DLI Wage Investigation: Minnesota Employer Response

What powers does DLI have in a Minnesota wage investigation?

DLI can enter your workplace during reasonable office hours or upon request, examine and copy wage records, question you and your employees, issue subpoenas, and interview nonmanagement employees in private. Under Minn. Stat. § 177.27, subd. 1, the commissioner may inspect records “that in any way relate to wages, hours, and other conditions of employment,” may “question the employer, employees, and other persons to ascertain compliance with any of the sections listed in subdivision 4,” and “may investigate wage claims or complaints by an employee against an employer if the failure to pay a wage may violate Minnesota law or an order or rule of the department.” Minn. Stat. § 175.20 adds that the commissioner or an authorized representative “may issue subpoenas, collect evidence, interview witnesses, take testimony, compel the attendance of witnesses,” with witness fees paid, and may take testimony under oath.

The phrase “any of the sections listed in subdivision 4” is why an investigation can outgrow the complaint that started it. That list covers the Minnesota Fair Labor Standards Act and many other wage and leave provisions, including the rules on paydays, final pay, and the wage notice given at hire, so an investigator who arrives about one employee’s overtime may ask how everyone is paid.

An investigation can begin with an employee’s wage claim. The Department’s Labor Standards Division takes claims by phone or email and asks the employee for the employer’s “name, address, phone number, email address and owner name,” along with whatever wage information the employee has (DLI, Wage claim). The Department also says the Minnesota Wage Theft Prevention Act funded staff “to perform strategic and targeted workplace enforcement” (DLI, Wage theft law).

What records can DLI require an employer to produce?

DLI can require any records that relate to employment or employment status and that the commissioner “deems necessary or appropriate,” including the payroll, time, and policy records Minnesota requires you to keep, plus written and sworn statements about wages, hours, and employees. Under Minn. Stat. § 177.27, subd. 2, the commissioner may require “photocopies, certified copies, or, if necessary, the originals” of employment records, including “sworn statements by the employer,” and employers “shall respond within the time and in the manner specified by the commissioner.” The fine is “up to $10,000 for each failure to submit or deliver records as required by this section,” with the amount weighed against the size of the business and the gravity of the violation.

The baseline is the record list in Minn. Stat. § 177.30. For each employee, a covered employer must keep the name, address, and occupation; “the rate of pay, and the amount paid each pay period”; “the hours worked each day and each workweek by the employee, including for all employees paid at piece rate, the number of pieces completed at each piece rate”; a list of the personnel policies provided, with the dates they were given and a brief description of the policies; a copy of the wage notice provided at hire, with any written changes to it; and the earnings statement for each pay period. The employer must also keep a record of “other information the commissioner finds necessary and appropriate to enforce sections 177.21 to 177.435.” The records must be kept for three years (on public works projects funded in whole or in part with state funds, three years after the contracting authority makes final payment) and “must be readily available for inspection by the commissioner upon demand,” either at the place where employees work or in a way that lets the employer produce them “within 72 hours.” The same section authorizes a fine “up to $1,000 for each failure to maintain records as required by this section, and up to $5,000 for each repeated failure.” Gaps in wage notices or pay stubs are addressed in Minnesota’s wage notice and earnings statement rules.

Two more rules decide whether you must produce everything the Department asks for. Refusing “to make any record available, or to furnish a sworn statement of the record or any other information as required by section 177.27,” and falsifying any record, are misdemeanors under Minn. Stat. § 177.32, subd. 1. And missing records work against the employer: if the records “do not provide sufficient information to determine the exact amount of back wages due an employee, the commissioner may make a determination of wages due based on available evidence” (Minn. Stat. § 177.27, subd. 3). I suggest producing the required records completely and on time, and raising any concern about a request’s scope or deadline with the investigator in writing before the deadline passes, since the statute lets the commissioner set the time and manner.

What happens when a DLI investigator comes to your workplace?

