Wage Payment is a heavily regulated area of the law and Employers would do well to familiarize themselves with both state and Federal requirements. Here in Minnesota, wage law is largely governed by the Payment of Wages Act (“Wages Act”) at the state level, and the Fair Labor Standards Act (FLSA) at the federal level.
Generally an Employer must pay its employees at minimum once every 31 days, on a regularly scheduled payday, set in advance by the employer. If the employee’s work is transitory in nature (such as highway construction) or requires the employee to change their place of residence, then the employer must pay wages every 15 days. Most importantly, the provision relied on here, Minn. Stat. § 181.19, was repealed in 1974 and no longer requires an employer to provide an employee with an earnings statement each pay period. If an Employee quits or resigns then they must be paid all remaining wages no later than the first regularly scheduled payday following their final day of employment, though the statute permits limited delays and exceptions. If the next payday is less than five days away, then an Employer may pay on a subsequent payday, but the employee must be paid within 20 days of resignation. If an employer fails to pay that employee within the allotted time period, then payment becomes due immediately upon the employee providing a written demand for payment; if the employer still has not paid within 24 hours of that demand, the employer becomes liable for a penalty equal to the employee’s average daily earnings for each day, up to 15 days, until payment is made. If the employee is discharged or terminated by the employer, then remaining wages for time worked become due upon written demand by the employee, and must once again be paid within 24 hours.
What are Wages under MN Law?
Under Minnesota law, wages are not simply the agreed upon salary or hourly pay. Many benefits that employees receive as part of their contracts have been interpreted as ‘wages’ in Minnesota Courts, including bonuses and vacation time. While not all benefits an employee can accrue constitute a wage, an employer should seek legal counsel before declining to pay a former employee a benefit.
Penalties
Perhaps the most pertinent issue facing employers in this area of the law are the consequences for untimely payments. Failure to pay a former employee their wages within 24 hours of receiving written demand for payment results in harsh penalties. After the 24 hour window expires, the employee may collect their average daily pay, regardless as to whether they are salaried, hourly or on commission, for each day that the employer is past due up to 15 days. Average daily pay is the greater of: the employee’s regular pay or the rate of pay required by law. This can be quite costly. It is in an employer’s best interest to comply once a former employee demands payment. However, if there is a dispute between the employee and employer and the employer in good faith pays the employee the wage the employer believes they are due, then the employer is not liable unless the employee recovers more wages in court.
Other Requirements
A Minnesota employer must pay all employees at least the state minimum wage set by Minn. Stat. § 177.24 (at least $8.00 an hour beginning August 1, 2014, and adjusted annually for inflation) and overtime for time worked in excess of 48 hours in a workweek unless they fall under an exemption provided by the statute. Minnesota also has minimum wage and overtime requirements. While most employers fall under the FSLA, the Minnesota statutory provisions will apply if they are more favorable to the employee.
This article is meant to be a brief overview of Minnesota Wage Payment law, for informative purposes only, and should not be taken as legal advice. For specific questions an employer should seek advice of counsel.
