Serious Business: Minnesota’s New Recordkeeping and Wage Theft Law
Minnesota employers, be prepared. A broad new wage theft and employee recordkeeping law goes into effect on August 1, 2019. This leaves employers with less than two months to prepare to comply.
Some highlights of the new law:
New Signed Wage Statement for Employees
Beginning August 1, employers will need to begin providing a written “wage statement” at hire to each employee. The wage statement must contain the following information:
- Both the rate and basis of pay, including whether the employee is paid by the hour, shift, day, week, salary, commission, piece, or other method, and the application of any additional rates such as overtime
- Any meal and lodging allowances
- The employee’s status as exempt or nonexempt from minimum wage and overtime requirements, and, if exempt, on what basis
- List of deductions from pay
- Number of days in the pay period, regularly scheduled payday, and date on which the employee will receive their first payment of wages earned
- Legal name of employer, and operating name of employer if different from the legal name
- Physical address of the employer’s main office or principal place of business, and mailing address if different than main address
- Telephone number of the employer
The form must be provided in English. However, the form must also contain a notice stating it can be provided in the language requested by the employee.
The employee must sign the wage statement, and the employer must keep a copy of the signed form.
The employer must also provide a written update to the employee any time information in the original wage statement changes. This includes increases in vacation accruals based on longevity, adding or removing benefits that involve deductions, and a change of name or address of the employer. Wage statements must be updated and given to affected employees when ANY of the above information changes.
New Requirements for Earnings Statements/Pay Stubs
Employee earning statements or pay stubs must also be updated under the new law to include the employee’s basis of pay (hourly, salary, commission, piece rate, etc.), any allowances for meals or lodging, and the employer’s address and phone number.
Timing of Payments
All earnings, including salary and gratuities, must be paid at least once every 31 days. All earned commissions must be paid at least once every three months.
The new law also increases the amount of potential penalties an employer could face for a missed payday. Currently, an employer could be responsible for a penalty of up to 15 days’ worth of the employee’s average daily earnings for an employer’s missed scheduled payment of wages. After August 1, there will be no 15-day average wage cap on the amount of possible penalties. Instead, the daily penalties will continue to accrue until the employer pays.
Significantly, an employer committing “wage theft” under the new law could be subject to criminal penalties. Wage theft is any of the following actions of an employer with an intent to defraud the employee:
- Failing to pay all wages, earnings, salary, gratuities, or commissions as required under federal, state, or local law
- Causing an employee to give a receipt for wages for a greater amount than the wages actually paid to the employee for services rendered
- Demanding or receiving from any employee any refund or rebate from the wages owed to the employee
- Making it appear in any manner that the wages paid to an employee were greater than the wages actually paid to the employee
Penalties can include fines and imprisonment.
Employers must strictly comply with these new requirements or face fines and penalties, including possible criminal charges.
With this new law, Minnesota joins the ranks of other progressive states that have passed laws placing similar requirements on employers. Minnesota employers should take steps now to make sure they are in compliance on or before the law’s August 1 effective date. For example, if you use a payroll service, contact them to make sure they can provide pay stubs that meet the law’s requirements. Employers with workers that speak a language other than English should make arrangements with a translation service to meet the wage statement requirements if needed. Contact us if you have questions or need more information.