A DLI investigator may enter during normal working hours to inspect and to talk with your employees, and if you refuse entry, the commissioner may ask a district court for an inspection order. Minn. Stat. § 175.20 allows the commissioner or an authorized representative to “enter without unreasonable delay and inspect places of employment, during normal working hours,” and if an employer refuses entry, the commissioner “may apply for an inspection order in the district court.” Minn. Stat. § 177.27, subd. 1 separately allows entry “during reasonable office hours or upon request.” Under Minn. Stat. § 177.32, subd. 1, an employer that “hinders or delays the commissioner in the performance of duties required under sections 177.21 to 177.435, 181.01 to 181.723, or 181.79” or “refuses to admit the commissioner to the place of business or employment of the employer, as required by section 177.27, subdivision 1” commits a misdemeanor. The U.S. Supreme Court has held, however, that a business may not be prosecuted for insisting on a warrant before an inspector enters areas not open to the public (See v. City of Seattle, 387 U.S. 541 (1967)).

The investigator may also talk with your staff without you present. The same entry statute provides that the commissioner “may interview in private nonmanagement employees regarding the matter under investigation.”

In my practice, when an owner brought me a federal wage audit days before it was set to close, my first advice was protective: preserve every payroll record, time record, employee file, and message with the auditor, and change, recreate, or discard nothing; keep a written log of every contact, noting who, when, what was asked, and what was provided; and sign nothing, agree to no findings, and make no new written statements until we had talked. The same habits fit a DLI visit. In a DLI investigation, those habits do not extend any deadline the investigator sets, because the commissioner may require written and sworn statements, and employers asked to produce records “shall respond within the time and in the manner specified by the commissioner” (Minn. Stat. § 177.27, subd. 2). I suggest naming one person to deal with the investigator, asking for the investigator’s contact information and the scope of the visit in writing, and letting the inspection and interviews proceed without coaching anyone.

How do you answer DLI without conceding the case?

The way to answer DLI without conceding is to respond with documents, put your explanation in writing in plain factual terms, and accept no findings or back-wage figures until you have checked the hours and rates behind them. Write every response on the assumption that the employee who complained, and any lawyer the employee hires, will read it.

That assumption comes from the other side of the table. In my practice I have also represented employees, and in one matter before the Department, the investigator forwarded the employer’s response letter to the employee; that letter became the foundation of my written submission to the Department. A response that describes the same decision two different ways, or states as fact something the documents do not support, can be used against the company long after the investigation closes.

Accuracy also carries legal weight. Minn. Stat. § 177.27, subd. 2 lets the commissioner require “full and correct statements in writing, including sworn statements by the employer,” and falsifying any record is a misdemeanor under Minn. Stat. § 177.32, subd. 1. When a fact is uncertain, I suggest saying so and naming the records you are checking, rather than guessing.

Back-wage figures deserve the same scrutiny. In a federal wage audit I advised on, the summary of unpaid wages showed a total for each employee but not the hours and rates behind it, and those hours and rates decide whether a figure is right. I suggest asking for the computation, comparing it line by line with your own time and pay records, and answering each line you dispute with the record that disproves it. If the dispute turns on whether a position is exempt from overtime, the duties and salary facts that support the exemption belong in the response, with the documents that show them.

What can a DLI compliance order require?

A compliance order requires the employer to stop the violation and take the affirmative steps the commissioner judges will carry out the purposes of the statute or rule violated. It also orders payment of back pay, gratuities, and compensatory damages, minus what the employer has already paid, plus an equal amount as liquidated damages, on top of the remedies, damages, and penalties the violated statute provides. It can add reinstatement, a penalty for repeated or willful violations, and hearing costs, and interest accrues on any unpaid balance. Under Minn. Stat. § 177.27, subd. 7, when the commissioner finds a violation and issues an order to comply, the commissioner “shall order the employer to cease and desist from engaging in the violative practice and to take such affirmative steps that in the judgment of the commissioner will effectuate the purposes of the section or rule violated.” The subdivision continues: “In addition to remedies, damages, and penalties provided for in the violated section, the commissioner shall order the employer to pay to the aggrieved parties back pay, gratuities, and compensatory damages, less any amount actually paid to the aggrieved parties by the employer, and for an additional equal amount as liquidated damages.”

