The Minnesota Legislature recently passed, and Governor Walz signed, the Jobs and Economic Development Omnibus Bill, which goes into effect as of July 1, 2019.  The bill amends existing state labor laws and creates new civil and criminal penalties for “wage theft”, as well as new recordkeeping and notice requirements for Minnesota employers.

Wage Theft

The new law makes it a crime to commit “wage theft.”  Wage theft is defined as any of the following actions by an employer, if the employer also has an “intent to defraud”:

  • Fails to pay an employee all wages, salary, gratuities, earnings, or commissions at the employee’s rate or rates of pay required by applicable law, when earned;
  • 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 under contract of employment with the employer; or
  • Makes or attempts to make it appear in any manner that the wages paid to any employee were greater than the amount actually paid to the employee.

Wage theft, as defined above, includes criminal penalties of imprisonment of up to 20 years and up to a $100,000 fine for any wage theft in excess of $35,000.  This particular portion of the law regarding wage theft goes into effect as of August 1, 2019.

Timing of Wage Payments

The new law also amends Minnesota Statute §181.101 regarding when wages must be paid.  Salaries, earnings and gratuities are now explicitly included in the types of wages that must be paid at least once every 31 days, and commissions earned by employees must be paid at least once every 3 months.  Further, commissions are now included in the types of wages that may be demanded for payment by the Minnesota Department of Labor and Industry (the “Department”).  The Department may charge and collect any commission not paid within 10 days of the demand, along with a penalty equal to 1/15 of the commissions earned but unpaid for each day beyond the 10-day limit.  The law also removes the prior 15-day cap on penalties for late payment of wages, and grants additional authority to the Department to assess penalties for violations of the law.

New Employer Recordkeeping Requirements

The new law also adds additional requirements to the earning statements that must be provided to employees at the end of each pay period.  In addition to the information required under Minnesota Statute §181.032, employers must now also include:

  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;
  2. Allowances, if any, claimed pursuant to permitted meals and lodging;
  3. The physical address of the employer’s main office or principal place of business, and a mailing address if different; and
  4. The employer’s telephone number.

Employers are also now required to keep additional employee records.  In addition to the current requirement of keeping the name, address, occupation, rate of pay, the amount paid each pay period to each employee, and the hours worked each day and workweek by the employee, employers now must keep the following records:

  • For employees paid at a piece rate, the number of pieces completed at each piece rate;
  • A list of the personnel policies provided to the employee, including the date the policies were given to the employee and a brief description of the policies;
  • A copy of the notice required under Minn. Stat. §181.032, paragraph (d), including any written changes to the notice.

New Written Employee Notice Requirement

The law also creates an entirely new requirement that employers provide a written notice to each employee at the start of employment, which contains the following information:

  1. The 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, and the specific application of any additional rates:
  2. Allowances, if any, claimed pursuant to permitted meals and lodging;
  3. Paid vacation, sick time, or other paid time-off accruals and terms of use;
  4. The employee’s employment status and whether the employee is exempt from minimum wage, overtime, and other provisions of Chapter 177 of Minnesota Statutes, 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 employers’ main office or principal place of business, and a mailing address if different; and
  9. The telephone number of the employer.

Employers are required to keep a copy of this notice, along with an acknowledgement signed by the employee that he/she received the notice.  The notice must be provided to the employees in English, and must also indicate that employees may request, by indicating on the form, that the notice be provided in a particular language. The commissioner will assist employers with providing the notice in additional languages, if needed.

Employers must also provide the employee with any written changes to the information contained in the notice prior to the date on which any changes take effect.

Next Steps for Employers

The new law is effective as of July, 1, 2019.  Therefore, employers should plan to evaluate compliance with the law as soon as practicable.  First, employers should review their payroll documentation to ensure that the earnings statements provided to their employees comply with the new requirements of Minn. Stat. §181.032, including the basis for the wage rate, allowance for meals and lodging, and the employer’s address and phone number.

Also, employers will need to provide new hires with a notice that includes the required categories of information as set forth above. If employers have employees earning commissions, the commission plans should be evaluated for compliance with the law.  Finally, given the new criminal penalties for wage theft, employers should ensure that their wage and hour practices are in compliance with the new requirements of the law.  For questions or assistance regarding the requirements under this new law, please contact us.