Wages

• It is unlawful for an employer, other than a public service corporation, to issue to any employee in lieu of or in payment of any salary or wages earned by the employee a nonnegotiable time check or order.

Employees should be paid by check. It is usually unlawful to pay an employee by providing goods or services, or by reducing obligations owed by the employee.

Provisions Protecting Employees from improper wage reductions. Section 181.03 contains a series of provisions designed to prevent employers from creating the impression that wages have been paid, which in fact have not been paid. The statutes states that:

An employer may not, directly or indirectly and with intent to defraud:

• (1) cause any employee to give a receipt for wages for a greater amount than that actually paid to the employee for services rendered;
• (2) directly or indirectly demand or receive from any employee any rebate or refund from the wages owed the employee under contract of employment with the employer; or
• (3) in any manner make or attempt to make it appear that the wages paid to any employee were greater than the amount actually paid to the employee.

Statement of Earnings Required: Section 181.032 requires an employer to give each employee an earnings statement, at the end of each pay period, in writing covering that pay period. The earnings statement may be in any form determined by the employer but must include:

• (a) the name of the employee;
• (b) the hourly rate of pay (if applicable);
• (c) the total number of hours worked by the employee unless exempt from chapter 177;
• (d) the total amount of gross pay earned by the employee during that period;
• (e) a list of deductions made from the employee's pay;
• (f) the net amount of pay after all deductions are made; (g) the date on which the pay period ends; and
• (h) the legal name of the employer and the operating name of the employer if different from the legal name.

Frequency of Payment:

Under Chapter 181, employees must be paid monthly, unless they are engaged in transitory employment, in which case, wages must be paid every 15 days. Transitory employment includes the "construction, paving, repair, or maintenance of roads or highways, sewers or ditches, clearing land, or the production of forest products or any other work that requires the employee to change the employee's place of abode."

Other employees are governed by section 181.101 which states:

• Wages; how often paid. Every employer must pay all wages earned by an employee at least once every 30 days on a regular pay day designated in advance by the employer regardless of whether the employee requests payment at longer intervals. Unless paid earlier, the wages earned during the first half of the first 30-day pay period become due on the first regular payday following the first day of work. If wages earned are not paid, the commissioner of labor and industry or the commissioner's representative may demand payment on behalf of an employee..... For purposes of this section, "employee" includes a person who performs agricultural labor as defined in section 181.85, subdivision 2. For purposes of this section, wages are earned on the day an employee works.

In the next portion of this panel, we deal with the employer's obligation to a terminating employee or commissioned sales person. The basic rule requires payment within 24 hours of discharge, or for resigning employees, at the time of the next pay check, but there are exceptions. Immediately upon discharge, employers should review carefully not only the employee's regular pay, but also carefully determine whether there is compensation due for unused vacation or any other fringe benefits due the employee.

Payment on Termination of Employment: An employee must be paid immediately on discharge. Section 181.13 states that:

• When any employer employing labor within this state discharges an employee, the wages or commissions actually earned and unpaid at the time of the discharge are immediately due and payable upon demand of the employee.

If the employee's earned wages and commissions are not paid within 24 hours after demand the employee may be entitled to a statutory penalty. Payment is due immediately, whether the employment was by the day, hour, week, month, or piece or by commissions. For wages in dispute, see section 181.14.

Penalty for non-payment. The discharged employee may charge the employee's average daily earnings at the rate agreed upon in the contract of employment, for each day up to 15 days, that the employer is in default, until full payment. This provision applies to public employer too, but if approval of a governing board is required, then the 24-hour period for payment does not commence until the date of the first regular or special meeting of the governing board following discharge of the employee.

Last wages wages and commissions must be paid at the usual place of payment unless the employee requests that the wages and commissions be sent through the mails. If, in accordance with a request by the employee, the employee's wages and commissions are sent to the employee through the mail, the wages and commissions are paid as of the date of their postmark.

Last Payment to employees who quit or resign. When an employee quits or resigns, the last check is due on the next regularly scheduled payday following the employee's final day of employment. This provision may be over-ruled by a collective bargaining agreement. If the first regularly scheduled payday is less than five calendar days following the employee's final day of employment, full payment may be delayed until the second regularly scheduled payday but shall not exceed a total of 20 calendar days following the employee's final day of employment. Failure to pay subjects the employee to the 15 day penalty.

Migrant workers. Migrant workers must be paid within 5 days of resignation.

