And I’m not talking Minnesota ice! 2019 was unquestionably a busy year for the Department of Homeland Security Immigration and Customs Enforcement (“ICE”). No doubt you heard on the news about one of Homeland Security Investigations’ workplace warrants over the past year. Less newsworthy, the I-9 audits spiked as well, with no signs of slowing down.  For example, in FY2017, there were 1,360 I-9 audits, in FY2018, there were 5,981 – a 340% increase. What does this have to do with wage and hour laws? Admittedly, it is a stretch, however, I write this article for our firm’s Employer Advisor, so I figured I might as well reprint it here as well. It’s like a Wednesday bonus blog!

So What? 

It is easy think that of all the employers in the United States “only” 5,981 I-9 audits took place – thus, your overall chance of being audited are low, right? Perhaps, but like anything else, if you are audited (and we have had several employers in the past year that were), there is about a 75% chance that you do in fact have Form I-9 violations, all of which are avoidable.  In fact, when we assist employers with internal audits, we spot audit about every 10th Form I-9. Of those, we find a technical violation on almost every form, which the employer can proactively correct. As detailed below, the potential penalties, for what seems like a simple form, can be staggering.  The largest fine that has been levied against an employer to date is $95 million.

Potential Penalties

If your business is audited, here is what you are looking at for possible penalties:

  • Monetary civil fines
    • Knowingly hire and continue to employ violations of $573-$4,586 per violation for first time violators (up to $22,972 for repeat offenders).
    • Substantive and uncorrected technical violations, or failure to produce an I-9, ranges from $230-$2,292 per violation. For example, if you have 100 I-9s and 75 of those are in error, you are looking at fines from $17,250-$171,900.
    • Fines may be enhanced up to 25% based on business size, good faith, seriousness, unauthorized aliens and history. This puts the above example at $21,562-$214,875.
  • Monitoring, suspension or debarment from government contracts.
  • Criminal arrest of employers.
  • Administrative arrest of unauthorized workers.

How to Best Avoid Potential Penalties

A few steps now can save a lot of headache (and fines) later:

  • Conduct an internal audit now – work with an attorney to do so, as you can actually create technical violations by improperly correcting I-9s or revivifying employees.
    • Ensure proper document retention for each terminated employee.
    • Be able to produce all I-9 records within 3 days (i.e. system of binders/files in one spot).
    • Make sure the most recent form is used (it is still the one with a 2017 expiration date).
  • Use E-Verify.
  • If you do get a Notice of Inspection (“NOI”), other audit documentation, or a raid, contact an attorney right away.
  • Make sure your business has a designated person for any ICE audit or raid and they know what attorney to call immediately.
  • Properly correct Form I-9s before you need to turn over documents to ICE.
  • Train managers (anyone who is going to fill it out on behalf of the employer and sign) on the proper completion of the I-9.

Employers with exempt (salaried) employees – do not forget that the Fair Labor Standards Act’s (FLSA) salary threshold increases January 1, 2020 to $684 per week ($35,568). This means, that if you have a salaried exempt employee making LESS than $684 per week, effective January 1, 2020, they will need to be reclassified as non-exempt and will be eligible for overtime pay. If you need more details about the revised so-called white collar regulations, you can view my earlier post here. Also, don’t forget that the rule changes do not change the duties tests. Just because someone meets the salary threshold does not necessarily mean they meet the duties test!

Employers with employees working 80 hours a year within Minneapolis should remember that the Minneapolis Wage Theft Prevention Ordinance goes into effect JANUARY 1, 2020. If you want more details about the ordinance and how it is different than the Minnesota Wage Theft Prevention Act, you can read my previous blog here.  In short, there are additional notice requirements and sick and safe time accrual and use balances must be put on the employee’s earnings statements.  All employees must be provided with the notice (not just new hires like the state law), and any changes to that notice must be signed by the employee.

To assist employers in compliance, the City of Minneapolis released an example prehire notice (though that name is somewhat misleading since it applies to current employees as well – don’t be tricked) in English and Spanish (that also complies with state law) and updated notice poster on its website yesterday.  It’s FAQs were previously released.

It’s that time of year where employers and employees alike get into the holiday spirit. Being the wage and hour blog that it is, I thought about sharing a few general holiday reminders (keep in mind I’m keeping this super simple just to toggle your brain):

  • Hourly employees who are provided a non-discretionary bonus must have that bonus layered back over their wages for the applicable period and included into the regular rate for overtime purposes (and thus, additional monies may be due the employee because of a bonus).
  • Think of a “discretionary” bonus as a “just because” bonus – there are no metrics, the employee does not know how to “earn” it, it is just something extra, typically unexpected.
  • A non-discretionary bonus is based on something (i.e. if the company does well, you will get 1% annual bonus; if you don’t go over on absences you will get $500, if x then y).
  • Employees cannot “volunteer” to perform their regular job whether it be for a company fundraiser, holiday party, etc. (well, they can, but they have to be paid at least minimum wage and overtime, if applicable).
  • Bonuses are “wages” – they should be paid like any other payroll (refrain from cash, gift cards, etc.).


The U.S. Department of Labor (DOL) certainly seems to mean well with it’s latest roll out. On November 13, 2019, it announced the issuance of the Office of Federal Contract Compliance Programs’ (OFCCP) Technical Assistance Guide – Construction Contractors. In its news release, the DOL noted this guide is meant as a “self-assessment tool” for federal project construction contractors to review their practices to “eliminate discrimination and achieve their equal employment opportunity goals”. Specifically, the guide contains an overview of obligations, steps to implement EEO construction contract specifications, and what to expect when preparing for an OFCCP audit. This includes guidance regarding equal pay, Pay Transparency Nondiscrimination Provision notice/requirements, compensation disparities and the like.

