The state of Minnesota has enacted a new Wage Theft Law, which took effect July 1. The law revises previous state labor laws as well as adds new wage and hour requirements, protections and sanctions.
What is wage theft?
Wage theft happens when employers don't pay owed wages for work performed. Common forms of wage theft include:
- Not paying for overtime
- Not paying minimum wage
- Not paying for all hours worked
- Not paying a worker for any work done
According to the Minnesota Department of Labor and Industry, there are roughly 40,000 Minnesota workers who pursue wage theft claims each year due to not being paid a fair day's wage for their work.
How does the new law help with wage theft?
The new legislation invests $3.1 million in funding over the next two years to the Department of Labor and Industry's enforcement of wage and hour laws for the state of Minnesota.
The new Minnesota statute will expand the Department of Labor and Industry's and the Attorney General's authority to enforce penalties when it comes to wage theft as well as create extra protections for workers related to wage theft.
The law also makes wage theft a felony, with criminal provisions related to the new law taking effect on August 1, 2019. If an employer is found guilty of stealing wages, they can face up to 20 years in prison or a $100,000 fine.
What changes are included in Minnesota's new wage theft law?
There are several new requirements in the law that Minnesota employers need to be aware of.
Employee Notice
Employers must provide each employee a written notice at the start of employment and keep a signed copy of the notice on file. The notice must include:
- Required information about an employee's employment status and the terms of their employment
- Rate of pay
- Allowances, if any, related to lodging and meals
- Paid vacation, sick time and other paid time off accruals
- A list of deductions made from an employee's pay
- Number of days in the pay period, the regularly scheduled pay day and the pay day when the employee will receive first payment
- Legal name of employer and operating name if different
- Physical address of the main office or principal place of business, as well as a mailing address, if different
- Telephone number of the employer
- A statement, in multiple languages, informing employees they may request the notice be provided in another language
Need help creating your notice?
Earning Statement Requirements
Earning statements, also known as paystubs, are used by employers and employees to document important information about wages paid, hours worked, deductions and benefits. Existing state law required earning statements to be provided to the employee electronically or in writing at the end of each pay period. Specific information had to be included as part of this earning statement.
Under the new law, earning statements must now include the following additional information for each pay period:
- Employee's rate or rates of pay, including whether they are paid by the hour, shift, day, week, salary, piece, commission etc.
- Allowances claimed for meals and lodging, as permitted
- Telephone number of the employer
- Physical address of the employer's main office/place of business
- Mailing address, if different from the above
There are several requirements when it comes to tracking payroll.
The following resources may help:
Record Keeping Requirements
Record keeping and documentation are incredibly important for any business. These records help demonstrate an employer's ability to remain compliant with wage and hour laws. The current law requires records be kept for three years.
The new Minnesota law requires the following additional records be kept:
- Each employee's hours worked, as well as each workweek
- If an employee is paid at a piece rate, the number of pieces completed at each piece rate
- Personnel policies list, along with descriptions of each policy provided to the employee with the dates the policies were given to that employee
- A copy of the new notice, signed by each employee at the start of employment, as well as a copy of any written changes to the notice provided to the employee
Ideally, records should be kept onsite at the primary place of business. If they are not kept there, employers must have the ability to comply with the commissioner's request within 72 hours.
Who does the new wage theft law apply to?
The new wage theft law applies to Minnesota employees and employers. Legislators are heralding it as one of the toughest in the country.
If you're not from Minnesota, you should still be thinking about wage theft. Wage theft laws and the penalties for wage theft vary by state. As an employer, the best thing to do is stay up to date on the legislation and regulations related to your location and your industry. Also, take time to look at your worker and wage classifications to ensure they are correct.
What do I need to do?
If you are an employer in Minnesota, ensure you're in compliance with the new legislation. Employers must create the newly required notice for all employees hired on or after July 1. At this point, it's unclear if the notice must be provided to currently employees. However, if any of the required information changes for current employees, you must provide a notice to them before the date the changes take effect.
It's a good time to review your recordkeeping policies, as well as your payroll documentation processes. Make sure you're providing the correct items to your employees, as well as keeping accurate historical records for your business. Proper documentation related to employee records and earning statements will be key as you work to remain compliant with the new Minnesota statute.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
