The Minnesota Wage Theft and Record-Keeping Law:
Effective July 1, 2019, a new law in Minnesota is strengthening and expanding the existing state laws for wage protection and record-keeping requirements.
The Wage Theft and Record-Keeping Law limits the time an employer has to pay employee wages, and will require employers to keep and communicate additional information about employment and earnings.
What Does This Mean for Your Minnesota Business?
If you have a business with employees in Minnesota, you are subject to the Wage Theft and Record-Keeping law. All businesses in Minnesota, regardless of size, are required to comply with the law.
The law went into effect on July 1, 2019, however the criminal provisions of the law will go into effect on August 1, 2019. Criminal sanctions for non-compliance include up to 20 years in prison and a fine of up to $100,000.
Its important to note that the definition of who is considered an “employee” is based on Minnesota Statutes 177. Under the record-keeping law in Chapter 177, salaried exempt employees are not included in the definition of “employee.”
A summary of the law provided by the Minnesota Department of Labor and Industry can be found here. In this article, we will highlight the key requirements for Minnesota employers:
Timing of Wage Payments:
- Employees must be paid all wages due at least once every 31 days. As an example, If an employee worked on January 1st, the employer would have until February 1st (31 calendar days) to pay the employee for hours worked on the 1st.
- “Wages” include salaries, earnings and gratuities.
- Commissions must be paid at least once every three months, on a regularly scheduled pay date.
Required Information on Paycheck:
- Name of the employee
- Total hours worked in the pay period
- Employee’s rate of pay, and if wages are paid by the hour, week, shift, salary, etc
- Allowances, if any, claimed pursuant to permitted meals and lodging
- Total amount of gross pay earned
- List of deductions made from the employee’s pay
- Net amount of pay after all deductions
- Date pay period ends
- Employer’s legal name and operating name (if different)
- Employer’s physical address, and mailing address (if different)
- Employer’s telephone number
Notices for New Employees:
Written notice must be provided to all new employees at the start of employment. Notices must include:
- The rate of pay, including whether the employee is paid by the hour, shift, day, week, salary, piece, commission or other
- 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
- A list of deductions that may be made from the employee’s pay
- The number of days in the pay period, regularly scheduled pay day, and the pay on which the employee will receive the first payment of wages earned
- The legal name of the employer, and operating name (if different)
- The physical address of the employer, and mailing address (if different)
- The telephone number of the employer
The notice must also include a statement notifying the employee of the right to request notice in a different language. More information about translation services, and a copy of the department’s standard notice can be found here.
Notices for Change In Compensation of Existing Employees:
If an employer makes any change to the information contained in the written notice, the employer must notify the employee via writing before the changes take effect. This means that any time there is a change in employment status, compensation, benefits, deductions, or allowances, or any other information contained in the notice, a written notice must be prepared. Be aware of changes that may trigger an updated notice, and make sure your HR or administrative teams add the new notice to their standard process for things like:
- Annual raises or other adjustments in pay
- Changes to the employee’s employment status
- Changes to the employer’s PTO accrual and/or usage policies
- An increase in the employee’s PTO accrual based on length of service or other criteria
- The inclusion of a new deduction, for instance the employee enrolls in an employer-sponsored benefit plan during open enrollment.
Note, a payment of a discretionary bonus would typically not constitute a change in compensation, and would not require an updated notice.
However, if the employee is compensated based on a non-discretionary bonus; for instance a bonus based on meeting certain goals, this would be considered a change in compensation and an updated notice would be required. Non-Discretionary bonuses are also required to be listed in the initial notice as a form of compensation.