In reality (and this is why I say they mean well), the “guide” is a 157 page document that has even my head spinning….and the pictures of clean people in freshly laundered construction gear/clothing does not help…In short, pictures of women on a construction site in heels aside, I wanted to be sure to share this for our Minnesota construction companies that do federal projects, so that you know it is a resource. Beyond that, I see it as a reference tool and not something that 99.9% of contractors are actually going to sit down and read. Also recall – a guide is no substitution for the law. If the law changes, or the guide is wrong, an employer cannot point at this document/website as a defense. Happy reading!

In a September 10, 2019 opinion letter, FLSA2019-23, the U.S. Department of Labor was asked to interpret what a “month” means for purposes of the retail or service establishment exemption (29 U.S.C. 207(i)). In this exemption, an employee need not be paid overtime if the employee is employed by a “retail or service establishment,” their pay is at least 1.5 times minimum wage, and they receive half their compensation for a “representative period (not less than one month)” based on commissions for goods or services.

At first I was baffled that an actual opinion letter was written about the definition of a “month”. However, as I read on, I began to understand the lack of clarify. For example, an employer can designate a “workweek” based on any start day/time the employer desires – this is well established. So certainly the same is true with a “month”, right? Nope.

Here, the employer asked if four pay periods or two bi-weekly pay periods could be considered a valid representative month – essentially allowing the employer to designate the start of a “month”. Citing to several cases (including Whiteside v. Metro Life Ins. from Minnesota), the DOL concluded that the fair reading is that a month means a calendar month. Thus, 6 – but not 4 weeks (or 3 bi-weekly payrolls) is sufficient to meet the requirement of “not less than one month” – so long as the period is a “representative” period.

Don’t forget that Minnesota’s minimum wage rates increase January 1, 2020 to $10 for large employers and $8.15 for others.  Updated posters (which employers must post where employees can see them) can be found here.  Keep in mind that this is a state minimum wage.

If employers are doing business in Minneapolis, it has its own minimum wage ordinance which trumps the state rates as the wages are higher; those wage rates can be found here and increase next in July 2020.  St. Paul has its own ordinance as well, which begins its phase-in (to $15) starting January 1, 2020; those rates can be found here.

On September 12, 2019, three City of Minneapolis Council members shared a draft ordinance, the Minneapolis Freelance Worker Protections Ordinance. As it is just in the draft stages, I won’t go into great detail here, but to point it out.  For those Minnesota employers who rely on independent contractors – the development of this potential ordinance is one to follow.  The City is seeking feedback from freelancers in surveys and meetings.  However, the draft ordinance seeks to essentially expand the current Minneapolis Wage Theft Ordinance to independent contractors (also called “freelancers”).  The ordinance, as currently proposed, includes requirements such as:

  • If requested by the freelancer, a written contract including:
    • Name and address
    • Itemization of all services
    • Compensation for the services (rates and method)
    • Date payment is due or mechanism for how it will be determined
  • If a freelancer requests a written contract, work cannot begin until a contract is agreed upon (or the employer decides not to use that person’s services).
  • Timely payment pursuant to the contract (or 30 days if no date is specified)

Again, this is just in the development stages,  but employers should at least be aware that this is looming.

Just as soon as Minnesota employers start to understand the new Minnesota Wage Theft Law (enacted July 1, 2019), the City of Minneapolis has passed its own ordinance, the Minneapolis Wage Theft Prevention Ordinance, effective January 1, 2020.  Employers located in Minneapolis and employers located outside of Minneapolis but who have employees who work at least 80 hours per year in the City, must adhere to the Ordinance.

What Is Different Between the State Law and Minneapolis Ordinance?

The Ordinance requires more than the state law to largely incorporate information about the Minneapolis Sick and Safe Time Ordinance:

  • The Employee Notice must be given to ALL employees – not just new hires (as with the State law)
  • Employee Notice and earnings statements must include information about Sick and Safe Time:
    • Hours of leave the employee receives
    • Type of year used to determine accrual and carryover
    • Earliest date SST may begin (no more than 90 days from date of hire)
  • Employee notice must also require:
    • Employee’s date of hire
    • Overtime pay rates, number of hours to work to be eligible (typically 40 or 48)
    • If position involves gratuities, a statement that tip sharing or pooling is voluntary
  • An explanation of sick and safe time rules and employee’s signature of approval
  • Posters must be posted in English and other language (if applicable) and distributed to employees

Employers who fall under this ordinance should be sure that their time off policies are compliant and they are ready to roll out the employee notice and posters by January 1, 2020.  It is no small task – do not procrastinate and underestimate the work needed!  Also, looking into my crystal ball, I would not be surprised to see St. Paul (and then Duluth) follow suit as is common with such ordinances.

For anyone that thought something looked different on my blog, you are right!  Effective November 1, 2019, our firm (formerly Seaton, Peters & Revnew) is now Peters, Revnew, Kappenman & Anderson, P.A. following the retirement of founding shareholder Doug Seaton.  Doug has gone on to found the Upper Midwest Law Center, a non-profit public interest law firm.  It was a pleasure to work with Doug over the past 13 years and I wish him the best!