A Practical Summary and Recommendations for Complying with Minnesota's Sweeping Wage Theft Law
Provisions requiring compliance by July 1, 2019*
*These civil provisions have an effective date of July 1, 2019, because these provisions were enacted through an appropriations bill, which takes effect on July 1 when no other effective date is specified. *
Employers must provide a “wage notice” that provides the following 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;
- employee’s employment status, including whether the employee is exempt and on what basis;
- 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.
- 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.
- The notice must be provided in English and must include text provided by the Commissioner of the Minnesota Department of Labor informing that the employee may request the notice be provided in a particular language.
- If requested, the employer must provide the notice in the language requested by the employee, and the Commissioner of the Minnesota Department of Labor is to assist employers with the translation of the notice into the requested languages.
Additionally, employers must ensure that:
- The wage notice is signed by the employee and provided to the employee on the employee’s start date, with a copy retained by the employer. Because individualized information is required, employers will not be able to incorporate the notice into a handbook and will instead need to prepare a wage notice for each employee.
- An updated wage notice is provided to the employee whenever any information on the original notice changes, with a copy retained by the employer. Because the statute provides that an updated notice must be provided whenever any information on the original notice changes, employers must ensure they are providing wage notices not only when employee-specific information changes but also when employer information—such as the legal name of the employer or the employer’s address—changes.
We read the new law to require wage notices and updated wage notices to be provided to new employees only, i.e., those hired on or after July 1, 2019. The Minnesota Department of Labor has issued preliminary guidance regarding the new law that is available here, but it does not address this issue. A risk-averse employer, therefore, may wish to issue wage notices to current employees.
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.
Notably, 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. As such, the new law may not have as great of an effect as the legislature anticipated. However, this makes it particularly important for employers with commission plans to review the explanation of when a commission is “earned” to fully understand the practical impact of the new law for their organizations.
Additionally, if an employer fails to pay wages within 10 days of an employee’s demand, the Commissioner of the Minnesota Department of Labor may collect a penalty for each day beyond the 10-day demand period in the amount of (1) the employee’s average daily wages for each day, or (2) for commissions, a penalty equal to 1/15 of the commissions earned but unpaid for each day. Notably, the 15-day limit on the penalty has been eliminated, creating the possibility of a very stiff penalty for any failure to timely pay an employee’s earnings.
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 for meals or lodging; and
- the address and phone number of the employer.
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 Commissioner of the Minnesota Department of Labor 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
The Minnesota Attorney General is now authorized to enforce state wage-and-hour laws, and the 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 Commissioner of the Minnesota Department of Labor 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.
Provisions requiring compliance by August 1, 2019**
**These criminal provisions are effective August 1, 2019, because the act explicitly stated that these provisions did not go into effect until August 1. **
“Wage theft” is a new criminal offense effective August 1, 2019. Specifically, 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.
- Create wage notice templates
- Create a process for providing wage notices and updated wage notice at required times
- Contact your payroll vendor and HRIS vendors regarding required updates to earnings statements
- Review your pay practices to ensure that all earnings other than commissions are paid once every 31 days and that earned commissions are paid at least once every three months
- Review commission plans regarding commission payment timing and the provisions for when a commission is considered to be earned
- Create a system for tracking the dates on which personnel policies are provided to each employee