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MN Payment of Wages Act Amended; Employees with Unpaid Wages Have More Protection

A bipartisan unanimous vote by the Minnesota House of Representatives and a near unanimous vote by the Minnesota Senate resulted in a major victory for employees.  The recent amendments to the Minnesota Payment of Wages Act, signed into law by Governor Mark Dayton, clarified the ability of employees to recover unpaid wages. The amendments help to protect employees’ rights all throughout Minnesota.

Twin Cities Overtime Attorneys

The Minnesota Payment of Wages Act previously stated “When any employer employing labor within this state discharges an employee, his wages or commissions actually earned and unpaid at the time of the discharge are immediately due and payable upon demand of the employee.”  The statute, on its face, appeared to safeguard the rights of employees by protecting their wages even after they are discharged.  A narrow reading of the statute by the Minnesota Supreme Court caused the Minnesota Legislature to expand upon the Act.

In Caldas v. Affordable Granite & Stone, Inc., 820 N.W.2d 826 (2012), Affordable Granite & Stone, Inc. (AGS), entered into a contract with the City of Minneapolis which stated that AGS would pay their employees according to the Public Works Ordinance.  When a dispute arose over whether the employees of AGS should be classified as “repair persons / specialty crew” (paid $16.28 per hour by the Public Works Ordinance) or classified as terrazzo mechanics (paid $44.31 per hour by the Public Works Ordinance), the Minnesota Supreme Court noted that the Minnesota Payment of Wages Act never defined “actually earned and unpaid.”

The Court held that “actually earned” referred to the wages defined by an employment contract between the employee and employer.  Since the employees of AGS were not a party in the contract between AGS and the City of Minneapolis, the employees could not recover under the Minnesota Payment of Wages Act.  The Court further held that the Minnesota Payment of Wages Act was a timing statute, stating that unpaid wages are “immediately due and payable upon demand.”  This meant that the Act mandated when an employer must pay a discharged employee, but not what an employer must pay a discharged employee.

On April 29, Minnesota Governor Mark Dayton, signed into law amendments to the Minnesota Payment of Wages Act that “actually earned and unpaid” wages are established by “any applicable statute, regulation, rule, ordinance, government resolution or policy, contract, or other legal authority.”   The amended statute goes on to state that the employer may recover “even if the employee is not a party to a contract that requires the employer to pay the employee.”  By defining “actually earned and unpaid” wages, the Minnesota Legislature made the Payment of Wages Act more than simply a timing statute.  The statute will no longer only be enforced in instances in which an employee is a party in the employment contract.