Wage theft and WESA Dave Skovholt and Mike Muenster-Blakley - PowerPoint Presentation

1. Wage theft and WESADave Skovholt and Mike Muenster-BlakleyLabor Standards Division www.dli.mn.gov

2. Wage theft training overviewWhat is wage theft? Is it a big problem? Who does it impact?Laws and enforcement regarding minimum wage, overtime, breaks, record keeping, tips, etc.Complaints, enforcement process and potential outcomesWomen’s Economic Security Act Issues not addressed by DLINext steps/questions and answersWage theft training overview | www.dli.mn.gov

3. Susan the sandwich makerIn 2018, Susan completed 13 years working in a Twin Cities area sandwich shop. Susan regularly worked more than 60 hours a week, so, her employer was required to pay her overtime for a portion of the hours she worked each week.During those two years, her employer paid her two to three checks each pay period, each averaging 20-25 hours. This multiple check process ensured she would not receive more than 40 hours on one check. Labor Standards is pursing a wage claim for more than $14,000.*Based on an actual DLI wage claim (first name of employee was changed).

4. What is wage theft?What is wage theft? | www.dli.mn.govWhen an employer avoids paying or fails to pay wages earned by employees, it is wage theft.

5. What does wage theft look like?Paying less than the required minimum wage.Not paying time and a half for overtime hours.Not paying a final check upon separation of employment.Not paying out earned tips.What does wage theft look like? | www.dli.mn.govPay deductions for short rest breaks.Working off the clock.Misclassifying employees as independent contractors to avoid wage and hour requirements. Unlawful paycheck deductions.

6. Is wage theft a big problem?In 2016, what was the nationwide estimated dollar amount that low-wage workers lost due to wage theft? $79.3 million $6.7 billion$15 billionIs wage theft a big problem? | www.dli.mn.gov

7. Minnesota impactHow many Minnesotans are affected by wage theft each year?2,850 39,000 275,000*Minnesota Department of Labor and Industry estimateMinnesota impact | www.dli.mn.gov

8. Why does wage theft matter?Worker loss of pay: Many individuals do not have the savings to deal without pay for extended periods of time. This results in difficulty paying for housing, groceries and children’s expenses.Integrity of the employment system: State and federal law is being violated. Workers should be able to have the confidence that promised pay and benefits will be delivered.Equal playing field: Employers not fulfilling their legal wage obligations undercut competing employers, hurting business and revenue.Why does wage theft matter | www.dli.mn.gov

9. Six industries with the most wage theft complaintsConstructionRestaurantsHealth careHotels/motels Retail storesTemporary agenciesSix industries with the most wage theft complaints | www.dli.mn.gov

10. Wage theft and the law Wage theft and the law | www.dli.mn.govFederal, state and municipal laws and ordinances dictate the minimum wage, overtime requirements, what break times are required to be paid, and other related regulations.These laws often differ and it is important connect with the agency in the best position to help with each individual issue that comes up.Examples of differences: Federal versus state overtime and state versus Minneapolis minimum wage.

11. Laws enforced by Minnesota DLI’s Labor StandardsMinnesota Fair Labor Standards ActWomen’s Economic Security Act Child Labor Standards ActOther laws related to employment, wage, conditions, hours, etc.Labor Standards at Minnesota Department of Labor and Industry is charged with administering parts or all of Minnesota statues 177, 181 and 184 as well as Minnesota Administrative Rules Chapter 5200.Laws enforced by Minnesota DLI’s Labor Standards | www.dli.mn.gov

12. Minnesota state law – Who is an employee?Minnesota state law – Who is an employee? | www.dli.mn.govEmployee: Any individual employed by an employer. Exceptions include (not exhaustive list):various agricultural exemptions;those that are exempt from overtime because they are salaried and meet tests for “executive, administrative, or professional” employees; and“over the road” truck drivers.

13. State law – Minimum wageState law – Minimum wage | www.dli.mn.gov*minimum wage adjusts January 1 of each year.Employer/employee typeMinimum wage rateLarge employer – Any enterprise with annual gross revenues of $500,000 or more$9.65/hour (2018) - $9.87/hour (2019)Small employer – Any enterprise with annual gross revenues of less than $500,000Training wage – May be paid to employees aged 18 and 19 in the first 90 days of employmentYouth wage – May be paid to employees aged 17 or younger$7.87/hour (2018) - $8.04/hour (2019)J-1 Visa – May be paid to employees of hotels, motels, lodging establishments and resorts working under the authority of a summer work, travel exchange (J) visa$7.87/hour (2018) - $8.04/hour (2019)

