HF 2567

as introduced - 94th Legislature (2025 - 2026) Posted on 03/24/2025 04:16pm

A bill for an act
relating to employment; providing that stay-or-pay provisions are prohibited,
unenforceable, and against public policy; amending Minnesota Statutes 2024,
section 177.27, subdivision 4; proposing coding for new law in Minnesota Statutes,
chapter 181.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 177.27, subdivision 4, is amended to read:

Subd. 4.

Compliance orders.

The commissioner may issue an order requiring an
employer to comply with sections 177.21 to 177.435, 177.50, 179.86, 181.02, 181.03,
181.031, 181.032, 181.10, 181.101, 181.11, 181.13, 181.14, 181.145, 181.15, 181.165,
181.172, paragraph (a) or (d), 181.214 to 181.217, 181.275, subdivision 2a, 181.635, 181.64,
181.722, 181.723, 181.79, 181.85 to 181.89, 181.939 to 181.943, 181.9445 to 181.9448,
181.987, new text begin 181.989, new text end 181.991, 268B.09, subdivisions 1 to 6, and 268B.14, subdivision 3, with
any rule promulgated under section 177.28, 181.213, or 181.215. The commissioner shall
issue an order requiring an employer to comply with sections 177.41 to 177.435, 181.165,
or 181.987 if the violation is repeated. For purposes of this subdivision only, a violation is
repeated if at any time during the two years that preceded the date of violation, the
commissioner issued an order to the employer for violation of sections 177.41 to 177.435,
181.165, or 181.987 and the order is final or the commissioner and the employer have
entered into a settlement agreement that required the employer to pay back wages that were
required by sections 177.41 to 177.435. The department shall serve the order upon the
employer or the employer's authorized representative in person or by certified mail at the
employer's place of business. An employer who wishes to contest the order must file written
notice of objection to the order with the commissioner within 15 calendar days after being
served with the order. A contested case proceeding must then be held in accordance with
sections 14.57 to 14.69 or 181.165. If, within 15 calendar days after being served with the
order, the employer fails to file a written notice of objection with the commissioner, the
order becomes a final order of the commissioner. For the purposes of this subdivision, an
employer includes a contractor that has assumed a subcontractor's liability within the meaning
of section 181.165.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2025.
new text end

Sec. 2.

new text begin [181.989] STAY-OR-PAY PROVISIONS VOID IN EMPLOYMENT
CONTRACTS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "Commissioner" means the commissioner of labor and industry.
new text end

new text begin (c) "Department" means the Department of Labor and Industry.
new text end

new text begin (d) "Employee" has the meaning given in section 181.988, subdivision 1, paragraph (c).
new text end

new text begin (e) "Employer" has the meaning given in section 181.988, subdivision 1, paragraph (b).
new text end

new text begin (f) "Independent contractor" has the meaning given in section 181.988, subdivision 1,
paragraph (d).
new text end

new text begin (g) "Stay-or-pay provision" means a written agreement or contract provision that requires
an employee to pay the employer or the employer's agent or assignee a sum of money if the
employee leaves the employment before passage of a stated period of time, including but
not limited to a written agreement or contract provision stating payment of money constitutes
reimbursement for training provided to the employee by the employer or by a third party,
recruitment and training costs for replacement employees, lost revenue, or liquidated
damages.
new text end

new text begin Subd. 2. new text end

new text begin Prohibiting use of stay-or-pay provisions. new text end

new text begin (a) A stay-or-pay provision is
unconscionable, against public policy, and prohibited.
new text end

new text begin (b) No employer may present an employee or prospective employee with a stay-or-pay
provision, or require an employee or prospective employee to execute a stay-or-pay provision,
as a condition of employment. The execution of a stay-or-pay provision as a condition of
employment is against public policy and is void. If a stay-or-pay provision is part of a larger
agreement, the invalidity of the provision does not affect other provisions of the larger
agreement.
new text end

new text begin (c) No employer may enforce or threaten to enforce a stay-or-pay provision against an
employee.
new text end

new text begin (d) A waiver of this section is invalid.
new text end

new text begin Subd. 3. new text end

new text begin Enforcement. new text end

new text begin (a) An employer found to have violated this section shall be
fined by the commissioner not less than $1,000 and not more than $5,000 for each violation.
new text end

new text begin (b) Each time an employer presents an employee or prospective employee with a
stay-or-pay provision, or requires the execution of, enforces, or threatens to enforce a
stay-or-pay provision, constitutes a separate violation of this section.
new text end

new text begin Subd. 4. new text end

new text begin Civil action. new text end

new text begin One or more employees or prospective employees seeking redress
for a violation of this section may, on their own behalf or on behalf of similarly situated
employees or prospective employees, bring a civil action in district court. In the event of a
successful action, a plaintiff shall be awarded injunctive relief as appropriate, actual damages,
an additional $5,000 for each violation, and reasonable costs and attorney fees.
new text end

new text begin Subd. 5. new text end

new text begin Scope. new text end

new text begin (a) This section supersedes common law only to the extent that it applies
to a stay-or-pay provision but otherwise does not affect principles of law and equity consistent
with this section.
new text end

new text begin (b) The rights and remedies provided in this section are in addition to and do not
supersede any other rights and remedies provided by statute or common law.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2025, and applies to contracts
and agreements entered into on or after that date.
new text end