Minnesota Enacts Wage Theft Law and Increases Employers' Wage and Hour Obligations

Minnesota's just passed perhaps the greatest change to Minnesota wage and hour law in recent years. The law greatly expands employee protections, creates additional administrative requirements for employers, and imposes criminal penalties for employers that engage in "wage theft." A general overview of the details is discussed below.

Employers need to be aware of these sweeping changes and act to ensure compliance. Employers that would like assistance in making the necessary changes now so that they have their best practices and polices in place by the time the law goes into effect are encouraged to contact the Employment Law Group at Quinlivan & Hughes, P.A by phone at 320-200-4928.

"Wage Theft."

The law primarily focuses on the concept of "wage theft." Under the new law, any of the following actions done with "intent to defraud" will be considered wage theft:

· failing to pay an employee all wages, salary, gratuities, earnings, or commissions as required by federal, state, or local law;

· directly or indirectly causing 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 demanding or receiving from any employee any rebate or refund from the wages owed the employee; or

· making it appear in any manner that the wages paid to any employee were greater than the amount actually paid to the employee.

While such actions have, for many years, been deemed civil violations, they may now, under certain circumstances be considered criminal in nature. Further, if the value of wage theft exceeds $35,000, a person may be sentenced to prison for up to 20 years, receive a fine of up to $100,000, or both.

This provision goes into effect on August 1, 2019 while the remaining provisions discussed below go into effect on July 1, 2019.

Revised Recordkeeping Requirements, Wage Statements, and DOLI Investigative Authority.

As tool to better enforce the wage theft provision the law also: created revised recordkeeping requirements; obligates employers to implement new wage statements; and gives the Minnesota Department of Labor and Industry (DOLI) greater authority to monitor compliance.

Regarding DOLI investigative authority, the law allows the DOLI Commissioner to enter an employer's place of business during work hours to investigate potential wage and hour violations. Much like the authority granted to other state departments (such as the Minnesota Department of Human Rights) the DOLI's authority includes the ability to collect evidence of potential violations and to interview witnesses.

In relation to the additional recordkeeping requirements, the law creates further administrative obligations by requiring employers to keep certain employment records, including:

· the basis of pay (hourly, salary, piece rate, etc.);

· personnel policies provided to the employee, including the date the policies were given to the employee and a brief description of the policies,

· a signed copy of the new "wage notice," which must include certain information like wage rates, vacation, PTO, etc., and must be provided to all employees at the start of their employment as well as if any changes are made.

Further, all records must be available for inspection, be kept at the place where employees are working, or kept in a manner that allows the employer to comply with any inspection demand within 72 hours. Repeat violations of the record keeping requirements may result in a maximum fine of $5,000.

Earnings Statements Must Include New Information.

Also effective on July 1, 2019 are requirements that the employee earnings statement provided to each employee at the end of a pay period under Minn. Stat. § 181.032 include the basis of pay (hourly, salary, piece rate, etc.), any allowances for meals or lodging, and the employer's address and phone number.

New Signed Wage Statement for Each Employee.

Additional legal obligations now require employers to provide new employees with a written "wage statement" at the start of employment that comprises of:

· 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 63.24 application of any additional rates;

· allowances, if any, claimed pursuant to permitted meals and lodging;

· paid vacation, sick time, or other paid time-off accruals and terms of use;

· 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;

· a list of deductions that may be made from the employee's pay;

· 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;

· 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.

The wage statement must be signed by the employee and kept by the employer. Also, the law requires an employer to provide written notice to an employee whenever anything in the original wage statement changes.

Increased Employee Protections and Causes of Action.

Importantly, the law removes what was formerly a maximum penalty of 15 times an employee's average daily wages for an employer's failure to pay wages upon demand and replaces it with unlimited penalties after failing to comply within 10 days of a demand. Specifically, the law reads:

[I]f payment of wages is not made within ten days of service of the demand, the commissioner may charge and collect the wages earned 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, and a penalty in the amount of the employee's average daily earnings at the same rate or rates for each day beyond the ten-day limit following the demand.

The law further clarifies and expands employee protections against retaliation for asserting rights under the Minnesota Fair Labor Standards Act and certain provisions of the Minnesota Employment Code.

Established more than 95 years ago, Quinlivan & Hughes ranks among the oldest and largest law practices in Central Minnesota. The full-service law firm has growing legal teams in the areas of employment law, business law, government law, insurance defense, trust and estate planning, and general litigation. Learn more at Quinlivan.com.

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