14. Minimum wage – credits Not allowed: “Tip credit” also know as the “tip penalty.” No employer may take a tip credit against minimum wages in Minnesota.Allowed: Limited meal credit Limited lodging creditMinimum wage - credits | www.dli.mn.gov

15. State law – Hours workedThe minimum wage must be paid for all hours worked. Hours worked include: training time call time cleaning time waiting time travel time State law – Hours worked | www.dli.mn.gov

16. State law – Deductions from wagesDeducting expenses from employees:Up to $50 for a uniformUp to $50 for equipmentConsumables Travel expensesHowever: Deductions cannot bring the employee below the minimum wage, andEmployer must reimburse the employee for any deductions upon separation.State law – Deductions from wages | www.dli.mn.gov

17. State law – Deductions from WagesOther situations – signed agreementLost/stolen property, damage to property, other indebtednessVoluntary authorization from employee AFTER loss/indebtedness has occurred; ORIf employee has been held liable in courtAny written authorization must state the amount to be deducted each pay periodPurchase/loanAuthorization still required, but can be made PRIOR to purchase or loan. 9/12/2018Optional Tagline Goes Here | www.dli.mn.gov

18. State law – Deductions from WagesExceptionsWhere a CBA authorizes a deduction;Where employer has established rules for commissioned salespersons where deductions are taken for disciplinary purposes for errors or omissions in the employee’s work.Consequences of ViolationEmployer may be liable in court for twice the amount of the deduction taken.9/12/2018Optional Tagline Goes Here | www.dli.mn.gov

19. State law – Meal and lodging creditsState law – Meal and lodging credits | www.dli.mn.govMeal allowanceWholesome, nutritious meal furnished by employer and accepted by employee. $5.70 a day for large employer; $4.65 a day for small employer (60 percent of one hour of state minimum wage a day)Lodging allowanceFair market value if a leased residence with exclusive kitchen and bathroom facilities, or $7.13 (large); $5.81 (small) (75 percent of one hour of minimum wage a day).

20. Final wages upon separation of employmentEmployees terminated, discharged or fired are due all wages and commissions within 24 hours of that employee’s written demand for payment.For employees who voluntarily leave employment, wages and commissions are due on the next regularly scheduled payday. If the payday is within five days of the last day of work, the employer has up to 20 days to make final payment.Penalties: Under Minnesota’s final pay laws, the employer may be liable to pay their former employee’s average daily earnings for each day the employer is late paying wages, up to 15 days.Final wage upon separation of employment | www.dli.mn.gov

21. State law – BreaksEvery four hours worked: Adequate time to use the nearest restroom.Every eight hours worked: Sufficient time to eat a meal.Any rest periods of less than 20 minutes is considered hours worked.State law - Breaks | www.dli.mn.gov

22. State law – Record keepingPersonnel filesEarnings statementsTimesheets State law – Record keeping | www.dli.mn.gov

23. State law – Personnel filesWhat is included in a “personnel file?”any application for employment; wage or salary history; notices of commendation, warning, discipline or termination; authorization for a deduction or withholding of pay; fringe benefit information; leave records; and job titles, dates of promotions, transfers, and other changes, attendance records, performance evaluations, and retirement record.State law – Personal files | www.dli.mn.gov

24. State law – Personnel filesIf requested in writing, employer must allow an employee to review their personnel file: At least once every six months for current employees.At least once a year for separated employees.Employer must provide file review within seven days if it is in Minnesota or 14 days if it is outside Minnesota.Current employees can request a copy after review.Separated employees may be provided a copy in lieu of an opportunity to review (employer must maintain and provide for up to three years).State law – Personnel files | www.dli.mn.gov

25. State law – Earnings statementsInformation required to be on a statement of earnings:employee name;hourly rate of pay (if applicable);total number of hours worked, unless exempt from chapter 177;total gross pay during the period and net pay after deductions;all deductions made;pay period end date; andlegal name of employer and operating name (if different from the legal name).State law – Earnings statements | www.dli.mn.gov

26. State law – Earnings StatementsEarnings statements must be provided: At the end of each pay period (covering that pay period).Either in writing or by electronic means.If provided electronically, employee must have access to an employer-owned computer during the employee’s regular working hours to review and print their earnings statements.In writing, rather than by electronic means, if requested in writing by the employee with 24 hours notice.This must continue on an on-going basis.State law – Earnings Statements | www.dli.mn.gov

