Employment & Labor Blog

Department of Labor Restores 2019 Salary Thresholds for FLSA Exemptions

Employers looking for clarity on the salary thresholds for the Fair Labor Standards Act (FLSA)’s white-collar exemptions now have it. On May 14, 2026, the U.S. Department of Labor (DOL)’s Wage and Hour Division formally rescinded the Biden administration’s 2024 overtime rule, which would have significantly increased the minimum salary threshold required to classify employees as exempt under the FLSA and expanded overtime eligibility to millions of previously exempt workers. The now-vacated 2024 rule would have increased the salary threshold for executive, administrative, and professional employees from $684 per week to $844 per week effective July 1, 2024, and then to $1,128 per week on January 1, 2025. It also would have introduced automatic updates every three years. But the 2024 rule was challenged in multiple lawsuits, and after federal district courts struck it down, the Trump administration’s DOL stopped defending it and the appeals of those rulings were dismissed. Under the restored rule, employees generally must satisfy three requirements to qualify for the executive, administrative, or professional exemptions: the employee must perform exempt duties, be paid on a salary basis, and receive at least the required minimum salary. That minimum salary remains $684 per week, or $35,568 annually for a full-year worker. For highly compensated employees, the annual compensation threshold remains $107,432, with at least $684 per week paid on a salary or fee basis. It remains to be seen whether the current DOL will propose new changes to the exemption thresholds in the future. Many states and localities impose higher salary thresholds or apply different duties tests, and when state or local law is more protective, that stricter standard controls. There are also other exemptions to which these salary requirements do not apply, including commissioned sales employees, certain computer professionals, and others. For employers, the takeaway is straightforward: now is a good time to revisit exempt classifications and confirm that employees meet all three parts of the test – not just the salary threshold. The DOL’s amendment is effective immediately, and while it largely confirms what courts had already made operative, it removes any lingering uncertainty from the federal regulations themselves. Contact any member of Larkin Hoffman’s employment law practice group with questions.

July 7, 2026

The FTC’s Aggressive Approach to Non-Compete Agreements

Another year, another twist in the non-compete rollercoaster. In 2026, the Federal Trade Commission (FTC) is intensifying its actions against anti-competitive non-competition agreements. As the agency’s enforcement remains a top priority, employers should pay close attention to evolving legal standards focused on protecting worker rights and mobility. FTC Takes Aim at Unjust Non-Compete Agreements On January 27, 2026, the FTC held a workshop, “Moving Forward: Protecting Workers from Anticompetitive Noncompete Agreements.” While the workshop covered a variety of topics, the key takeaway was clear: the FTC’s tough stance on non-competition agreements remains in place. The meeting highlighted the commission’s strong commitment to cracking down on unlawful non-competes, especially those used to suppress worker mobility, chill wage competition, or hinder competitors’ entry into the market. The FTC’s approach is a shift from broad rulemaking under former Chair Lina Khan to what current Chair Andrew Ferguson described as “education through enforcement.” The FTC hopes targeted enforcement actions under existing antitrust authority will have a broad deterrent effect, particularly protecting low-wage earners and healthcare professionals. Ferguson also indicated that employers subject to enforcement actions should expect the agency to litigate. Key Workshop Takeaways Non-competes must be supported by real and specific business justifications. Employers cannot rely on generalized concerns about competition or retention. Non-competes must be narrowly tailored. The duration, geographic scope, and job-specific needs must be reasonable, narrowly tailored, and support the business justifications at issue. Access to proprietary information matters. In evaluating reasonableness, the FTC will consider individual workers’ specific access to the employer’s confidential and trade secret information that could materially aid or advance a competitor’s business. Healthcare and low-wage earners are a priority. The FTC is particularly concerned about non-competition agreements hindering the mobility of low-wage earners and healthcare workers. For healthcare workers specifically, the FTC is concerned about patient access, worker shortages in rural areas, and high barriers to entry for workers with specialty practices. Less restrictive alternatives matter. In evaluating non-competes, the FTC will consider whether non-solicitation restrictions, non-disclosure and confidentiality restrictions, or fixed-term contracts could address the same business concerns without unreasonably suppressing worker mobility. Non-solicitation restrictions and confidentiality restrictions are not affected by the FTC’s guidance, so long as they are not so broad that they function as “de facto” non-competes. Action Steps for Employers In anticipation of the FTC’s enforcement efforts, employers should: Review future non-competition agreements for defensibility under federal law. Eliminate “one-size-fits-all” provisions and ensure agreements are tailored to specific roles and responsibilities. Assess whether less restrictive measures, such as confidentiality or non-solicitation clauses, can adequately safeguard company interests. Be mindful of state law requirements regarding non-competes, including Minnesota’s prohibition on non-competes for agreements entered into on or after July 1, 2023. Staying informed about the FTC’s ongoing efforts and adapting existing employment practices will be critical to minimizing legal risk. By focusing on legitimate business needs and considering worker mobility, employers can create enforceable agreements that align with current regulatory expectations.

