The Mistake of a Business Owner Regarding Wage Theft

Wage theft should be a serious concern for employers in Minnesota. That is because the wage theft law in Minnesota is the most stringent in the country. Wage theft is very broad. It simply means that any time you do not pay a worker wages, compensation, benefits or any money that is owed to them that is considered wage theft. Wage theft has both criminal and civil consequences to the employer.

So, for example, does your business provide Earned Sick and Safe Time (ESST) to its employees? ESST has been in effect since January 1, 2024. It covers any employee whom the employer anticipates will work at least 80 hours in a year for an employer in Minnesota and is not an independent contractor. So, seasonal, temporary, and part-time workers, for example are covered. An employer must provide its employees with one hour of ESST for every 30 hours worked, with the ability to accumulate at least 48 hours of ESST each year. An employer may also front-load the employee with 48 hours at the beginning of each year, and pay out the unused portion at the end of the year. Or, an employer may front-load the employee with 80 hours at the beginning of each year without the requirement to pay out the unused portion at the end of the year. There are lots of rules regarding how ESST works. Check out the ESST website for more information at www.dli.mn.gov/sick-leave-FAQs.

Another example, does your business provide Paid Leave (MN Paid Family and Medical Leave) to its employees? Paid Leave has been in place only since January 1, 2026. Similar to ESST, Paid Leave does not allow an employer to allow employees to opt out of ESST or Paid Leave. If you did not take steps to sign up as the administrator of your business’s Paid Leave policy, your business is still covered by Minnesota Paid Leave, and first quarter premiums are due in April. If you did not follow the law’s requirement to notify your employees as to Paid Leave, then you will be 100% responsible for the payment of the Paid Leave policy. That is in contrast to splitting the cost of the Paid Leave policy if you did follow the notice requirements. In fact, currently, you can assess .44% of the premium cost to your employees even if your premium is less than .88%. There have been tens of thousands of claims already filed with the state in this first quarter. The state will be looking for your premium in April regardless of whether or not you followed the steps to obtain an administrator’s account and/or followed the notice requirements to employees. If you are not in compliance with the program requirements take the steps now to get into compliance.

A final example, is the failure to pay overtime to your employees. Employees are either exempt or non-exempt. The analysis is based on the applicable federal or state law. So, first you have to determine if federal law or state law applies to your business. The fact that you pay an employee a salary does not automatically make them exempt from overtime and minimum wage. What makes them exempt is whether or not they satisfy the factors in the applicable exemption test.

Spangler and de Stefano, PLLP advises businesses about wage theft and other employment laws.

The material contained herein is for informational purposes only, and is not intended to create or constitute an attorney-client relationship between Spangler and de Stefano, PLLP and the reader. The information contained herein is not offered as legal advice and should not be construed as legal advice.