27. State law – Timesheets, etc.Employers must keep records of:the name, address, and occupation of each employee;the rate of pay, and the amount paid each pay period to each employee; andthe hours worked each day and each workweek by the employee.Records must be kept for a minimum of three years.Up to $1,000 may be assessed for each failure to maintain records.State law – Timesheets, etc. | www.dli.mn.gov

28. MisclassificationMisclassification definitionThe practice of labeling workers as independent contractors instead of employees in order to avoid certain legal obligations, such as worker’s compensation, tax obligations, and fair labor standards.Frequent question for Minnesota’s Labor StandardsDoes misclassification lead to a violation of the MFLSA or FLSA?Misclassification | www.dli.mn.gov

29. OvertimeMinnesota law: Over 48 hoursThis is a general guideline that applies in most situations. DLI refers many overtime cases to the U.S. Department of Labor because the general federal threshold is lower.Overtime | www.dli.mn.govFederal law: Over 40 hoursThis is a general guideline that applies in most situations. The U.S. Department of Labor should be contacted for further details.

30. Complaint and intake processMinnesota Department of Labor and Industry will:move to a strategic enforcement model;no longer be strictly complaint-based;identify strategic industries upon which to focus investigative resources; andnever disclose the name of a complainant or any information that could lead to the identity of the complainant.Complaint and intake process | www.dli.mn.gov

31. Complaint and intake processInformation helpful to DLI in investigating a complaint:An employee willing to share information and documentation with DLI about employer violations and method of violations (either directly or via a third party).Time records and pay stubs.Direct knowledge about how laws are being circumvented, especially if employer records will not show violations.Example: Employer adjusting time records, skimming hours, taking employee tips, etc.Complaint and intake process | www.dli.mn.gov

32. Powers, duties and enforcement process of Labor StandardsAdditional enforcement actionsNotice of initial findings (NOIF)Consent Order Compliance OrderOffice of Administrative HearingsCourt of AppealsExamination of recordsCivil actionsPowers, duties and enforcement process of Labor Standards | www.dli.mn.govWage claim processFor final wages (upon separation).Employee must file claim personally.Claim process is “informal.”Detailed information about employer, employee and unpaid amount needed.Four-day processing goal.

33. Labor StandardsDuring the past five years, DLI’s Labor Standards unit has handled an average of 1,500 cases annually and has recovered more than $4.8M in back wages.Minnesota Department of Labor and Industry | www.dli.mn.gov

34. Successful wage claimSuccessful wage claim | www.dli.mn.govIn March 2017, a worker at a grain distribution business in Chaska, Minnesota, contacted Labor Standards stating that his employer had not paid him in 14 months. The man was employed as truck delivery driver and traveled long distances throughout the state while working. He was “retired” at the time and was working part time.After processing a phone intake, Labor Standards opened a wage claim to pursue the missing wages. When contacted, the employer admitted he had not paid this employee and shortly thereafter, mailed Labor Standards a check for $10,006.16 and corresponding pay stubs to be passed on to the worker.

35. The Women’s Economic Security Act (2014)Wage disclosureNursing mothersPregnancy and parenting leavePregnancy accommodationsSick and safe leaveThe Women’s Economic Security Act | www.dli.mn.gov

36. Wage DisclosureNEW in 2014ALL employers in Minnesota cannot:Require an employee to refrain from disclosing their wagesRequire an employee to sign any document which would deny the right to disclose wagesTake adverse employment action against an employee forDisclosing their own wagesDiscussing another employee’s wages, if that employee disclosed their wages voluntarily.Employees whose rights under this law are violated may contact DLI or sue.9/12/2018Wage Disclosure | www.dli.mn.gov

37. Wage DisclosureCaveats:Neither employees nor employers are required to disclose wages.Employees cannot disclose the employer’s protected information unless agreed to in writing by the employerNLRA still in full force;Employees are not permitted to disclose wage information of other employees to a competitor;Employers who have handbooks must include a provision regarding wage disclosureEmployers cannot retaliate.9/12/2018Wage Disclosure | www.dli.mn.gov

38. Nursing MothersAMENDED in 2014 as to location requirement.Who’s covered?Any employer; andany employee who needs to express breast milk for their child.Basic Requirements: Time and LocationTime:If possible, “reasonable unpaid break time” that is taken at the same time as any existing breaks.Exception: if taking the break time would unduly disrupt the employer’s operations.9/12/2018Nursing Mothers | www.dli.mn.gov

