Minnesota Puts an End to Wage Theft

June 12, 2019
Publication
Inside HR
Wage & Hour

On May 25, 2019, the Minnesota State Legislature passed an omnibus jobs and economic development finance bill, which included a new wage theft law that will go in to effect on July 1, 2019. The legislation creates new obligations and additional recordkeeping requirements for Minnesota employers and includes criminal penalties (effective August 1, 2019) for companies who commit wage theft with an “intent to defraud.” The law also clarifies that earnings must be paid at least every 31 days and commissions paid at least every three months.

Finally, the new law mandates that employers maintain a list of personnel policies provided to employees, including the date the policies were given to the employee and a brief description of the policies.

What Is Wage Theft?

Wage theft is a broad term used when an employer does not pay all the wages to which an employee is entitled. Some common forms of wage theft are unpaid overtime, denial of meal or rest breaks, withholding tips or underpaying the minimum hourly rate for tipped workers, making illegal deductions from paychecks, misclassification of employees as independent contractors or as exempt from overtime, and simply not paying the full wages due. 

New Wage Statement – ACTION REQUIRED:

For any employee hired on or after July 1, 2019, an employer must provide and retain a written notice signed by the employee containing the following information:

  • 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. It is still unclear if this notice will be required only once (at the time of hire) or every time there is an adjustment to salary. Minnesota’s Department of Labor and Industry (DOLI) provided a sample notice or members can download a fillable word version from our website. Employers may use these examples or create their own, as long as it includes the required information.

Statement of Earnings by Employer – ACTION REQUIRED:   

Under Minnesota law, at the end of each pay period, the employer must provide each employee an earnings statement, either in writing or by electronic means, covering that pay period. An employer who chooses to provide an earnings statement by electronic means must provide employee access to an employer-owned computer during an employee's regular working hours to review and print earnings statements.  

The new law includes new requirements, specifically basis of pay (hourly, salary, piece rate, etc.), any allowances for meals or lodging, and the address and phone number of the employer. Therefore, the earnings statement may be in any form determined by the employer but must now include all the following:

  • The name of the employee;
  • The rate or rates of pay and basis thereof, including whether the employee is paid by hour, shift, day, week, salary, piece, commission, or other method;
  • Allowances, if any, claimed pursuant to permitted meals and lodging;
  • The total number of hours worked by the employee unless exempt;  
  • The total amount of gross pay earned by the employee during that period;
  • A list of deductions made from the employee's pay;
  • The net amount of pay after all deductions are made;
  • The date on which the pay period ends; and
  • 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.

Recordkeeping Requirements

The new law also includes a new requirement that employers maintain a list of personnel policies provided to the employee, including the date the policies were given to the employee and a brief description of the policies. Therefore, every employer must make and keep a record of the following:  

  • The name, address, and occupation of each employee;
  • The rate of pay, and the amount paid each pay period to each employee;
  • The hours worked each day and each workweek by the employee, including for all employees paid at 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 New Wage Statement notice explained above.

These records should be kept for 3 years from the date of the employee’s termination of employment.

Key Takeaways

July 1 is approaching quickly. Minnesota employers should get prepared by doing the following:

  • Contact vendors of current HRIS and payroll systems to confirm they capture all the elements of the new requirements (most likely they will) and can be included in the earning statements.
  • Create a wage notice for employees. Employers may use the samples provided or create their own (such as through an offer letter for a new hire) as long as it includes the required information.
  • Maintain a handbook acknowledgement of policies given to employees with the date documented, and a brief description of the policies.
  • Review pay practices to ensure all earnings are paid within the appropriate timeframes, including commission plans.

Source: Michael Hyatt, HR Government Affairs Director, MRA – The Management Association