Back in the good old days wage theft was best described as taking employee payroll and putting it on horse number 5 in the 7th race at Canterbury Park. Starting next month (July 1, 2019), wage theft has gotten a new expansive meaning. The 2019 Wage Theft Law is a greatly expanded approach to employment record keeping. Employers are required to provide lots of information to new employees, create lengthy payroll earning statements and maintain (and make available) additional employer records. The “wage theft” part of the law relates to the potential criminal penalties for an employer’s failure to comply. These criminal laws become effective in August 2019.
The new provisions fall into some basic categories:
Additional information Employers are required to provide employees when they start work:
The new employee hire letter must now include a written notice to employees about their employment status and terms of employment, including wages, hours and benefits. It must be provided at the start of employment.
Specific information must include:
• Employee’s employment status
• Whether an employee is exempt from minimum wage, overtime and other state wage and hour laws, and 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,
o This must include a statement of 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
o Allowances, if any, that may be claimed for permitted meals and lodging (New).
• 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.
• The Employer’s legal name and the operating name, if different.
• The physical address of employer’s main office or principal place of business and a mailing address, if different.
• The Employer’s telephone number.
Employers are required to keep a copy of the notice signed by each employee.
All employers must provide the notice to employees in English. The notice must include a statement, in multiple languages, that informs employees they may request the notice be provided to them in another language. The employer must provide the notice in another language if requested by the employee. (Fortunately, the State Department of Labor and Industry has indicated that they are preparing this notice).
Employers are also required to provide employees in writing any changes to the information in the notice before the date the changes take effect.
Changes to Employee Earning Statements:
Existing state law requires earning statements be provided to employees in writing or by electronic means at the end of each pay period and specific information be included on the earnings statement. The existing information that you should already provide is as follows:
• Name of the employee.
• Total hours worked by the employee in the pay period.
• Total amount of gross pay earned by employee in the pay period.
• Net amount of pay after all deductions are made.
• List of deductions made from the employee’s pay.
• Date pay period ended.
• Employer’s legal and operating name.
New information that must be included is as follows:
• Employee’s 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.
• Allowances claimed for permitted meals and lodging.
• Employer’s telephone contact.
• Physical address of employer’s main office or principal place of business and a mailing address, if different.
Additional record keeping:
Under existing law, employers are required to keep various records for three years.
The new law requires the following additional records be kept by an employer:
• Each employee’s name, address and occupation.
• Each employee’s rate of pay and the 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 that is required to be provided to and signed by each employee at the start of employment and a copy of any written changes to the notice that were provided to each employee.
• There is a lengthy requirement for each employer subject to the Minnesota Prevailing Wage Act, and while performing work on public works projects funded in whole or in part with state funds. Please contact us if you are an employer subject to this area and we can let you know the additional requirements.
• The law also continues the prior requirement that the employer must maintain “other information the commissioner finds necessary and appropriate to enforce this portion of the laws.
There is also a new requirement that these records must be handy in case the State demands to see them. The law states that these and other records that are required to be kept by an employer must be available for inspection by the commissioner upon demand.
• The records must be either kept at the place where employees are working or kept in a manner that allows the employer to comply with the commissioner’s demand within 72 hours.
• If records maintained by the employer do not provide sufficient information to determine the exact amount of back wages due, the commissioner may make a determination of wages due based on available evidence.
As an aside, the State can enter and inspect places of employment without unreasonable delay to carry out purposes of the wage and hour laws. It can also apply for an inspection order in district court in the county where the place of employment is located to require the employer to permit entry of the commissioner or an authorized representative if the entry has been denied. Finally the State can interview non-management employees in private regarding an investigation.
