Expanded Liability for Failure to Pay Wages
The Minnesota House of Representatives was very active on human resources and employment law matters in just-completed legislative session. The House passed bills removing the serious and pervasive requirement for a plaintiff to prevail on a hostile work environment claim, providing mandatory paid sick and safe leave, and strengthening tools to combat wage theft. We addressed the hostile work environment bill in a previous post.
The big story is that while most of these measures may have had support to pass in the Senate, the Senate did not bring them up at all. This had the result of killing the measures for this session. Accordingly, the law has not changed with respect to these and will not until at least the next legislative session, which begins in February 2020.
The key exception is part of the wage theft amendments. As you likely know, wage theft occurs when an employer fails to pay wages due to an employee with some intent to defraud. The use of the criminal term “theft” is intentional, as it refers to the criminal liability that may attach to underpayment of wages. Previously, the most serious penalty for wage theft was a misdemeanor, carrying a maximum penalty of 90 days in jail and a fine of $1,000. For large wage thefts over $35,000 the penalties can be as serious as 20 years in prison and a fine of $100,000. Under the new law, wage theft in excess of $1,000 is a felony. The new law also prohibits retaliation against employees who report wage theft and increases the Department of Labor and Industry’s budget by nearly $4 million to expand prevention and inspection efforts. This law takes effect on August 1, 2019.
Common ways for wage theft to occur include when an employer does not pay minimum wage, does not pay prevailing wage, or does not pay for the correct number of hours worked. Wage theft can also occur when an employer takes improper deductions. In addition to the criminal liability, the Department of Labor and Industry may impose fines and seek to recoup wages, and employees may bring a private right of action, which carries with it an award of reasonable attorneys’ fees and costs if the employee is successful. This amendment adds both administrative and criminal enforcement tools.
The passage of this law is an excellent opportunity for employers to ensure that they have robust wage and hour practices that ensure employees are paid all of their wages. Employers should keep in mind that an employee’s working unauthorized hours or performing unauthorized work is not a defense to paying wages. Therefore, employers should be vigilant in using other measures of discipline to ensure that their employees do not work when they are not authorized to do so.