The remaining items depend on the findings. The commissioner “may also order reinstatement and any other appropriate relief to the aggrieved parties.” An employer found to have “repeatedly or willfully” violated the listed laws “shall be subject to an additional civil penalty of up to $10,000 for each violation for each employee,” with the amount weighed against the size of the business and the gravity of the violation. When an order goes through a contested case, the commissioner may order the employer to reimburse the Department and the attorney general for “all appropriate litigation and hearing costs expended in preparation for and in conducting the contested case proceeding, unless payment of costs would impose extreme financial hardship on the employer.” If the employer establishes that hardship, the commissioner “may order the employer to pay a percentage of the total costs that will not cause extreme financial hardship.” Interest accrues on the unpaid balance from the date the commissioner signs the order until it is paid.

The Department serves the order “in person or by certified mail at the employer’s place of business” (Minn. Stat. § 177.27, subd. 4), so certified mail from the Department deserves same-day attention. To enforce an order, the commissioner “may bring an action in the district court,” and the commissioner may also ask the court for an order “enjoining and restraining violations” (Minn. Stat. § 177.27, subd. 5).

Some employers face added rules. Contractors on public works projects funded in whole or in part with state funds must furnish certified payroll reports, listing each employee’s “prevailing wage master job classification,” under Minn. Stat. § 177.30. For compliance orders generally, “an employer includes a contractor that has assumed a subcontractor’s liability within the meaning of section 181.165” (Minn. Stat. § 177.27, subd. 4).

How do you contest a DLI compliance order?

You contest a compliance order by filing a written notice of objection with the commissioner within a short statutory window, and an order that is not timely contested becomes final. Minn. Stat. § 177.27, subd. 4 states: “An employer who wishes to contest the order must file written notice of objection to the order with the commissioner within 15 calendar days after being served with the order.” If no written objection is filed in that time, “the order becomes a final order of the commissioner.” I suggest reading the current text of the statute and the order itself the day the order arrives, because the window runs from service.

A timely objection turns the order into a contested case: “A contested case proceeding must then be held in accordance with sections 14.57 to 14.69 or 181.165.” Those proceedings go to an administrative law judge serving in the Court of Administrative Hearings, which the legislature renamed from the Office of Administrative Hearings in 2025 (Minn. Stat. § 14.48; 2025 Minn. Laws ch. 39, art. 2, § 68). The judge issues a report. Before the commissioner acts on it, each party adversely affected has an opportunity to file exceptions and present argument (Minn. Stat. § 14.61, subd. 1). An issue left out of that step may not be considered on appeal: the Court of Appeals called an issue that an employer had raised neither in its exceptions nor in its accompanying memorandum “not properly before this court,” though it addressed the issue anyway (In re the Alleged Labor Law Violation of Chafoulias Management Co., 572 N.W.2d 326, 332 (Minn. App. 1997)). Unless another law provides otherwise, the judge’s report becomes the final decision unless the commissioner modifies it, rejects it, or requests a remand within the time Minn. Stat. § 14.62, subd. 2a allows.

In re the Order to Comply: Labor Law Violation of Daley Farm of Lewiston, 816 N.W.2d 671 (Minn. App. 2012) shows the path. The Department issued a compliance order for unpaid overtime, the employer objected, and an administrative law judge recommended dismissing the order. “An assistant commissioner for DLI rejected that recommendation and affirmed the order to comply,” and the final order required the employer to pay the unpaid overtime “plus an equal amount as liquidated damages.” The Minnesota Court of Appeals affirmed, noting that “Agency decisions enjoy a presumption of correctness.”

After the final decision, an aggrieved party may seek review in the Minnesota Court of Appeals by filing a petition for a writ of certiorari with that court and serving it on all parties to the contested case, on a short deadline that runs from the party’s receipt of the final decision and order (Minn. Stat. § 14.63). Cost belongs in the decision to object. A contested case can add the Department’s and the attorney general’s litigation and hearing costs to the order unless the employer establishes that paying them would impose extreme financial hardship. Even then, the commissioner may order the employer to pay a percentage of the costs that will not cause that hardship (Minn. Stat. § 177.27, subd. 7). The agency’s decision also arrives on appeal with that presumption of correctness.

What retaliation rules apply while DLI is investigating?

