Minnesota Wage Theft Law: Employer Obligations You Can’t Ignore

Most Minnesota employers accurately pay their employees. However, some purposely withhold wages from their employees. These employers are committing wage theft.

According to the Minnesota Department of Labor and Industry (DLI), approximately 39,000 workers suffer from wage theft each year. And, businesses owe more than $11.9 million to workers because of it.

To help prevent more wage theft cases from occurring, the state has established the Minnesota Wage Theft Law. Read on to learn more about this law and your employer responsibilities.

What is wage theft?

Before you can learn more about Minnesota’s Wage Theft Law, you need to know what wage theft is.

Wage theft occurs when employers don’t pay their employees what they owe them for their work.

When an employer fails to pay or avoids paying earned wages, it can be considered wage theft. Here are some common examples of wage theft in the workplace:

  • Paying employees less than minimum wage
  • Taking illegal deductions from employee wages
  • Not paying an eligible employee overtime
  • Misclassifying a worker as an independent contractor
  • Not compensating an employee for working off-the-clock
  • Failing to give an employee their paycheck
  • Not paying earned tips to employees
  • Pocketing withheld taxes

Minnesota Wage Theft Law

The Minnesota Wage Theft Law helps make sure workers receive their proper wages from their employers. It also outlines new rules for Minnesota workers to follow, such as including additional information on pay stubs and providing employees with a notice when they’re hired.

Employers must follow the rules set by Minnesota’s Wage Theft Law, which cover:

  • Notifying employees
  • Pay stub requirements
  • Recordkeeping requirements
Need to brush up on the federal laws you have to follow as an employer?

Keeping track of all the laws you need to follow can get complicated. To make sure you’re up-to-date on the Fair Labor Standards Act, check our FREE whitepaper, The Busy Business Owner’s Complete FLSA Cheat Sheet.

Notifying employees

All Minnesota employers must provide each employee with a written notice at the start of their employment.

The notice must contain the following information:

  • Employee’s employment status and whether they’re exempt from overtime
  • Number of days in the employee’s pay period
  • Employee’s regularly scheduled payday
  • Date the employee will receive their first paycheck
  • Employee’s rate or rates of pay and pay basis (e.g., paid by the hour)
  • Allowances for meals and lodging (if applicable)
  • Provision of paid vacation, sick time, or other paid time off
  • List of deductions that employers can take from an employee’s pay
  • Legal and operating name of the business
  • Business and mailing address
  • Employer’s phone number

Employees must sign the notice and return it to their employer. Employers must keep a copy of each employee’s signed notice in their records.

Pay stub requirements

In addition to having all employees sign a notice, employers must also begin providing more detailed pay stubs to employees.

Pay stubs must include additional payment information, including the employee’s rate or rates of pay, pay frequency and basis, allowances for meals and lodging (if any), business’s physical and mailing address, and employer’s phone number.

Recordkeeping requirements

The new wage theft act requires employers to keep detailed payroll records.

Employers must keep records of the employee’s signed notice, hours worked for piece rate employees, number of pieces for each piece rate, and a list of personnel policies provided to the employees.

You must keep related records for at least three years. Make sure to keep your records in case of inspection.

Penalties for not complying

The penalties employers are subject to under the new law depend on the value of the withheld wages. 

Minnesota employers who commit wage theft might be subject to jail time and hefty fines. The largest penalty is 20 years of jail time and a fine of $100,000.

For more information on penalties for not complying, consult the state.

How to avoid wage theft

Employers who commit wage theft are breaking the law. While many businesses commit wage theft on purpose, some businesses might not know they are doing so.

So, what can you do to avoid committing wage theft at your business? For wage theft prevention, you can:

  • Pay your employees at least the state minimum wage
  • Compensate employees for all hours worked (including off-the-clock work)
  • Pay eligible employees for overtime
  • Pay your employees at least every 31 days and on a regularly scheduled payday
  • Avoid misclassifying employees as independent contractors (e.g., use Form SS-8 for classification help)
  • Not take illegal deductions from employees’ paychecks
  • Avoid implementing mandatory tip pooling

Contact Minnesota for more information on how to remain compliant and avoid committing wage theft.

Searching for a way to streamline your payroll process? You’ve come to the right place. Patriot’s online payroll lets you run payroll in three easy steps. And, we have free, U.S.-based support. Try a free trial today!

This article has been updated from its original publication date of September 16, 2019.

This is not intended as legal advice; for more information, please click here.

Stay up to date on the latest payroll tips and training

You may also be interested in:

Most popular blog categories