News

Minnesota Passes Sweeping Wage-theft and Employer Record Keeping Law

July 02, 2019

By Grant Collins, Attorney, Felhaber Larson

Close-up Of A Businessperson's Hand Calculating payroll At Workplace
New law makes wage theft a crime and includes several record keeping requirements for Minnesota employers.

During a special session over Memorial Day weekend, the Minnesota House and Senate passed an omnibus bill that creates new civil and criminal penalties for wage theft. The bill also creates new record keeping requirements for Minnesota employers, including the need to keep a signed wage statement for each employee.

Governor Tim Walz signed the bill into law May 30. The record keeping portions of the bill took effect July 1. The criminal wage theft penalties go into effect Aug. 1.

Prohibition on Wage Theft

The new law makes it a crime to commit wage theft. Wage theft is any of the following actions by an employer with intent to defraud:

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

If the value of wage theft exceeds $35,000, a person may be sentenced to prison for up to 20 years, a fine of up to $100,000 or both.

The wage theft protections apply to actions that occur on or after Aug. 1, 2019.

Revised Record Keeping, New “Wage Notice” Requirement

Effective July 1, the new law includes several additional record keeping requirements for Minnesota employers, as well as additional authority for the Minnesota Department of Labor and Industry (DLI) to monitor compliance.

Also the bill creates a new wage notice that must be provided to employees in writing at the start of employment. Employees must sign the wage notice, and employers are required to keep a copy and provide a new notice if there are any changes. Again, each of these requirements took effect July 1.

Additional Authority for DLI to Investigate Violations: The bill amends Minnesota Statutes, Section 175.20 to allow the DLI commissioner to enter places of business during work hours to investigate potential violations of chapters 177, 181, 181A and 184. The investigation authority includes the ability to collect various evidence of potential violations of law and to interview witnesses.

Employers Must Keep Additional Records: The new law amends the record keeping requirements contained in Minnesota Statutes, Section 177.30 to require employers to keep the following employment records:

  • 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 such as wage rates, vacation, paid time off, etc., and must be provided to all employees at the start of their employment and if any changes are made.

This section of the law also requires that all records be available for inspection and must be kept at the place where employees are working or kept in a manner that allows the employer to comply with any demand for inspection within 72 hours.

The law also creates a new maximum fine of $5,000 for repeat violations of DLI record keeping requirements.

Retaliation Protections: The law adds additional retaliation protections for employees who assert rights under the Minnesota Fair Labor Standards Act, Minnesota Statutes, Sections 177.21 to 177.44 and certain provisions of the Minnesota Employment Code (Minn. Stat. §§ 181.01 to 181.723, or 181.79).

Earnings Statements Must Include New Information: The new law adds to information required on an employee earnings statement, which must be provided to each employee at the end of a pay period under Minnesota Statutes, Section 181.032. The new information includes the basis of pay (hourly, salary, piece rate, etc.), any allowances for meals or lodging, and the address and phone number of the employer.

Signed Wage Notice for Each Employee: The law also amends Minnesota Statutes, Section 181.032 to create a new wage notice requirement. Specifically, the law requires all employers to provide a new employee with written notice of the following “at the start of employment”:

  • 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;
  • 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.

This notice must be signed by the employee and kept by the employer. Also, whenever anything in the original written notice changes, the law requires the employer to provide an additional notice “prior to the date the changes take effect.”

DLI has posted a sample wage notice on its website (DLI.mn.gov/business/employment-practices/wage-theft-legislation-2019-and-summaries).

Earnings Paid Every 31 Days; Commissions Paid Every Three Months: The new law amends Minnesota Statutes, Section181.101 to specify that all earnings, including salary and gratuities, must be paid at least every 31 days. In addition, the law requires that all earned commissions must be paid “at least once every three months.”

The law also removes the 15-day maximum penalty for an employer’s failure to pay wages upon an employee’s demand. Specifically, the law as amended provides for unlimited penalties after a 10-day notice period: “[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.”

A One-fifteenth Penalty for Earned but Unpaid Commissions after the 10-day Notice Period: “If payment of commissions is not made within ten days of service of the demand, the commissioner may charge and collect the commissions earned and a penalty equal to [one-fifteenth] of the commissions earned but unpaid for each day beyond the ten-day limit.”

The law also makes clear that it provides a “substantive right to the payment of wages, including salary, earnings, and gratuities, as well as commissions, in addition to the right to be paid at certain times.”

Bottom Line

Because the record keeping requirements took effect July 1, employers must take steps immediately to prepare for complying with the new law.