What about disputes. Suppose the employee and employer have a good faith dispute about the amount of wages due. Can the employer avoid statutory penalty by paying only the amount in dispute. Subdivision 3 of section 181.14 says:

• If the employer disputes the amount of wages or commissions claimed by the employee under the provisions of this section or section 181.13, and the employer makes a legal tender of the amount which the employer in good faith claims to be due, the employer shall not be liable for any sum greater than the amount so tendered and interest thereon at the legal rate, unless, in an action brought in a court having jurisdiction, the employee recovers a greater sum than the amount so tendered with interest thereon; and if, in the suit, the employee fails to recover a greater sum than that so tendered, with interest, the employee shall pay the cost of the suit, otherwise the cost shall be paid by the employer.

Operation of this subdivision is fact specific. As always, we strongly recommend that an employer consult with an attorney about the application of legal principles to specific fact situations.

Employees entrusted with money or property. Chapter 181 has a specific provision dealing with wages paid to employees entrusted with money. Generally, an employer cannot reduce an employee's wages by claims the employer has against the employer. But when an employee entrusted with money or property resigns or is discharged, the employer may have a right to account for the funds or property when calculating wages. Employers should be cautious in using this provision. Subdivision 4 of section 181.14 states:

• In cases where the discharged or quitting employee was, during employment, entrusted with the collection, disbursement, or handling of money or property, the employer shall have ten calendar days after the termination of the employment to audit and adjust the accounts of the employee before the employee's wages or commissions shall be paid as provided in this section, and the penalty herein provided shall apply in such case only from the date of demand made after the expiration of the period allowed for payment of the employee's wages or commissions. If, upon such audit and adjustment of the accounts of the employee, it is found that any money or property entrusted to the employee by the employer has not been properly accounted for or paid over to the employer, as provided by the terms of the contract of employment, the employee shall not be entitled to the benefit of sections 181.13 to 181.171, but the claim for unpaid wages or commissions of such employee, if any, shall be disposed of as provided by existing law.

Commissions: A special provision, section 181.145 deals with payment of terminating commissioned sales persons. A "commission salesperson" means a person who is paid on the basis of commissions for sales and who is not covered by sections 181.13 and 181.14 because the person is an independent contractor. If the person is not an independent contractor, then section 181.145 does not apply. For independent contractors who are commissioned sales persons, section 181.145 defines "commissions earned through the last day of employment" as commissions due for services or merchandise which have actually been delivered to and accepted by the customer by the final day of the salesperson's employment.

On resignation or termination, Section 181.145 requires the "employer" of a commission salesperson to

• promptly pay the salesperson, at the usual place of payment, commissions earned through the last day of employment...

Like the other provisions in Chapter 181, this section has provisions for dealing with disputes, for accounting for funds entrusted to the sales person, and awarding penalties in cases of violation.

"Penalty" Deductions from Wages   Minnesota law contains severe restrictions against mandatory deductions from wages for losses, breakage or theft.   Section 181.79 subdivision 1 states:

• No employer shall make any deduction, directly or indirectly, from the wages due or earned by any employee, who is not an independent contractor, for lost or stolen property, damage to property, or to recover any other claimed indebtedness running from employee to employer, unless the employee, after the loss has occurred or the claimed indebtedness has arisen, voluntarily authorizes the employer in writing to make the deduction or unless the employee is held liable in a court of competent jurisdiction for the loss or indebtedness. Such authorization shall not be admissible as evidence in any civil or criminal proceeding. Any authorization for a deduction shall set forth the amount to be deducted from the employee's wages during each pay period.  A deduction may not be in excess of the amount established by law as subject to garnishment or execution on wages.

• Any agreement entered into between an employer and an employee contrary to this section shall be void. This section shall not apply to the following:
• (a) in cases where a contrary provision in a collective bargaining agreement exists;
• (b) any rules established by an employer for employees who are commissioned salespeople, where the rules are used for purposes of discipline, by fine or otherwise, in cases where errors or omissions in performing their duties exist; or
• (c) in cases where an employee, prior to making a purchase or loan from the employer, voluntarily authorizes in writing that the cost of the purchase or loan shall be deducted from the employee's wages, at regular intervals or upon termination of employment.

Note that deduction authorizations cannot be obtained prior to the loss. They must always be voluntary. Since an employer has leverage over an employee, deductions should be agreed to only with the greatest of caution. In cases of acknowledged theft, an employer can enter into a reimbursement agreement. But this should always be done with advice of an attorney, to make sure that all applicable laws have been complied with.