BUSINESS TIPS
ARE YOU A WAGE THIEF? AN INTRODUCTION TO MINNESOTA’S WAGE THEFT PREVENTION ACT
Minnesota passed the Wage Theft Prevention Act (WTPA) in 2019, a series of modifications to existing statutes providing additional protection for workers whose employers do not pay what is owed for work performed. Wage theft occurs when an employer, with an intent to commit fraud, pays an employee less than has been earned. The employer may require an employee to falsify the hours worked, require an employee to return any portion of their earnings, create a record showing the employee was paid more than was actually paid, or misclassify an employee as an independent contractor. The Federal Fair Labor Standards Act (FLSA) classifies employees as “Exempt” or “Non-exempt.” Exempt employees
are typically management, supervisors, or make financial decisions that impact the health of the business. The exempt employee is often paid a salary, no overtime, and does not make a record of hours worked. A word of caution: many office and field personnel are paid a salary but do not qualify as exempt employees. Most employees are non-exempt under the FLSA, meaning they must be paid hourly at a rate no less than minimum wage and must be paid overtime at a rate of no less than 1½ times their hourly rate for all hours worked over 40 hours in each seven-day work week. Failure to track hours and pay a non-exempt employee for the hours worked, including overtime, may constitute wage theft.
The FLSA does not allow “banking” of hours. Banking occurs when a nonexempt employee is paid for 40 hours during a seven-day period when the employee worked more than 40 hours. The ‘extra’ hours are banked for a slower week when the employee works less than 40 hours but still receives a 40-hour paycheck. Employers believe banking is okay to “save” the overtime hours for a time when the employee works less than 40 hours, and because many office personnel prefer a salary to punching a clock. Intentionally misclassifying employees (W2) as independent contractors (1099) may also constitute wage theft. Engaging independent contractors is a common business practice for contractors that
OCTOBER–DECEMBER 2021 | HOUSING FIRST MINNESOTA
The Digest
33
