MN Passes New Wage Theft Bill. Employers Scramble
The higher profile bills relating to paid leave and watering down of defenses to harassment lawsuits that were introduced in the 2019 legislative session never made it. Sneaking under the radar, however, a new Wage Theft law made it through and will go into effect on July 1.
SUMMARY OF THE NEW WAGE THEFT LAW
The law touches on a number of criminal and employment laws with the idea that more information to employees regarding their wages will result in fewer incidents of wage theft by employers. Whether true or not, according to the State of Minnesota nearly 40,000 workers in the state are not paid their wages fully in any given year. To rectify that the new law does a number of things: It makes clear earned commissions need to be paid at least every three months. It clarifies the definition of wages to include salary, earnings, and gratuities. It requires employers to provide notice to new employees of a number of details regarding their wages and benefits. Wage statements must have even more information on them beyond what was previously required. More records are now required to be kept for three (3) years by employers.
Finally, not to be understated, but if the employer commits “wage theft” it could lead to imprisonment and a fine for any person directly or indirectly working in the interest of the employer (yikes).
WHAT DO EMPLOYERS NEED TO DO?
First, it’s now an even better idea to pay employees their full entitlement to wages. Imprisonment is not something most HR professionals, managers and business executives like to be presented with as a possibility. Reviewing your pay practices to ensure employees are fully and timely paid is an increasingly good idea. Rest assured, for the “wage theft” to be criminal the employer (and all people working directly or indirectly in the employer’s interest – like HR) must intentionally not pay the employee.
Second, employers will need to keep the hours worked by employees who are paid on a piece rate basis, the piece rate, and the number of pieces completed by the employee for at least three years. Employers will also need to keep a list of personnel policies – e.g. the employee handbook – and the dates the policies were given to the employees for three years. For most employers this means keeping the old handbooks and acknowledgement forms that employees complete for at least three years.
Finally, employers will need to provide new employees, at the start of employment, with specific information:
The employee’s rate(s) of pay, the basis for the pay, the measurement of pay (hourly, shift, day, week, salary, piece rate, commission, or some other method);
Allowances for meals and lodging, if any;
Paid vacation, sick time or other forms of PTO, how the PTO will accrue and terms for its use;
Whether the employee is exempt, and the basis for the exemption;
A list of deductions that may be made from the employee’s pay;
The number of days in the pay period, the regularly scheduled payday and the day the employee will receive the first payment of wages;
The legal name of the employer;
The employer’s physical address;
The telephone number of the employer.
Per the new law, employers will need to have new employees sign-off on receipt of this information. Based on the nature of the notices doing this at the offer of employment stage seems to make the most sense. Whatever vehicle you use to provide the notice, the receipt needs to be kept at least three years. The MN Department of Labor and Industry (DLI) has promised to provide a form for employers to use with disclosure language. To-date, however, DLI has not issued the notice.
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