US - Law change in Minnesota gives employers new responsibilities


A bill recently passed by the Minnesota Legislature makes amendments to existing labour laws which will give Minnesota employers new notice and recordkeeping requirements and create civil and criminal penalties for “wage theft”

The Minnesota Legislature passed the Jobs and Economic Development Omnibus Bill, which Governor Walz signed. It will go into effect from July 1, 2019. The notable changes (compiled and summarised by JD Supra) will be as follows:

Wage theft
The new law criminalises “wage theft.” Wage theft occurs when any of the following actions are committed by an employer should the employer also have the “intent to defraud”:

  • Failure 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 causing an employee to give a receipt for wages for a greater amount than the amount really 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 under a contract of employment with the employer; or
  • Making or attempting to make it appear, in any way, that wages paid to any employee were greater than the amount really paid to the employee

When committed as detailed above, “wage theft” incurs criminal penalties of imprisonment for up to 20 years and a fine of up to $100,000 for any wage theft in excess of $35,000. This specific portion of the law regarding wage theft will be in effect from August 1, 2019.


Wage payment timing
The new law also amends Minnesota Statute §181.101. Which addresses when wages must be paid. Salaries, earnings and gratuities will now be explicitly included in the types of wages that must be paid at least once every 31 days. Commissions earned by employees must be paid at least once every 3 months. Additionally, commissions are now included in the types of wages that can be demanded for payment by the Minnesota Department of Labor and Industry (the “Department”).

The Department can charge and collect any commission not paid within 10 days of the demand, as well as a penalty equal to 1/15 of the commissions earned but unpaid for each day past the 10-day limit. The law also takes away the previous 15-day cap on penalties for late payment of wages and gives extra authority to the Department to assess penalties for violations of the law.


New employer recordkeeping requirements
The new law also adds extra requirements to the earning statements that have to be given to employees at the end of each pay period. As well as the information required under Minnesota Statute §181.032, employers now also have to include all of the following:

  • The rate or rates of pay, and basis thereof, including whether the employee is paid per hour, shift, day, week, salary, piece, commission, or by another method
  • Allowances, if any, claimed pursuant to permitted meals and lodging
  • The physical address of the employer’s main office or principal place of business, and a mailing address if different; and
  • The employer’s telephone number

Employers must now also keep additional employee records. As well as the current requirement to keep 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 a record of the following:

  • 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 Minnesota Statute §181.032, paragraph (d), including any written changes to the notice.


The new written employee notice requirement
The law creates a totally new requirement asking that employers provide written notice to each employee at the start of employment, which is to contain the following information:

  • 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 another 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 of Minnesota Statutes, 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 payday, and the payday 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 employers’ main office or principal place of business, and a mailing address if different; and
  • The telephone number of the employer

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

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


Steps for employers to take next
The new law comes into effect on July 1, 2019. Employers should plan an evaluation of compliance with the law as soon as is practical. Employers should first review their payroll documentation to make sure that earnings statements provided to their employees will comply with the new requirements of Minnesota Statute §181.032, including the basis for the wage rate, any allowances for meals and lodging, and the employer’s address and phone number.

Employers will also need to provide new hires with a notice including the required categories of information detailed above. If employers have employees earning commissions, their commission plans must be evaluated for compliance with the law. Lastly, considering the new criminal penalties for wage theft, employers should make sure that their wage and hour practices are in compliance with the new requirements of the law.