February 25, 2026

DEI Programs Beware! Updated Guidance on Federal Antidiscrimination Compliance

Over the summer, the United States Department of Justice (DOJ) issued guidance clarifying how federal antidiscrimination laws apply to programs which the DOJ now considers discriminatory, including initiatives labeled as Diversity, Equity, and Inclusion (DEI) programs. While this new guidance focuses primarily on entities receiving federal funding, it sheds light on the types of practices and policies which the current administration views as unlawful and has potentially far-reaching implications for employers and businesses of all types. Specifically, the DOJ warns that entities which are “subject to federal anti-discrimination laws, including…public and private employers, should review this guidance carefully to ensure all programs comply with their legal obligations.” DEI Policies and Practices Deemed Unlawful The DOJ’s primary concern appears to be DEI policies and programs. In the DOJ memorandum, Attorney General Pamela Bondi describes “the significant legal risks of initiatives that involve discrimination based on protected characteristics.” The guidance explains that recipients of federal funds, “like all other entities subject to federal antidiscrimination laws, must ensure that their programs and activities comply with federal law and do not discriminate on the basis of race, color, national origin, sex, religion, or other protected characteristics—no matter the program’s labels, objectives, or intentions.” The guidance identifies a non-exhaustive list of potentially unlawful discriminatory actions that could result in the loss of federal funding or other unwanted attention from the federal government. Below is a summary of the areas of focus, along with the DOJ’s explanation of each. Granting preferential treatment based on protected characteristics. The DOJ considers the granting of preferential treatment based upon protected characteristics to be unlawful discrimination. Specific examples of unlawful practices include: preferential hiring or promotion practices (in which a federally funded entity’s DEI policy prioritizes candidates from underrepresented groups for admission, hiring, or promotion, where the preferred underrepresented groups are determined on the basis of a protected characteristic like race); race-based scholarships or programs (including internships, mentorship programs, or leadership initiatives that reserve spots for specific racial groups, regardless of intent to promote diversity); and access to facilities or resources based on race or ethnicity. The prohibited use of proxies for protected characteristics. According to the guidance, unlawful proxies occur when a federally funded entity uses ostensibly neutral criteria that effectively function as substitutes for race, sex, or other protected characteristics. Specific examples of unlawful practices include: “cultural competence” requirements (such as a required demonstration of cultural competitive, lived experience, or cross-cultural skills in ways that effectively evaluate racial or ethnic backgrounds); geographic or institutional targeting in the context of recruiting efforts; and application questions that solicit “diversity statements” or information about “overcoming obstacles.” Segregation based upon protected characteristics. According to the guidance, it is “generally impermissible” when programs, activities, or resources separate or restrict access based upon race, sex, or other characteristics, with some narrow exceptions. Examples of unlawful programs include race-based training programs that separate participants into race-based groups; programs that are available only to those who identify with a specific racial or ethnic group; and segregation in facilities or resources. Training programs that promote discrimination or hostile environments. Finally, the guidance emphasizes that an organization’s training programs can violate the law if the programs stereotype, exclude, or disadvantage individuals based on protected characteristics or otherwise “create a hostile environment.” Examples include DEI training that includes statements stereotyping groups, or the use of training materials or methods that single out, demean, or stereotype individuals based upon protected characteristics (such as “all white people are inherently privileged,” “toxic masculinity,” etc.). DOJ’s Recommended Best Practices The guidance identifies a list of non-binding “best practices” to comply with federal antidiscrimination laws, including: Ensure inclusive access to all workplace programs, activities, and resources to all qualified individuals, without organizing groups or sessions based upon protected traits; Focus on specific, measurable skills and qualifications directly related to job performance or program participation; Discontinue any program designed to achieve discriminatory outcomes, even those using facially neutral means; Document clear, legitimate rationales for criteria used in hiring, promotions, or selecting contracts; Carefully scrutinize neutral criteria for proxy effects; Eliminate diversity quotas; Ensure trainings are open to all qualified participants, regardless of protected characteristics; Include explicit nondiscrimination clauses in grant agreements, contracts, or partnership agreements; and Establish clear anti-retaliation procedures and safe reporting mechanisms. While the guidance does not change the underlying antidiscrimination laws, it does reflect a significant change in enforcement priorities while shedding light on how the DOJ will evaluate complaints and pursue enforcement actions. Entities subject to federal antidiscrimination laws (including most private and public sector employers) should work with legal counsel to review their existing policies and practices.

