Here are three easy things that employers can do to cut costs and save money in Minnesota:

  1. Don’t Pay Out Unused PTO To Terminated Employees:  Under Minnesota law, whether a terminated employee is entitled to payment for unused PTO or vacation depends on the terms of the agreement between the employer and the employee.  As a result, an employer who adopts a policy stating that unused PTO or vacation will not be paid out at the time of termination is not required to pay those benefits to a terminated employee.
  2. Pay Pro Rata Salaries In the Initial and Terminal Weeks of Employment:  Many of the exemptions from minimum wage and overtime requirements require that an employee must be paid on a “salary basis,” which means that the employee must receive a predetermined salary that is “not subject to reduction because of variations in the quality or quantity of the work performed.”  However, this requirement does not apply to the initial or terminal weeks of employment.  See 29 C.F.R. § 541.602(b)(6).  As a result, employers may pro-rate an exempt, salaried employee’s wages during the first and last weeks of employment.
  3. Deduct Credit Card Processing Fees From Gratuities:  Currently, the law allows an employer to deduct a service charge from a gratuity paid by a customer using a credit or charge card so long as the “percentage deducted from the tip [is] in the same ratio as the percentage deducted from the total bill by the service company.”  Recently, legislation has been introduced to ban this practice in Minnesota, but it has not yet passed into law.  For the time being, it remains lawful in Minnesota.

Takeaway:  These strategies will not yield large savings right away, but over time, the savings can add up, particularly for employers with a large number of employees or a high turnover rate.