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Employers Will Have More Options to Recover on Employee Debts When Caps on Minnesota Small Claims Court Actions Increase August 1st, 2012

June 2012

Employers often ask us how to recover money from a former employee that has somehow "stiffed" them. Examples we frequently hear include running up a company credit card balance without authorization, damaging company property, or failing to repay relocation or tuition advances. The most common question employers have is: "Can we recover these monies by deducting them from the employee's final paycheck?" Unfortunately, due to strict prohibitions found in the Minnesota Wage Payment Act the answer to this question is almost always "no." Employers must pay employees and pursue separate claims against such employees to recover any monies or damages owed. Such recourse is often impractical because going to court may cost more than the debt itself, amounting to throwing good money after bad. In many cases the only cost-effective means of pursuing what generally are smaller sums of money is Conciliation Court, more commonly known as "small claims court." This venue is about to become more available for a greater number of claims.

Currently, the maximum amount that may be recovered in small claims court is $7,500.00; however, this cap will double by August of 2014. This year the cap will increase to $10,000.00effective August 1, 2012. Next year the cap will increase again, to $15,000.00 effective August 1, 2014. These increases will provide access to the less costly and less time consuming Conciliation Court in a greater number of disputes, including those involving employers looking to recover monies owed them by former employees.

To be sure this is not all good news. Employees and other parties may also use this expanded access to small claims court to pursue more claims against employers. Additionally, before deciding whether to pursue any claims against an employee or former employee, employers are wise to first assess the situation from a number of angles. All too often employers go after an employee in court only to find themselves defending against "counterclaims" brought by the employee. Because many laws allow employees to recover amplified damages, attorney fees and other remedies not available to employers the possibility of such counterclaims should be assessed before initiating any claims.

If you have any questions regarding whether to pursue claims in either small claims court or through a more traditional means, the attorneys at Wessels Sherman can assist you in making that decision and guiding you through the process.