39. Nursing MothersBasic Requirements: Time and Location (cont’d)Location:Close to work areaCannot be a bathroom or toilet stallShielded from viewFree from intrusion from coworkers and the publicAccess to electrical outletException: reasonable effortsRetaliation prohibited.9/12/2018Nursing Mothers | www.dli.mn.gov

40. Pregnancy and Parenting LeaveAMENDED in 2014Covered entitiesEmployee: Has worked for employer for at least 12 months; ANDHas worked at least ½ FTE in the 12 months preceding the requestEmployerHas at least 21 employees at any one location in Minnesota.9/12/2018Pregnancy and Parenting Leave | www.dli.mn.gov

41. Pregnancy and Parenting LeaveBenefitsUp to 12 weeks of unpaid leave related to pregnancy, birth, or adoptionBiological or adoptive parent in conjunction with birth or adoptionFemale employee for prenatal care or incapacity due to pregnancy, childbirth, or related health conditionsLeave starts at a time requested by employee, must start either within 12 months of birth or adoption or within 12 months of the date when the child leaves the hospital, if later than the mother.Employers cannot retaliate against an employee for requesting or taking this leave.Employers must make insurance coverage available during absence; employees may be required to pay for coverage while on leave.9/12/2018Pregnancy and Parenting Leave | www.dli.mn.gov

42. Pregnancy and Parenting LeaveWhat if other leave is taken?Potential reduction in time available under Minnesota law:Paid benefits (e.g. paid parental, disability, personal, medical, or sick leave)Paid vacationLeave taken under the Family Medical Leave Act for the same purpose.Employers are free to offer more leave to employees than what is required under Minnesota law. Return to Work: Employees entitled to return to work in same or similar position with regard to duties, number of hours, and pay.9/12/2018Pregnancy and Parenting Leave | www.dli.mn.gov

43. Pregnancy AccommodationsNEW in 2014Covered entities same as those covered by pregnancy and parenting leave.Requirements:Employers to provide “reasonable accommodations,” engage in an “interactive process” to discover what accommodations are reasonable. More frequent restroom, food, and water breaks; seating; and limits on lifting over 20lbs are reasonable; employees may not be required to get medical professional advice prior.Employers are not required to create new or additional position(s), discharge or promote any employee, or to transfer more senior employees to accommodate.9/12/2018Pregnancy Accommodations | www.dli.mn.gov

44. Pregnancy AccommodationEmployer Prohibitions:Employers may not retaliate for requesting or obtaining an accommodation.Employers may not require an employee to take pregnancy or parenting leave or to take a pregnancy related accommodation. Undue hardship exception.Other rights may exist with regard to other law not enforced by DLI.Minnesota Human Rights Act; Americans with Disabilities Act; Pregnancy Discrimination Act9/12/2018Pregnancy Accommodation | www.dli.mn.gov

45. Sick and Safety LeaveAMENDED in 2014Covered entities same as those covered by pregnancy and parenting leaveBasic overviewCovered employees can use their leave for illness or injury of covered relativesCovered employees can use leave or take time for safety leave“Safety leave” is leave taken to provide or receive assistance because of sexual assault, domestic abuse, or stalking. Applies to ALL covered relatives in sick leave provision. A minimum of 160 hours of leave is available for safety leave in a twelve month period.Employers cannot retaliate if sick or safety leave is taken.9/12/2018Sick and Safety Leave | www.dli.mn.gov

46. Sick and Safety LeaveReturn to Work: Employees are entitled to return to their former position.Important changes:Mother-in-law, father-in-law, and grandchild added to list of family members covered by sick and safety leave; “grandchild” includes step-grandchildren and biological, adopted, and foster grandchildren.Addition of safety leave9/12/2018Sick and Safety Leave | www.dli.mn.gov

47. Good to Know: School Conference and Activities LeaveNot part of WESA; most recent version enacted in 2002.Covered EntitiesEmployee must have worked for an average of ½ FTE in the 12 months preceding the request for leave; no requirement to have worked for 12 months. Employer is a person or entity employing at least one employee in Minnesota. 9/12/2018School Conference and Activities Leave | www.dli.mn.gov

48. Good to Know – School Conference and Activity LeaveBenefitsCovered employees can take up to 16 hours during a 12 month period to attend school conferences or school-related activities for the employee’s child provided those activities cannot be scheduled during non-work hours. This time can be used for leave related to the following activities of the child receives child care services or pre-K programs (regular or special ed) if the activities cannot be scheduled during nonwork hours:School related conferences or activities related to the child;Observe and monitor the services of the program9/12/2018School Conference and Activities Leave | www.dli.mn.gov

