Minnesota ramps up enforcement of new wage theft law
Since August, the state has had one of the toughest laws against wage theft in the country
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Security officer Chris Lewis had a good rapport with his boss, so when his employer asked him if he wanted more hours, Lewis saw it as a vote of confidence.
His employer, Madison Equities Inc., owns buildings in downtown St. Paul. When Lewis finished an eight-hour shift working security at one, he’d take on a shift at another building, some weeks working as many as 80 hours. But when payday came, instead of getting one check to cover his regular hours plus time-and-a-half for overtime, he got two separate checks from different companies set up by his employer, both paying him base rate for a 40-hour work week.
“We don’t know if this is even legal,” Lewis said. “But we just do it because we don’t want to go to the boss and say, ‘Why aren’t you paying me overtime?’ and then just get fired, for no reason.”
Then this summer, Lewis heard about Minnesota’s wage theft law that took effect in August.
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Wage theft is now defined in law as when an employer fails to pay an employee their earned wages. That could mean withholding a paycheck or overtime payments, or simply failing to pay the state minimum wage. And violations now come with stiff criminal penalties — ranging from $1,000 to $100,000 in fines and up to 20 years in prison — depending on the severity of the theft.
It’s one of the toughest wage theft laws in the nation. Minnesota is one of only two states that makes it a felony in some cases, and the state is taking enforcement seriously. The Department of Labor and Industry is hiring seven new staffers dedicated solely to investigate wage theft claims and Democratic Attorney General Keith Ellison has added two attorneys to his office who will handle cases where employers appear to have clearly broken the law.
“As soon as we put up the flag we got calls, a lot of calls,” Ellison said. “What could be more important than being able to put food on the table for your family? If you’re promised a certain amount of money and you don’t get it, that’s incredibly frustrating.”
The Minnesota Department of Labor and Industry estimates more than 39,000 workers — many of them immigrants — are victims of wage theft each year to the tune of nearly $12 million in wages owed to them.
But the aggressive approach puts the state at odds with some employers, including Madison Equities. The company is suing Lewis and the SEIU Local 26, which is representing Lewis, for defamation while seeking a protective order from a civil investigative demand from Ellison’s office.
Madison Equities’ manager James Crockarell said the attorney general is subpoenaing their phone records, which goes “way beyond the scope of what’s appropriate.”
He said the company has done nothing wrong: Lewis quit his job with Madison Equities before the wage theft law went into effect. And the bigger question for other businesses in the state is whether or not they're allowed to own multiple corporations.
“Just because you do a security guard a favor and let them do extra hours at a separate corporation does not mean you are guilty of wage theft,” Crockarell said.
But lawmakers from both parties supported the bill last session, arguing the most fundamental right of a worker is to be paid the wages they are owed. And cities such as Minneapolis are going further, passing their own ordinances on wage theft.
Terri Gerstein, who helps states navigate wage and labor laws at the Harvard School of Law, said that trend is nationwide.
“States and cities are really standing up in this area and feeling the need to be leaders and take action and protect their people because of the way the federal government is rolling back workers’ rights and has been less aggressive in protecting workers’ rights in some ways,” she said.
The new law also expands notification requirements for employers. They must now tell employees their pay rate, inform them of overtime and wage laws and when they should expect to be paid. And there are new penalties for employers who don’t keep records of payments, who don’t cooperate with the state in investigating a claim of wage theft and for those who retaliate against a worker for complaining about their pay.
Department of Labor and Industry Commissioner Nancy Leppink said the department has been on a publicity tour since the law was passed earlier this year, trying to let businesses know the new rules and how they can comply. She said most employers in the state pay their employees the wages they are owed.
“For the vast majority of employers in Minnesota, this law is interesting, but it isn’t a significant concern,” she said.
“But often employers can see the business down the street engaging in certain practices and they need to compete with that business, so sometimes employers begin to utilize business practices and they don’t do their due diligence to make sure they’re in compliance with the law.”
The industries that are the biggest offenders of wage theft include construction, hospitality, agriculture, and home care workers. Within days of the wage theft law going into effect, a group of construction workers alleged a firm withheld their wages on a $40 million project in Rochester in 2018. Then there’s the growing gig economy, including Lyft and Uber drivers who are sometimes paid less for the service than they agreed to, or not paid at all.
Leppink acknowledges it would take her team years to investigate every employer in the state. They have to make a lot out of a little: Some of the new staffers in the department will target those problematic sectors and hopefully signal to businesses that they’re taking it seriously.
“Many Minnesotans are living paycheck-to-paycheck, therefore not getting a paycheck or not getting all of a paycheck is something that makes a difference between a kid going to school hungry or not, or having a roof over their head or not,” Leppink added. “The importance is not complicated.”