Author: Ashleigh Leitch, Attorney, Best & Flanagan
On July 1, 2019, the civil provisions of Minnesota’s new “wage theft” statute went into effect. This new law requires all employers in Minnesota to provide new information to employees about their employment and to keep new records about personnel policies and wages. If you haven’t already, now is the time to update your onboarding forms and paystubs. The four takeaways for wage theft compliance are:
- Provide an individualized notice to all new hires during onboarding.
For employees who start work after July 1, you must provide an individualized form stating the key terms and conditions of their employment. For example, the form must state their wages, benefits, withholdings, deductions, exemptions, payroll periods, and eligibility for paid vacation or sick time. The Minnesota Department of Labor and Industry provided a sample employee notice form, available here. For convenience, I recommend using the Department’s sample form, tailoring it to your company, and swapping out the Department’s letterhead for your company’s branding. New employees must sign this form when they begin work, and you should keep a copy of the signed form in their personnel file.
You are not required to provide this form to employees hired prior to July 1, although according to its FAQs the Department believes that is a best practice. Going forward, if an existing employee’s terms or conditions of employment change, you will have to create or update the form to reflect the change. For example, if an employee hired before July 1 received a pay raise, then you would need to create the form, note the new rate of pay, get the employee’s signature, and keep a copy in the employee’s personnel file. If six months later that same employee became eligible for PTO, then you would have to update the form to note the new PTO eligibility, get the employee’s signature, and keep another copy in the personnel file. As you can see, this requirement may generate a lot of paperwork.
- Update your earnings statements through your payroll provider.
You must also include the following information in employee wage statements: the employee’s rate of pay, allowances claimed for permitted meals and lodging, the employer’s telephone number, and the employer’s physical and mailing addresses for its main office or principal place of business. Check with your payroll provider to make sure that they have updated their paystubs and wage statements to include this information.
- Stay on top of new recordkeeping requirements, including tracking the delivery of new policies to employees.
The new law requires you to document when you disseminate new or revised personnel policies to employees. Your records must contain a “brief description” of the policy and the date when it was delivered to employees. Some employers are tracking this through spreadsheets or electronic filing systems.
There is also a new recordkeeping requirement for piece rate workers. Minnesota law already requires you to track each employee’s hours worked for each day and workweek. The new law goes one step further and requires you to track the number of pieces completed at each piece rate for employees who are paid by piece rate.
Although most companies already pay employees every two weeks, the new law also requires you to pay wages (including gratuities) to employees at least once every 31 days. You must pay earned commissions to employees at least once every three months.
- Get into compliance now to avoid criminal sanctions later.
The Minnesota Department of Labor and Industry and Minnesota Attorney General will enforce these new rules through investigations, fines, and penalties. Both are taking enforcement seriously: the Department committed to hiring eight new investigators, and the Attorney General’s Office recently formed a Wage Theft Unit. Next month, prosecutors may start pursuing criminal sanctions for committing wage theft with intent to defraud an employee. Sanctions may be severe, including imprisonment and monetary fines.
And if that wasn’t enough, Minneapolis employers should stay tuned because the City of Minneapolis is considering its own wage theft ordinance later in July. We will post updates on that ordinance as it develops.
If you have any questions about how to comply with the new wage theft law, contact your Marsh & McLennan Agency representative or contact me directly at firstname.lastname@example.org.