information in this language.” The translations of this statement are provided on the DOLI’s Employee Wage Notice example and must also be included on the wage notice.
  • If requested, the employer must provide the notice in the language requested by the employee.
  • On the wage notice, employers may provide links to relevant policies instead of printing the entire policy or a summary of the policy on the notice. However, the linked information must be translated in full if an employee requests a translated notice.
  • The DOLI considers non-discretionary bonuses to be a rate of pay and, therefore, requires them to be included on the employee’s initial wage notice.
  • Discretionary bonuses do not need to be included on an employee’s initial wage notice.

Changes to Information in the Wage Notice

  • An updated wage notice need not be provided each time the information in the original wage notice changes, but any planned changes must be provided in writing prior to the effective date of the change.
  • Changes to the information in the notice must be provided in English and the language requested by the employee.

Earnings Statements

Earnings statements provided at the end of each pay period must include all previously required information, plus:

  • the basis of pay, 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 for meals or lodging;
  • the legal name of the employer and the operating name of the employer, if different;
  • the physical address of the employer’s main office or principal place of business, and a mailing address if different; and
  • the employer’s telephone number.

Timing of Wage Payments

Employers must pay all non-commission earnings at least every 31 days and pay all earned commissions at least once every three months.

The new law does not address the question of when commissions are “earned,” which has historically been a prerequisite to the requirement to pay the commission.

Failure to pay wages within 10 days of an employee’s demand subjects employers to penalties imposed by the DOLI, which are no longer capped at 15 days.

Recordkeeping

Employers must already make and keep a record for three years of the name, address, and occupation of each employee; the rate of pay and the amount paid to the employee each pay period; and the hours worked each day and each workweek by the employee. Under the new law, employers must also keep records of:

  • All employees paid at piece rate and the number of pieces completed at each piece rate;
  • A list of all 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 all wage notices and updated wage notices provided to the employee.

All these records must be readily available for inspection by the DOLI within 72 hours of a demand. Employers who fail to maintain the required records were already subject to a $1,000 fine for each failure to maintain records but will now also be subject to a $5,000 fine for each repeated violation.

Civil Enforcement Provisions

Both the Minnesota Attorney General and the DOLI are authorized to enforce state wage-and-hour laws, and the Minnesota Attorney General’s office is hiring attorneys to specifically focus on wage theft. As such, employers should expect an uptick in enforcement actions from the Minnesota Department of Labor and the Minnesota Attorney General’s office.

Additionally, the DOLI is now authorized to enter places of business during work hours to investigate potential violations of wage-and-hour laws, collect evidence, and interview witnesses.

Finally, there are additional retaliation protections for reporting or expressing the intention to report violations of various wage-and-hour laws.

Criminal Provisions

“Wage theft” is a new criminal offense, effective August 1, 2019. Wage theft occurs when an employer, with an intent to defraud:

  • fails to pay an employee all earnings required by law;
  • 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; or
  • makes it appear in any manner that the wages paid to any employee were greater than the amount actually paid to the employee.

The sentences and fines for wage theft depend on the amount considered stolen.

Minneapolis Wage Theft Ordinance

In addition to the Minnesota Wage Theft Law, the City of Minneapolis passed its own Wage Theft Ordinance, effective January 1, 2020. The Minneapolis Wage Theft Ordinance applies to all employees who work 80 or more hours per year within city limits, regardless of where the employer is located. The ordinance parallels the state wage theft statute in several respects, but also creates several new obligations:

Wage Notices

  • The Minneapolis wage notice must include all of the state-required information, but it must also include (1) the date on which employment is scheduled to begin; (2) the employee’s rights under the Minneapolis Sick and Safe Time (SST) Ordinances; (3) a statement that the sharing of gratuities is voluntary, if applicable; and (4) the employer’s overtime policy.
  • The Minneapolis wage notice must be provided to current employees on or before January 1, 2020, if all of the required information has not previously been provided to the employees.
  • Any changes to information in the Minneapolis wage notice must be provided to the employee and signed before going into effect, unless the change is an increase in wages and the employee is informed in advance of the specific amount of the increase and date the increase will take effect.

Earnings Statements

  • The Minneapolis earnings statement must include the information required under Minnesota law, plus the number of hours of SST accrued and unused by the employee.