Redpath Insights

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Major Changes to Minnesota Wage Payment Laws: Wage Theft Legislation for 2019

by Heather Larson, CPP

A major employer law change for business owners went into effect on July 1st, 2019 with criminal provisions effective August 1st, 2019.

That is when the Minnesota Legislature enacted a new Minnesota Wage Theft Law, passed and signed by Governor Tim Walz. The law amends existing labor laws in the state and provides new requirements that enforce the need for additional documentation at the time of hire. A new form titled โ€œEmployee Noticeโ€ will be required as part of the new hire packet provided at the start of employment, and employers will need to include this form in their new hire packets along with the Form I-9 and Federal W-4. The state provided example of the โ€œEmployee Noticeโ€ form is linked to below. Employers have the option to either utilize this notice or to create their own.

Click here for an employee notice form example from the Minnesota Department of Labor and Industry.

Employers are advised to review the state guidance regarding these changes to ensure their businesses are compliant with Minnesota labor laws. We further encourage the review of internal company policies regarding the hiring process to ensure that they are also in alignment with the new law. Human resource and payroll departments will need to be involved to help establish controls, and if questions remain, businesses should seek outside support from their legal counsel.

Example of a question from a client regarding the changes to the law:

Q: How does this law affect out of state employers with employees performing services in Minnesota? 

A: The state agency recommends seeking legal counsel to determine the proper facts and circumstances that could create liability as an out of state employer. In addition, employees who are sent into the state while hired out of state may fall under Minnesota Statutes while performing services in the state. In these cases, the employee may trigger Minnesota reporting for state unemployment, work comp coverage, and other state-specific coverages while performing services in the state. These in-state coverages for other agencies may also trigger employer liability in Minnesota in accordance with Wage Theft rules.

For those employees known at the time of hiring either to work in Minnesota or who will likely cross the state line during their employment, adopting the form for them may be a best practice in order to remain compliant with Minnesota Law. As the state suggested, legal counsel is an encouraged method for verifying compliance as an out of state employer.

Some payroll references have also suggested that an additional best practice in multistate employment circumstances is to adopt policies that follow the strictest state guidelines and apply to the entire employee base, regardless of where work is performed. This practice encourages compliance across states that have similar rules and helps to cover future law changes in states that follow anotherโ€™s lead.

For more information regarding the new law, please visit the MN Department of Labor and Industryโ€™s help page at https://www.dli.mn.gov/business/employment-practices/wage-theft-legislation-2019-and-summaries โ€”the state of Minnesota has also enforced additional employer requirements regarding paystubs, employee record keeping, and employee rights, all of which can be reviewed on their website. 

If you have further questions or need help contacting the state directly for questions, please contact Heather Larson.

Heather Larson, CPP

Heather Larson, CPP

Heather Larson, CPP is a payroll manager focusing on non-attest services including bookkeeping, compiled financials, liquor and sales tax, and 1099 filings. Most of her time is spent working with business owners on a day to day basis to maintain their books, and help with payroll record keeping and processing, and assisting with general business processes.