FILE - Minnesota State Capitol

The Minnesota State Capitol in Saint Paul, Minnesota.

A new law that threatens fines and jail time for employers who steal wages goes into effect Thursday.

Business owners with “intent to defraud” who purposely steal wages can face one to 20 years in prison and fines from $500 to $35,000.

Wage theft occurs when employers do not pay their workers what is owed them for the work they have performed. It’s estimated up to 40,000 Minnesota workers file wage complaints each year.

As of this month, the law requires an employer to keep certain employment documents and present them to the Department of Labor and Industry upon request. Failing to comply could bring up to a $5,000 fine.

It requires employers to provide written employment terms, prohibits employers from retaliating against an employee that complains to the state, and gives the government greater authority and access to documents and workplaces.

Wage theft can take many forms: missing paycheck hours; forced work off the clock; not getting paid for overtime; being paid less than promised, or being misclassified as an independent contractor.

Lauryn Schothorst, director of labor and management policy for the Minnesota Chamber of Commerce, told The Center Square that wage theft commonly victimizes workers in industries in which it’s significant fto miss a paycheck.

“The Minnesota Chamber worked hard to pass the compromise state legislation that will help protect employers who inadvertently find themselves in violation of certain wage laws while increasing penalties for employers who intentionally shortchange paychecks,” Schothorst said.

Legislation passed in May 2019 will invest $3.1 million in Department of Labor and Industry's (DLI's) funding for enforcement.

The new funding will help the department 15 people to target workplace enforcement and conduct greater outreach and education for employers, workers, and their communities.

That will help the agency follow up with the 40,000 people who submit wage-theft complaints, conduct workplace inspections, and identify which businesses and industries are most likely to engage in wage-theft, Commissioner Nancy Leppink told The Center Square.

Leppink said the state plans to harness its investigation data to identify the most at-risk industries – from construction workers to restaurant staff.

Fear of immigration laws, employee or employer retaliation, and job loss gag many wage theft complaints, Leppink said.

“We don’t know how many workers are in a situation not compliant with the law,” Leppink said. “There’s a lot of folks who never come forward. People are too afraid to complain.”

That’s one reason wage theft is a problem in immigrant communities – and why Attorney General Keith Ellison promised to investigate allegations made by all workers thoroughly.

“You are not entitled to steal people’s wages based on their immigration status or lack thereof,” Ellison said in a news conference. “The promise of America is that if you work hard and play by the rules, you’ll get ahead. But you can’t get ahead if your boss is stealing your hard-earned wages.”

Staff Writer

Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org. Previously, he worked as a financial analyst at Pepsi.