RLG Alert: Minnesota Wage Theft Law
We have a new law, which is not a surprise. However, this new law is surprisingly onerous and Minnesota employers must adjust quickly to comply. At our September Lunch and Learn, we will discuss the new Minnesota Wage Theft Law and its implications, pitfalls and liabilities. However, in the interim, we want to provide you with an outline of the law and its requirements.
What the Law is Supposed to Do
The purpose of this bill is to create greater transparency and clarity of payment calculations for employees, especially those who are overtime-eligible. With this new law, employers must provide employees with information regarding the components of their compensation, overtime eligibility status, timing for wage payments, potential for deductions from pay, and company contact information (presumably in the event an employee has questions about their pay).
The Minnesota Department of Labor and Industry (DOLI) has released a guidance document and a wage theft question and answer page clarifying the new law, and it plans to issue additional guidance in the coming weeks. Further, it has issued a sample notice form businesses can use to comply with the new notice requirements. (Alternatively, employers can develop a written notice containing all nine areas of information listed below.)
To be in compliance, employers should: (1) review the wage documentation given to new employees upon hire, as well as wage statements given to employees; (2) review their record retention policies and practices, as they pertain to employee wage information; and (3) have a process to ensure that employees who were given the initial written wage notices receive written notice of any changes to the policies and processes described in the original wage notice, before those changes take place.
Notice and Recordkeeping Requirements
New Information to Be Disclosed to New Employees by Employers (Minn. Stat. § 181.032)
When a new employee begins employment, employers must provide written notice of the following information to the employee:
- employee’s employment status and whether an employee is exempt from minimum wage, overtime and other state wage and hour laws, and if so, on what basis;
- number of days in the employee’s pay period and the regularly scheduled payday;
- date the employee will receive the first payment of wages earned;
- employee’s 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;
- allowances, if any, that may be claimed for permitted meals and lodging;
- provision of paid vacation, sick time or other paid time off (PTO), how the paid time off will accrue and terms for its use;
- a list of deductions that may be made from the employee’s pay;
- employer’s legal name and the operating name, if different;
- physical address of employer’s main office or principal place of business and a mailing address, if different; and
- employer’s telephone number.
Once the notice has been provided, employees must sign the notice acknowledging that they have seen the information and the employer must retain a copy of the signed notice. The document must also inform the employee that a version of the notice is available in other languages, and if requested, the employer must provide the translated version of the notice in the requested language, at its own cost. The Department of Labor and Industry will have statements available in multiple languages that can be added to the notice. If any of the information changes during the course of employment, the employee must be given notice of the change prior to implementation.
Earnings Statement Disclosures (Minn. Stat § 181.032)
The new law adds additional earnings statement disclosure requirements, which must include:
- employee name;
- total hours worked in the pay period;
- employee’s rate or rates (if more than one method of calculation) of pay and basis thereof, including whether the employee is being paid by the hour, shift, day, week, salary, piece, commission or other method;
- allowances claimed for permitted meals and lodging;
- total amount of gross pay earned in the pay period;
- list of deductions made from the employee’s pay;
- net amount of pay after all deductions are made;
- date pay period ended;
- employer’s legal and operating name;
- employer’s telephone contact; and
- physical address of employer’s main office or principal place of business and a mailing address, if different from the main office or principal place of business.
If an employer normally provides electronic statements but receives at least 24 hours’ notice that an employee prefers to receive a hard copy of the earnings statement, the employer must provide the employee with a paper copy of the statement and continue providing paper copies of the statements for that employee, until otherwise requested.
Maintaining Records (Minn. Stat. § 177.30)
For most employers, these records must be kept for 3 years in the premises where the employee works and must be readily available (within 72 hours) for the commissioner to inspect on demand. Failure to maintain these records (including the new employee notice now required under section 181.032) may result in a fine of up to $1,000 for each failure to maintain records and fines up to $5,000 for each repeated failure.
The following records must be kept:
- each employee’s name, address and occupation;
- each employee’s rate of pay and the gross and net amount paid each pay period;
- each employee’s hours worked each day and each workweek, including, for all employees paid at piece rate, the number of pieces completed at each piece rate;
- a list of personnel policies with brief descriptions of each policy that were provided to each employee, including the date the policies were given to the employee;
- a copy of the new notice provided to and signed by each new employee and a copy of any written changes to the notice that were provided to each employee;
- for each employer subject to the Minnesota Prevailing Wage Act, for public works projects funded in whole or in part with state funds, employers must furnish a certified payroll report every two weeks signed under oath by an owner or officer of the employer stating the wages and benefits paid each employee during the preceding weeks, and specifying for each employee: name; identifying number; prevailing wage master job classification; hours worked each day; total hours; rate of pay; gross amount earned; each deduction for taxes; total deductions; net pay for the week; dollars contributed per hour for each benefit, including name and address of administrator; benefit account number; and telephone number for health and welfare, vacation or holiday, apprenticeship training, pension and other benefit programs;
- any other information the commissioner finds necessary and appropriate to enforce the law.
Timing for Making Wage Payments (Minn. Stat. § 181.101)
The law specifies that employers must pay all wages (salary, earnings and gratuities) to employees at least once every 31 days. All commissions earned by the employee must be paid at least once every three months on a regular payday.
Employers generally distribute their employee handbooks at the time of hire. These amendments to the MFLSA do not appear to change this practice. However, employers may want to ensure that they have a process to obtain an employee’s signed, written acknowledgment of receipt of an employee handbook or other personnel policies at the start of employment. Employers should also document the date of distribution of the handbook and retain these records. Some employers just provide the table of contents and maintain a copy of the handbook, identifying for employees where it can be accessed. That may suffice but employers must find a way to ensure acknowledgement of those policies. DOLI has not yet provided guidance as to whether documents such as safety manuals, operations procedures, etc. would qualify as “personnel policies” under this new law. Stay tuned!
We strongly encourage employers to watch the DOLI website for future updates. We also suggest that if you create your own notice, you include at-will language as well. Finally, employers should consult with their payroll providers to ensure that their paystubs comply with the new law. Please be sure that you are using the DOLI sample notice form or its equivalent beginning July 1, 2019. We will have a draft wage theft letter at our September Lunch and Learn.
This newsletter is provided for informational purposes only, not as legal advice. The reader of these materials should seek legal advice before using this or any other materials from this author.
Copyright © 2019 Roe Law Group, PLLC, All rights reserved.
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