In late May 2019, at the end of the legislative session, Minnesota enacted a new wage theft law that adds, or amends, several laws. These changes, which take effect on July 1, 2019, will have a big impact on Minnesota employers.
What is wage theft? Wage theft occurs when a business does not pay employees what they have earned for their work. The new wage theft law creates additional protections for employees, including potential criminal liability for employers who engage in wage theft.
While not intended to be exhaustive, some of the most significant new requirements with which Minnesota employers will need to comply as of July 1, 2019, are discussed below.
Wage Notice to Employees (Minn. Stat. § 181.032(d))
Starting July 1, 2019, employers will be required to provide each employee with a written notice containing the following information at the start of their employment:
(1) 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;
(2) allowances, if any, claimed pursuant to permitted meals and lodging;
(4) 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;
(5) a list of deductions that may be made from the employee’s pay;
(6) the number of days in the pay period, the regularly scheduled pay day, and the pay day on which the employee will receive the first payment of wages earned;
(7) the legal name of the employer and the operating name of the employer if different from the legal name;
(8) the physical address of the employer’s main office or principal place of business, and a mailing address if different; and
(9) the telephone number of the employer.
The notice must be provided to employees in English and must include a statement, in multiple languages, that informs employees that they may request that the notice be provided to them in another language. If requested by an employee, an employer must provide the notice in another language. If information in the notice changes (e.g., an employee receives a pay raise), employers must provide the employee with written notice of such changes prior to the date the changes take effect. The notice must be signed by both the employer and the employee, and employers must retain a copy of the notice, as well as any changes.
MNDOLI has provided a sample employee wage notice.
Do current employees as of July 1, 2019, need to receive the wage notice? It appears not, at least until changes are made to an employee’s information that otherwise would have been required in such a written notice. But, of course, it’s not that easy. First, MNDOLI “strongly encourages” employers to provide the written notice to all employees when the law takes effect, stating that such a notice “is a good business practice.” Second, even if a current employee does not receive such a wage notice as of July 1, 2019, if an employer plans to make changes to an employee’s information that otherwise would have been included in such a written notice, the employer must provide a written notice to the employee, prior to the date of such changes, that includes all the information required under the new law, including the changes. MNDOLI FAQ #8.
Earnings Statement (Minn. Stat. §181.032)
Employers already were required to provide employees with earnings statements (pay stubs) that contained various required information. Starting July 1, 2019, employers must now include the following additional items on earnings statements:
- The 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;
- Allowances claimed for permitted meals and lodging;
- The Employer’s telephone contact; and
- The physical address of the employer’s main office or principal place of business and a mailing address, if different.
Additional Recordkeeping Requirements (Minn. Stat. §177.30)
Effective July 1, 2019, Minnesota employers will face new recordkeeping requirements. The following records must be kept at the place where employees are working or in a manner that allows an employer to comply with the MNDOLI Commissioner’s demand for such records within 72 hours. Most significantly:
- Employers must keep a copy of the wage notice (discussed above), signed by the employee, as well as a copy of any changes to such notice that were provided to an employee;
- 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; and
- For employees who work at a piece rate, the number of pieces completed at each piece rate.
Clarification Regarding Payment of Wages and Commissions
The law had already been that wages must be paid at least once every 31 days. Minn. Stat. §181.101. This now has been updated to clarify that wages includes salary, earnings and gratuities. In addition, and perhaps more significantly, all commissions earned by an employee now must be paid at least once every three months on a regular payday.
MNDOLI Has Expanded Enforcement Authority and Penalties – Including Potential Criminal Liability – Have Increased for Violations
Employers must comply with the new wage theft law starting on July 1, 2019. Under the new law, MNDOLI now has greater enforcement authority and the penalties for employers who violate the law have been increased significantly. In addition, starting August 1, 2019, employers who engage in wage theft will be subject to criminal liability.
The Minnesota Department of Labor and Industry (“MNDOLI”) has provided guidance regarding the new wage theft law, including:
- 2019 Wage Theft Legislation and Summaries
- Summary of Minnesota’s New Wage Theft Law
- Q & A about Minnesota’s New Wage Theft Law
- Guidance for Employers on Minnesota’s New Wage Theft Law
- Guidance for Employees on Minnesota’s New Wage Theft Law
- Sample Employee Wage Notice
Employer Action Items
Minnesota employers need to act now in order to comply with the new wage theft law. Of most immediate concern, employers should provide employee wage notices to new employees and have such new employees return a signed copy, work with payroll providers to ensure that required information is included on earnings statements, and update recordkeeping policies.