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Important employment law update for employers

By Larry Morgan, MAIR, SPHR, SHRM-SCP, GPHR and Dan Ballintine

June 11, 2019

The Minnesota Legislature this year passed several amendments to statutes that employers should be aware
of.

The amendments create criminal penalties for the failure to pay wages on a timely basis. Additionally, they impose requirements for employers to document the terms of employment with their employees.  The new amendments have been signed into law by Gov. Tim Walk and will take effect as early as Aug. 1, 2019.

Here is what employers need to do now.

1. Ensure that employers pay all “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 regularly scheduled payroll dates. Unpaid wages may contain a penalty of 1/15 of the unpaid wages for every day they are late.

Note that “wage theft” is defined as occurring “when an employer with intent to defraud” does any of the following:
  1. 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, including any applicable statute, regulation, rule, ordinance, government resolution or policy, contract or other legal authority, whichever rate of pay is greater.
  2. 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.
  3. Directly or indirectly demands or receives from any employee any rebate or refund from the wages owed the employee under contract or employment with the employer.
  4. Makes or attempts to make it appear in any manner that the wages paid to any employee were greater than the amount actually paid to the employee. 

Wage theft is now punishable by imprisonment of up to 20 years and a fine of $100,000 for wage theft in excess of $35,000, 10 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.

2. Provide employees, at the end of each payroll period, an earnings statement that 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/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.
  11. The telephone number of the employer. 
3. Provide new employees similar information at the commencement of employment. Specifically, at the “start of employment, an employer shall provide each employee a written notice containing the following 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 in terms of use.
  4. The employee’s employment status and whether the employee is exempt from minimum wage, overtime and any other provisions of Chapter 177, 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.
  9. The telephone number of the employer. 

4.  Keep a copy of the [above] notice … “signed by each employee acknowledging receipt of the notice” and “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. If an employee requests a language other than English, 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. 

5. 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 as required by Section 181.032 ... including any written changes to the notice.” This could include an employee handbook when version control is maintained. For employers without a current handbook or outdated handbook, this should be carefully reviewed by HR staff or an HR consultant or employment attorney.

Employers must keep these records “readily available for inspection by the commissioner upon demand” and “must be kept either at the place where employees are working or kept in a manner that allows the employer to comply with this paragraph within 72 hours.” 

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 potential criminal penalties for employers who hinder or delay the commissioner.

As the law goes into effect, additional details will likely be forthcoming.
 
A new employee sample template is available to MNCPA members on the HR Hotline page.
 
For additional information, contact Larry Morgan through the MNCPA HR Hotline at hrhotline@mncpa.org or 952-885- 5539 (toll-free at 1-877-339-7003) or Daniel Ballintine at dballintine@larkinhoffman.com or (952) 896-3288.