39,000 Minnesotans experience some form of wage theft every year. Whether it be a restaurant owner taking money from the tips of its employees, or employers withholding commissions, or demanding the employee pay back certain wages received in order for them to keep their job, wage theft has a huge impact on the amount of money wage-earners across the state bring home.
The state already had laws that made it illegal for employers to withhold wages from employees either directly or indirectly. The Fair Labor Standards Act also goes a long way in protecting wages from unlawful wage practices of employers. However, an employer’s violation of those laws up to this point has only exposed employers to possible civil action from their employees who were improperly paid. Now, with the passing of the 2019 Omnibus Jobs and Energy bill, the state of Minnesota has brought itself to the forefront of the fight against wage theft, by making it a felony for employers to deliberately withhold wages from employees.
The Omnibus bill actually addresses a number of issues, but for employers, it is important to pay special attention to the fact that the criminal code has been amended to include wage theft. The bill states that “Wage theft” occurs “when an employer with the 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, including any applicable statute, regulation, rule, ordinance, government resolution or policy, contract, or other legal authority, whichever rate of pay is greater;
- Directly or indirectly causes any employee to give a receipt for wages for a greater amount that 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; or
- 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.
Those who steal more than $35,000 in wages may be subject to up to 20 years in prison or a fine of up to $100,000. The law is set to go into effect on August 1, 2019.
The last three bullets should not come as much of a shock to employers. If you are intentionally misrepresenting the amount earned by an employee or forcing employees to pay money back to your business in order to keep their jobs, one can expect serious consequences. However, the first bullet point puts an incredible amount of pressure on employers to ensure they are paying employees correctly. Obviously there must be an intent to defraud the employees when considering the possible miscalculation of wages, but the law is too new to tell if, once employers have notice they have been improperly calculating wages for employees, they will be considered to have been put on notice and subject to criminal prosecution for future errors.
The bill has yet to become law, but there has been agreement in both the House and the Senate, with overwhelming support. You can expect to see this one signed into law by the labor-friendly governor in the near future.
That being said, the stakes for calculating the appropriate wages for employees and paying them properly have gotten greater. If you or your payroll department are in need of assistance in making sure you’re paying your employees right, contact the Wiley Law Office, for advice that works.