The Minnesota Legislature passed sweeping new amendments to statutes which create criminal penalties for the failure to pay wages and impose requirements for employers (including contractors) to document the terms of employment with their employees.  The new amendments took effect July 1, 2019.  Then, on August 8, Minneapolis passed an ordinance, essentially piggybacking on the new law, requiring employers (including contractors) to provide new notices to employees effective January 1, 2020.  The ordinance applies not only to employers with brick and mortar locations within the City’s limits, but also employers outside the City with employees who work at least 80 hours each year inside its limits.

Let’s take a closer look at these new laws and what actions an employer needs to take.

State Changes

Wage Theft

Effective August 1, 2019, Minnesota law makes clear that prison time can be imposed for wage theft.  “Wage theft” is defined as occurring “when an employer with intent to defraud” fails to pay an employee all wages, salary, gratuities, earnings, or commissions at the employee’s rate or rates of pay or at the rate or rates required by law, or makes or attempts to make it appear in any manner that the wages paid to an employee were greater than the amount actually paid to the employee.

Wage theft is now punishable by imprisonment of up to twenty years and a fine of $100,000 for wage theft in excess of $35,000, ten years and a fine of $20,000 for wage theft exceeding $5,000, and five years and a penalty of $10,000 for wage theft exceeding $1,000.

Earnings Statement

As part of the new legislation, effective July 1, 2019, employers are required to provide employees, at the end of each payroll period, an earnings statement which includes the following information (newly added requirements are italicized):

  1.  the name of the employee;
  2.  the hourly rate or rates of pay and basis thereof, including whether the employee is paid by hour, shift, day, week, salary, piece, commission or other method;
  3.  allowances, if any, claimed pursuant to permitted meals and lodging;
  4.  the total number of hours worked by the employee unless exempt from minimum wage and overtime;
  5. the total amount of gross pay earned by the employee during the period;
  6. a list of the deductions made from the employee’s pay,
  7. the net amount of pay after all deductions are made,
  8. the date on which the pay period ends,
  9. the legal name of the employer and the operating name of the employer if different from the legal name,
  10. the physical address of the employer’s main office or principal place of business, and a mailing address if different, and
  11. the telephone number of the employer.
Information at Commencement of Employment

Employers must also provide new employees at the start of employment with the following written information:

  1. the rate or rates of pay and 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;
  2. allowances, if any, claimed pursuant to permitted meals and lodging;
  3. paid vacation, sick time or other paid time off accruals and terms of use;
  4. the employee’s employment status and whether the employee is exempt from minimum wage and overtime, and on what basis;
  5. a list of deductions that may be made from the employee’s pay;
  6.  the number of days in the pay period, the regularly scheduled pay date, and the pay day on which the employee will receive the first payment of wages earned;
  7. the legal name of the employer and the operating name of the employer if different from the legal name;
  8. the physical address of the employer’s main office or principal place of business, and a mailing address if different; and
  9. the telephone number of the employer.

Employers must also keep a copy of this notice signed by each employee acknowledging receipt of the notice.  They must also provide the employee any written changes to the information contained in the notice prior to the date the changes take effect.  The notice must be provided to each employee in English, and include text provided by the Commissioner of the Minnesota Department of Labor & Industry that informs employees they may request that the notice be provided in a language other than English.  If requested, employers must provide the notice in the language requested by the employee, but the Commissioner must assist employers with translation of the notice in the languages requested by their employees.

List of Personnel Policies

As of July 1, 2019, employers (including contractors) must maintain a list of the personnel policies provided the employee, including the date the policies were given to the employee and a brief description of the policies as well as a copy of the notice provided to each employee, including any written changes to the notice.  It is possible that providing a list of the table of contents of an employee handbook may suffice with respect to policies contained within the handbook.  Employers must keep these records readily available for inspection by the Commissioner within 72 hours of a demand.  Failure to keep the proper records allows the Commissioner, in a wage dispute, to make his or her own determination of any wages that are due based on available evidence.  A $5,000 fine for “each repeated failure” may be levied.  The new legislation also imposes criminal penalties upon employers who hinder or delay the Commissioner in the performance of his or her duties.

The New Minneapolis Ordinance

Under the new Minneapolis ordinance, employers (including contractors) are required to provide a written notice at the time of hiring, and prior to the commencement of work, which includes the following information (which is new and additional to what is required under the State wage theft law):

  1.  the date on which employment will start;
  2.  the employer’s policy regarding tips, and state that tip sharing is voluntary under Minnesota law (if the employee will be in a position to receive tips);
  3.  the employer’s overtime policy applicable to the employee’s position and the rate of pay that will apply to straight time and overtime; and
  4.  details about the employee’s rights under the Minneapolis Sick and Safe Ordinance (our previous article regarding the Minneapolis Sick and Safe Ordinance is attached here ).

The notice regarding the Minneapolis Sick and Safe Ordinance must provide how sick and safe leave is accrued, the first date when the employee will be entitled to use any accrued time under the ordinance, and the beginning and end dates of the employer’s year for purposes of sick and safe time accrual.

Unlike the State’s wage theft notice requirement, the Minneapolis ordinance explicitly allows the notice to simply reference the employer’s handbook or other policies, which contain the required information, as opposed to repeating that information, in full, in the notice.  But like the Minnesota wage theft notice, the Minneapolis ordinance requires employees to sign the pre-hire notice in order to acknowledge its receipt (electronic signatures are acceptable).  Any changes to the information contained in that pre-hire notice will require an additional written notice to the employee prior to the date the changes take effect (which does not need to be signed).

The Minneapolis ordinance also requires that any employee who is employed prior to January 1, 2020, be provided the equivalent of the full, pre-hire notice.  The State wage theft law, to the contrary, allows employers to wait to provide the information required in the pre-hire notice to employees who were employed prior to its July 1, 2019, effective date until their terms of employment change.  The Minneapolis ordinance requires that the notice be provided to all existing employees, who were hired prior to January 1, 2020, no later than the end of the first full payroll period in 2020 (i.e. employers are not allowed to wait until a change is made in their terms of employment to provide the information required in the pre-hire notice).

The new Minneapolis ordinance also requires that earning statements be provided to employees every payroll period which include the amount of accrued sick and safe time available to the employee.

What Should Employers and Contractors Do Now?

The State’s Wage Theft Law has been enacted, so employers need to be in compliance now.  The Minneapolis ordinance doesn’t take effect until the beginning of the year.  We recommend that employers hold off on preparations to comply with the Minneapolis ordinance until closer to January 1.  A case is currently pending before the Minnesota Supreme Court which could affect the applicability of the Minneapolis Sick and Safe Ordinance to employers physically located outside the City.  In addition, the City may issue guidance on the new ordinance in the future which could be of assistance.

The Minneapolis ordinance provides an array of penalties that may be imposed on employers who fail to comply.  Civil fines up to $2,000, liquidated damages and other remedies are available.

Please contact one of your employment lawyers at Larkin Hoffman for any questions or assistance in complying with the new Minneapolis ordinance.