In addition to these record keeping requirements, the law adds further clarification on when wages and commissions must be paid:
Employers must pay all wages, including salary, earnings and gratuities earned by an employee at least once every 31 days and all commissions earned by an employee at least once every three months on a regular payday. The new Wage Theft Law further clarifies that Minn. Stat. § 181.101 provides a substantive right to the payment of commissions and wages, at the employee’s rate or rates of pay or the rate or rates required by law, whichever is greater, as well as the right to be paid wages and commissions earned on a regular pay day.
The law prohibits Employers from retaliating against employees for asserting rights or remedies under the Minnesota wage and hour laws.
Responsible Contractor Law:
The “responsible contractor” requirements have been amended to include the laws on prohibited wage practices and retaliation, payment of wages and the new criminal wage theft laws, in the list of laws that contractors must verify they are in compliance with and have not violated during the past three years, to be considered eligible to bid on public contracts.
Remedies and Violations:
For violations, the commissioner may order the employer to:
• Pay wages or commissions owed to an employee.
• Pay an amount equal to the wages or commissions owed as liquidated damages.
• Pay compensatory damages incurred by an employee.
• Cease and desist in the violative practice.
• Pay a civil penalty for repeated or willful violations.
In addition, the commissioner may also now order an employer to pay a penalty equal to either the employee’s average daily wages earned or an amount equal to 1/15 of the commissions earned for each day payment is not made in accordance with the commissioner’s order. Also, the commissioner may:
• Penalize an employer up to $5,000 for each repeated failure to submit or deliver records to the commissioner as required by law.
• Penalize an employer up to $5,000 for each repeated failure to keep and maintain records as required by law.
Under existing law, an employer found to have hindered or delayed the commissioner in the performance of duties required under the Minnesota Fair Labor Standards Act or the Prevailing Wage Act was guilty of a misdemeanor.
The new Wage Theft Law adds that any employer hindering or delaying the commissioner in the performance of duties required under these laws is also guilty of a misdemeanor.
This is the particularly concerning area for Employers because of the massive potential criminal penalties. The law adds new a crime of “wage theft” and criminal sanctions for committing “wage theft”.
The crime of “wage theft” occurs 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, whichever is greater.
• Directly or indirectly causes any employee to give a receipt for wages for a greater amount than that actually paid to the employee for services rendered.
• Directly or indirectly demands or receives from any employee any rebate or refund from the wages owed the employee under contract of employment with the employer.
• Makes or attempts to make it appear in any manner the wages paid to any employee were greater than the amount actually paid to the employee.
The key in this area is intent. There will need to be intent to defraud in order to apply these criminal penalties.
“Employer” is defined as “any individual, partnership, association, corporation, business trust, or any person or group of persons acting directly or indirectly in the interest of an employer in relation to an employee.”
“Employee” is defined as “any individual employed by an employer.”
Criminal sanctions for “wage theft” are as follows:
•Imprisonment for not more than 20 years, payment of a fine of not more than $100,000 or both if the value of the wages stolen is more than $35,000.
•Imprisonment for not more than 10 years, payment of a fine of not more than $20,000 or both if the value of the wages stolen exceeds $5,000.
•Imprisonment for not more than five years, payment of a fine of not more than $10,000 or both if the value of wages stolen is more than $1,000 but not more than $5,000.
•Imprisonment for not more than one year, payment of a fine of not more than $3,000 or both if the value of the property or services stolen is more than $500 but not more than $1,000.
When determining the value of the wages stolen, the law allows for the amount of employee wages that were stolen through wage theft to be aggregated within any six-month period.
Tips for Employers:
• Get some aspirin.
• Sharpen your pencils (or your typing skills) – this new law is going to have you digging through and likely amending your policies and practices to comply with all of the information that must now be developed, provided and maintained.
If you are an employer that does not have the time, inclination or this whole thing seems confusing, call your friendly employment attorneys at BGS for guidance in sorting through what you have, what you need and the preferred way to approach this new layer of complexity. And if you wind up afoul of this law, the friendly lawyers at BGS can also help you through the regulatory, civil and criminal avenues that are created from this law.