Why Minneapolis passed a wage-theft ordinance that essentially duplicates state law

The Minneapolis City Council unanimously passed an ordinance that establishes the city’s own set of rules to crack down on wage theft and force employers to be transparent with payrolls. The ordinance is similar to a state law that went into effect last month.

On Thursday morning, the 13-member council rewrote city code to give attorneys within the city’s Department of Civil Rights authority to enforce the municipal law against wage theft — which is when employers don’t pay employees, or pay them less than guaranteed — and require employers to provide earnings statements on a regular basis.

Meanwhile, a larger-scale effort is beginning within the Minnesota Department of Labor and Industry and the attorney general’s office. Last month, Gov. Tim Walz signed a bipartisan bill to establish protections for workers that substantially grow the state’s resources for investigating allegations of wage theft — guidelines that are almost identical to the Minneapolis ordinance. Supporters call the new policies necessary considering the pervasiveness of underpayment that disproportionately affects Minnesota’s communities of color and immigrants.

But while labor and social-justice advocates celebrate the new efforts, which they describe as the toughest of their kind in the country, this question remains: Why is it necessary for Minneapolis to pass an ordinance that basically duplicates state law?

The state law

The state Labor Department estimates that up to 40,000 employees in Minnesota are not fully paid what they have earned each year. Examples of wage theft are when employees clock out but keep working, don’t receive sick and safe time or time and a half for overtime, or work more hours than promised at a flat rate.

That is what prompted the 2019 change to state law. The law set aside roughly $3 million over the next two years to establish a new investigative program and help pay the salaries of about 12 new hires, including investigators, communication personnel and researchers. In an interview last week, Labor Commissioner Nancy Leppink said the department is in the process of finalizing job descriptions. Once administrators establish the new team, she said the department will create new operating and training procedures.

Currently, Labor Department investigators mostly do “records-based” investigations by examining documentation such as employees’ pay stubs. But with the funding boost, investigators will be able to travel to employees’ workplaces to do in-person interviews and look around.

“[Onsite investigations] have greater capacity to detect various, certain kinds of wage theft, and also to detect things like labor trafficking, which you’re not going to see in … simply the review of paper records,” Leppink said. “It’s clear that we need to be getting into workplaces to find workers who may not even be on the books in terms of payroll records.”

She said the state welcomes Minneapolis’ efforts to create its own team of investigators and enforcement regulations, and staff within the city and Labor Department have been meeting regularly to coordinate strategies.

“The problem is significant, and so therefore additional resources to respond to these issues are always welcome and needed,” Leppink said. “Having more hands on deck can only make for improvements on this issue.”

Minneapolis’ ordinance

The Minneapolis ordinance applies to all employers in the city and employees who work at least 80 hours per year.  (Workers for any level of government are not covered, nor are workers for the University of Minnesota. Workers under certain state employment programs and independent contractors, including Uber and Lyft drivers, are also not covered by the ordinance.)

Other criteria in the local ordinance closely matches the 2019 state law, with a few exceptions.

Both policies require employers to provide workers with information explaining wage theft and labor rights, as well as earnings statements at the end of each period. But the city’s rules require more from employers in those notices. At the start of employment, all employers must provide documentation of workers’ hiring date, explain the city’s sick-and-safe time rules and receive employees’ signature of approval. Also, employers in Minneapolis must give the same information to current employees who have not received it once the policy takes effect Jan. 1.

Minneapolis’ ordinance requires employers to routinely provide not only earnings statements, but also employees’ accrued and available sick and safe time hours. (Sick and safe time can include paid time off or other types of leave.) The city policy also requires employers to hang educational posters in English and other languages, if applicable, to educate employees of their rights.

Penalties are different, too. Severe cases under the state’s purview will result in criminal charges, while the city ordinance only gives attorneys the authority to investigate violations on a civil basis and carries fines in extreme cases. Both policies are written so that violators do not face citations under more than one law at either the federal, state or local level.

