Wage Theft and New Burdens on Minnesota Employers: Reporting and Disclosures and…Jail!

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Following the lead of other states, the 2019 Minnesota Legislature passed a somewhat watered-down “wage theft” bill which adds substantial disclosure and recordkeeping burdens on Minnesota employers which have little to do with wage “theft.” However, woe to the employer who actually does, with “intent to defraud,” steal wages from an employee. An earlier version of the bill would have held an employer criminally liable for a mistake in paying wages. Common sense prevailed at the last minute to require that an “intent to defraud” must be proven before an employer can be criminally liable.

Broadly speaking, the new law imposes the following new or altered requirements (or penalties) on employers effective July 1, 2019.

New Hire Disclosure. An employer must provide every new employee with, and the new employee must sign, a disclosure detailing the terms of employment (wage), identity of the employer, benefits available (vacation, personal time, including terms of use), and deductions which might be taken. The Minnesota Department of Labor and Industry (DOLI) published a sample form which can be found here:

This form arguably will provide some “cover” for employees. Note, however, that some items will not apply to many employers and DOLI will, hopefully, periodically update the form as it clarifies its interpretations. For example, an employer who never pays for “piece” work does not have to provide that option to hourly or salary employees. On the deduction side, however, an employer should disclose every possible deduction which might be deducted in the future or if the employee changes her mind (401K contributions, for example).

Earnings Statements. All periodic earnings statements must now include (in addition to the disclosures previously required) additional detail about the type of wage being paid (salary, hourly, piece) and the rate (if applicable); the employer’s phone number and physical/mailing address; and meal and lodging allowances. Most professional payroll services should adjust their pay statements accordingly.

Bookkeeping Records. The employer must keep a copy of the signed new hire disclosure. And, if any of the new hire disclosures change, the employer must keep a record of the changes and when it disclosed those changes to the employee. Further, if an employee is paid by the piece, the employer must keep a record of the number of pieces and rate paid. Lastly, the employer must keep a list and brief description of all employee benefits (and changes thereto) and the date these descriptions were provided to each employee.

Pay Periods. Employers must pay employee wages at least every 31 days and on a regular pay day. Similarly, commissions must be paid at least every three months, again, on a regular pay day. In addition, an employee not paid timely, or at all, under these guidelines has a substantive right to payment under the new statute.

Inspections and Demands. The legislature requires that an employer must produce records to DOLI or the Attorney General no more than 72 hours after a request.

Criminal Penalties. Penalties range from misdemeanor charges for interfering with DOLI and AG conducting their investigations, to felony charges for actual wage theft where it is done “with intent to defraud.” Depending on the amount stolen, penalties range from one year in jail (and a $3,000 fine) to 20 years in jail (and a $35,000 fine). The statute allows a six-month look-back aggregation to determine the amount “stolen.”

Miscellaneous.The new law contains a grab bag of other provisions relating to government contractors, authority of government entitles to share information, and DOLI/AG enforcement of the payment of wages and, where applicable, interest, liquidated damages (equal to the unpaid wages), compensatory damages, cease and desist orders, and civil penalties. Those civil penalties are $5,000 for failure to timely produce records to DOLI or to fail to keep the required records.

The DOLI will have additional guidance as the weeks pass. However, the time to comply is not so generous — it’s July 1, 2019.

Your employment lawyers at Lommen Abdo, P.A. are ready to assist you in wading through these new requirements. Please contact Stacey DeKalb at 612.336.9310 or stacey@lommen.com or Mike Glover at 612.336.1269 or mglover@lommen.com.