49. Good to Know – School Conference and Activities LeaveReturn to Work: Employees are entitled to return to their position. Caveats:If the need for leave is foreseeable, the employee must provide reasonable notice to the employer prior to the leave and try to schedule the leave such that it is not unduly disruptiveThe leave need not be paid leave, but employees may substitute accrued paid leave for unpaid leave.9/12/2018School Conference and Activities Leave | www.dli.mn.gov

50. Other Changes Under WESAAdvisor with expertise in assisting women in obtaining employment in high-wage, high-demand, nontraditional occupations added to the Governor’s Workforce Development CouncilEqual Pay Certificates required for certain state contractsGrants/programs meant to increase the presence of women in high-wage, high-demand, nontraditional occupationsExpansion of discrimination to include familial status discrimination9/12/2018Other Changes Under WESA | www.dli.mn.gov

51. What’s Wrong with this Scenario?Jane Doe works for a Minnesota contractor as a roofer. She’s worked for her employer consistently as a full-time employee for five years. Jane recently found out she was pregnant, and contacted her employer to have a chat about what her options for leave and accommodation are. The next day, Jane was taken off the schedule. When she inquired further about the matter, she was told she was put on leave as a “precaution.” When she asked to instead be placed on a shift with similar responsibilities that kept her on the job site, she was given the option to run inventory back at the shop but, despite repeated requests, was never scheduled to work in the shop. She was given the ability to pick up odd shifts, but was never offered any accommodations. 9/12/2018WESA Scenario 1 | www.dli.mn.gov

52. AnswersOpen question: how many employees does employer have, and where do they work? Open question: what kind of leave did employee use?Employer put employee on leave, forcing her to take a leave that was not even requestedEmployee may be entitled to back benefits, any difference in pay.Employer may have failed to engage in interactive process re: accommodations9/12/2018WESA Answers 1 | www.dli.mn.gov

53. What’s Wrong with this Scenario?Shawna Johnson works for a local caterer. She sets up and serves at buffets. Her employer has three locations. The Twin Cities location has 19 employees, main headquarters has 7 employees, and the Duluth location where Shawna works has 15 employees. Shawna has just returned to work from a pregnancy leave and needs time to pump for her newborn. Upon return, she was assigned to prep materials for banquets at the Duluth location; she was not assigned to staff banquets. A few banquets were short-staffed, however, and Shawna filled in at these events. When Shawna asked about facilities for pumping at the on-site locations, the employer reported that she should pump before or after work, and that the provision of on-site facilities for pumping was not their responsibility. 9/12/2018WESA Scenario 2 | www.dli.mn.gov

54. AnswersNumber of Employees is partially a red herring!Entitlement to leave/accommodations not at issue here; issue is entitlement to nursing mothers’ accommodations.Reassignment could be retaliation for taking leave or requesting nursing mothers accommodationsIs this standard practice? Was it medically indicated? Was there a decrease in wages? Is this a “similar” position in terms of duties and salary?Nursing mothers accommodations are a problemEmployees should be provided regularly scheduled break time, if possible. If not and not an undue disruption, employees should be provided time.Location of the work site doesn’t matter. Employers who staff employees off-site should ensure that a nursing mothers room is available if one is required. 9/12/2018WESA Answers 2 | www.dli.mn.gov

55. Issues not addressed by DLI or USDOL Discrimination in the workplaceContract disputes Vacation time / PTO / severance payPay raises (scheduled or promised)Reason for dischargeIssues not addressed by DLI or USDOL | www.dli.mn.govAgencies we make referrals to:Minnesota Department of Human RightsMinnesota Department of Employment and Economic DevelopmentU.S. Department of Labor (Minneapolis office)Equal Opportunity Employment Commission (EEOC)National Labor Relations BoardMinnesota Department of Revenue and Federal Internal Revenue ServiceSt. Paul Human Rights and Equal Economic Opportunity and Minneapolis Department of Civil Rights

56. Future trainings and questions and answersQuestions or topics you would like to know more about?Suggestions about other groups DLI should reach out to?Contact Labor Standards Monday through Friday, 7:30 a.m. to 6 p.m.Phone: 651-284-5070Email: DLI.LaborStandards@state.mn.usWeb: www.dli.mn.govFuture trainings and Q and A | www.dli.mn.gov

57. Thank You!Dave SkovholtWage Theft Outreach CoordinatorEmail: david.skovholt@state.mn.usPhone: 651-478-8154Mike Muenster-BlakleySenior Labor InvestigatorEmail: michael.muenster-blakley@state.mn.usPhone: 651-478-8152