Minnesota prohibits discharging, disciplining, penalizing, threatening, or otherwise retaliating against an employee for filing a wage complaint with the Department or for telling you of a plan to file one, and it protects an employee whom a public body asks to take part in an investigation. Minn. Stat. § 181.03, subd. 6 bars retaliation “for asserting rights or remedies” under the wage laws, “including, but not limited to, filing a complaint with the department or telling the employer of the employee’s intention to file a complaint,” and adds a civil penalty “of not less than $700 nor more than $3,000 per violation” on top of other remedies.

The whistleblower statute adds two protections that fit an investigation. Minn. Stat. § 181.932, subd. 1 protects an employee who “in good faith, reports a violation, suspected violation, or planned violation” of law “to any governmental body,” and an employee who “is requested by a public body or office to participate in an investigation, hearing, inquiry.” An injured employee may sue for “any and all damages recoverable at law,” including “reasonable attorney’s fees,” and may obtain injunctive relief (Minn. Stat. § 181.935). If convicted, an employer that discharges or discriminates against an employee because the employee complained to the employer or the Department about unpaid wages, started or will start a proceeding, or testified or will testify faces a fine of $700 to $3,000 (Minn. Stat. § 177.32, subd. 2).

The Department’s guidance lists what it treats as retaliation, including discipline or termination, a reduction in pay, a changed schedule or work location, “exclusion from meetings or trainings,” and “inaccurate reports of poor performance” (DLI, Retaliation); that list states the Department’s view, and the statutes control. The identity of an employee who reports a violation to a government body is “private data on individuals” (Minn. Stat. § 181.932, subd. 2). I suggest not trying to learn who complained, and treating every employee as a possible witness until the file closes. Minnesota’s retaliation rules for employers cover the wider set of protected complaints, and documenting performance problems as they arise gives later discipline a record of its own.

How do you remediate and resolve a DLI wage investigation?

You resolve a DLI wage investigation by fixing the pay practice, paying what you owe, answering any Department demand for payment before its deadline, and settling with the Department rather than through private deals with employees. Paying early counts in two ways: a compliance order credits “any amount actually paid to the aggrieved parties by the employer” (Minn. Stat. § 177.27, subd. 7), and the Department says its wage-claim process, which it uses to resolve unpaid wages, “reduces the likelihood of further investigation, litigation or penalties” (DLI, Wage theft in Minnesota: Employer information).

The commissioner can also demand payment directly. Under Minn. Stat. § 181.101, when earned wages are not paid, the commissioner “may serve a demand for payment on behalf of an employee,” and if the wages are not paid “within ten days of service of the demand,” the commissioner may collect the wages, at the employee’s rate or the rate required by law, whichever is greater, plus a penalty equal to the employee’s average daily earnings at the same rate “for each day beyond the ten-day limit following the demand.” Money the commissioner collects goes to the employee. A former employee’s final paycheck runs on its own penalty clock under Minnesota’s final pay rules.

Private settlements with employees can fail to end the Department’s claim. In In re the Alleged Labor Law Violation of Chafoulias Management Co., 572 N.W.2d 326 (Minn. App. 1997), some employees opted out of the Department’s case and settled privately with the employer for less than the law required. The commissioner refused to treat those settlements as ending their claims, though it credited what the employer had paid under them, and the Court of Appeals affirmed, holding that the employer’s “settlement agreements with some employees did not abrogate its obligation to pay those employees the full amounts owed them by statute.” The statute points the same way: “An agreement between the employee and the employer to work for less than the applicable wage is not a defense to the action” (Minn. Stat. § 177.27, subd. 8). A resolution with the Department itself is what the statute contemplates when it refers to a compliance order resolved “through settlement or other final disposition” (Minn. Stat. § 177.27, subd. 11).

When the Department closes a file, the complaint can still matter later. In a matter where I represented an employee before the Department, the closing letter told the employee that the claim had become part of the record on which the Department may base future enforcement. I suggest fixing the practice that produced the claim and keeping records that show the fix.

The practical sequence in a DLI wage investigation is short: produce what the law requires on time, give the investigator access, answer in writing with documents, protect every employee who takes part, pay what is owed, and decide whether to contest a compliance order before the objection window closes. Wage investigations are part of my employment law work for Minnesota employers. If you would like a second set of eyes on a records demand, an investigator’s findings, or a compliance order, email me at [email protected] to start an intake and conflict check before sending payroll records or other confidential documents.