Other guidelines in the city law, however, are duplications of the state law. For example, all employers in Minneapolis must establish a regular pay day, inform staff of the recurring date and then follow through with the payment schedule, much like the statewide policy change.

In addition, both the local and state rules allow third-parties to report violations — meaning labor unions or advocacy groups such as Centro de Trabajadores Unidos en Lucha can file complaints on behalf of wronged workers. Both laws have protections for victims who face retaliation from bosses.

Part of a worker-protection agenda

Minneapolis council members say the push to curb wage-theft violations came along with efforts to raise the minimum wage to $15 hourly and guarantee employees paid time off for health or family issues (or sick and safe time), both of which the city established outside of state law in 2017. The council members say the wage-theft prevention effort began under the leadership of former Mayor R.T. Rybak.

But the main reason council members say the city needs its own ordinance is demographics. Since Minneapolis has such a large, diverse workforce, they say the city needs its own program to ensure the city’s high number of cases of wage theft don’t fall through the cracks of a statewide system.

“[Wage theft] is way, way, way, way too common,” advocate Taylor Shevey, of Minneapolis, told council members at a committee meeting last week to discuss the ordinance. During her testimony, she said her former boss took her earnings while she worked as a barista. “We know that it’s not a level playing field between bosses and employees.”

Supporters say the municipal wage-theft ordinance reinforces other city-sponsored efforts to strengthen protections of the city’s workers and streamlines enforcement. “If somebody is not getting paid minimum wage, they’re probably also experiencing not getting their sick and safe time and having their wages stolen,” Council Member Phillipe Cunningham said. “This is going to be able to more rapidly be able to protect those workers and get their rights and regain their wages.”

At last week’s committee meeting, Council Member Linea Palmisano also shared her reasoning for the ordinance and why council members are going forward with it now. She said considering the slight differences between the two policies, it makes sense to roll out the city’s law concurrently with the state program. “So much of what we need to do with this ordinance for the next year will really be about education,” she said. “It seems timely to do these small changes in concert with importing the state law so we can be part of that effort and work together with the state on this initiative.”

The next step: enforcement

For Brian Walsh, the council’s decision Thursday means more work. As enforcement supervisor of the city’s labor standards division within the Department of Civil Rights, he said he and his team of three attorneys hear about wage theft every day, but until the ordinance they had little legal ground to enforce compliance among alleged violators.

“It’s not just about the paycheck, although it may absolutely be about that too, but it’s about the dignity of the worker,” Walsh said. “It leaves one feeling violated and that pain is very real and very serious.”

So far this year, Walsh’s team has investigated 72 reports of all types of workplace violations, 52 of which relate to the city’s sick and safe time policy and the remainder of which pertain to the rising minimum wage, according to the unit’s records.

To investigate cases of wage theft, specifically, the team will use the same procedures it uses to look all other types of allegations: It will collect data such as employees’ hours and rates and interview payroll keepers.

But the extent of new demands, as a result of the new ordinance, remains to be seen. “To this point, we have certainly been able to stay on top of all of the complaints,” he said. “It’s hard to predict what will happen now with wage theft, certainly it’s an expansion of our enforcement authority.”

Walsh said he talked to colleagues in Seattle, which enacted a similar wage-theft prevention ordinance in 2015, who said the overall number of complaints did not rise with the new law but the complexity of each investigation intensified. For that reason, Seattle hired more attorneys.

“Is that going to be the case here? We don’t know,” Walsh said. “We do the best we can with whatever resources we are given.”

The question of staffing and resources is ultimately up to the council. Cunningham said he hopes Mayor Jacob Frey includes money in his 2020 budget proposal to boost staffing in the labor standards enforcement unit. Frey is scheduled to release his preliminary budget on Aug. 15. The council will make its own changes before a final vote in December.

“We want to make sure that we are building the capacity … so that they’re able to meet the needs of workers because of the scale of this problem is astounding,” Cunningham said. “A really quick way to erode public trust is by passing laws that you don’t enforce.”