The Minnesota Supreme Court recently reaffirmed the Minnesota attorney general’s broad power to investigate Wage Theft Act and alleged pay practice violations.
In Madison Equities, Inc. v. Office of Attorney General, No. A20-0434 (Minn. Dec. 22, 2021), the Minnesota Supreme Court upheld the attorney general’s broad civil investigative demand to a group of closely held real-estate companies, demanding payroll and pay practice information on wage payments to security guards and other employees. The demand was served in response to security guards’ complaints about the companies’ payroll practices and potential wage-theft violations. More specifically, the security guards complained they were being shorted overtime pay for hours worked over 40 hours per week. The security guards claimed that they were required to clock in and out with ostensibly different companies to avoid payment of time and a half overtime pay. The companies challenged the investigative demand in court, arguing the attorney general exceeded its authority by seeking information and documents regarding entities that had not paid the complaining security guards and regarding all employee positions, not just security guards. The Minnesota Supreme Court disagreed.
The Supreme Court held that the attorney general had broad statutory powers to investigate the security guards’ complaints, finding that the attorney general had a reasonable basis to suspect violations based on the security guards’ complaints alone. It also held that the attorney general was not required to limit the demand to entities that paid the complaining employees or to establish that all the entities were joint employers at the start of the investigation. Interpreting the attorney general’s powers to investigate wage theft, the Supreme Court held that the attorney general may obtain discovery from “any person regarding any matter, fact or circumstance, not privileged, which is relevant to the subject matter involved in the pending investigation.” Similar to federal agency investigatory subpoenas, the Supreme Court held that “relevance” at the attorney general’s investigatory stage is liberally construed, “with the recognition that relevancy limits would be more circumscribed at any subsequent trial.”
The only prerequisite to the attorney general’s investigative demand, the court found, is reasonable ground to believe that “any person has violated, or is about to violate,” a regulation regarding unfair, discriminatory, and other unlawful practices in business, commerce, or trade.” In addition, the information sought must be “reasonably relevant” to the subject matter involved in the alleged violation.
Applying those standards, the court concluded that the attorney general had a reasonable basis to believe the defendants violated the law and, with some minor exceptions, the attorney general’s demands were tailored to address the allegations in the security guards’ complaints.
Takeaway for Minnesota Employers
The Minnesota Supreme Court’s opinion is a stark reminder to employers regarding the broad interpretation of what is relevant information in an administrative investigation, such as this one brought by the attorney general. If information demanded is reasonably related to an underlying complaint, then an investigating agency like the attorney general is legally entitled to obtain it, unless an employer can demonstrate (not just object) that the request is unreasonably burdensome and disconnected to the allegations in the complaint.
Further, for civil demands from the attorney general for interrogatory answers, the time for response may be as short as 20 days, and in the case of producing documents to the attorney general, the time period may be even shorter, at 15 days. Thus, when an employer receives an investigative demand from the attorney general or another state or local agency, it is critical to promptly consult experienced counsel to advise and assist in making appropriate objections to production and limiting an investigation to those matters that are legally relevant.