October 7, 2025

Three Things Employers Should Know About Minnesota’s Pay Transparency Law

Minnesota’s new pay transparency law took effect earlier this year. However, with a number of new employment laws enacted in recent years, the pay transparency law has been lost in the shuffle for many companies. Below are the three most-asked questions we receive about the new law. Which employers are covered under the new law? The pay transparency law does not apply to all Minnesota employers. Rather, it applies only to employers with 30 or more employees at one or more sites in Minnesota. The law is silent as to whether or how it applies to remote positions that can be performed outside of Minnesota. What does the law require? When posting for open positions, covered employers are required to include the starting salary range and a general description of benefits and other compensation as part of the posting. The new law defines “salary range” as the minimum and maximum annual salary or hourly range of compensation, based upon the employer’s good faith estimate of those ranges at the time of the posting. Employers may not use an open-ended salary range. Finally, if a covered employer does not plan to use or offer a salary range, the employer must list a fixed pay rate for the posted position. In addition to the salary range, covered employers must provide a general description of all offered benefits for the position. This includes health or retirement benefits. The law does not address what types of bonuses, if any, may be considered “other compensation” which would need to be disclosed. What types of “job postings” must include the required information? The law broadly defines a “posting” as “any solicitation intended to recruit job applicants for a specific available position” that includes qualifications for desired applicants. This applies to both external and internal-facing job postings, as well as electronic and printed documents. The law specifically applies to both postings by an employer and third parties like staffing agencies. Next Steps for Employers If not already done, covered employers need to work with their hiring managers and human resource personnel to make sure their job postings are compliant. Additionally, covered employers must ensure any of their third-party vendors, such as staffing agencies, are in compliance with the new law.

April 30, 2025

New Employment Laws

Minnesota Bans Inquiries into Applicants’ Pay History

A new Minnesota law banning employers from asking for applicants’ pay history went into effect at the beginning of 2024. All Minnesota employers are now prohibited from requesting or requiring job applicants – including internal hires – to disclose their compensation history. While employers may still access an applicant’s compensation history if the information is a matter of public record, the new law prohibits employers from doing so with the intent of using the information to set the employee’s compensation. Additionally, if an applicant voluntarily discloses prior compensation to a prospective employer, the employer may only consider the information if it supports greater compensation than what the employer initially offered. With this law, Minnesota joins the District of Columbia and seventeen other states that have adopted similar provisions, notably including Illinois, New Jersey, California, Colorado, Massachusetts, New York, and Washington. A few large cities have also passed ordinances prohibiting employers from inquiring about pay history. These include San Francisco, New York City, Philadelphia, Kansas City, Cincinnati, and Columbus. Employers should take steps to ensure compliance with Minnesota’s new law, including revising application and interview materials to remove questions about prior compensation. Organizations should also communicate this prohibition to all personnel involved in hiring. Employers are still allowed to inquire about a candidate’s salary expectations so long as they do not ask about past or current compensation. Relatedly, Minnesota employers are already prohibited from taking any adverse action against an employee for sharing information about his/her own wages or discussing another employee’s wages which have been voluntarily shared. Minnesota law requires employers who use employee handbooks to include in the handbook a notice of employees’ rights under this statute. Employers who have questions about Minnesota employment law as it relates to pay transparency should contact a Larkin Hoffman attorney.

April 22, 2024

Labor Law

Employer Non-Competes Under Threat by FTC Proposal

On January 5, 2023, the Federal Trade Commission (FTC) issued a proposed rule which, if enacted, would ban most non-compete clauses in employment contracts. The rule would also require employers to rescind existing non-compete clauses with its workers and provide those workers with written notice that the non-competes have been rescinded. This rule, if enacted, would apply to agreements between employers and employees, independent contractors, interns, externs, volunteers, apprentices, and/or sole proprietors that provide services to clients or customers. However, the rule would not prohibit the use of non-competes in contracts for the sale of a business or non-compete agreements with franchisees in the context of a franchise agreement. The rule, as proposed, would ban non-compete restrictions, even if not titled as such. The FTC’s proposal makes clear the prohibition would invalidate even “de facto non-compete” provisions which include overly broad non-disclosure agreements or agreements that require an employee to repay employers for training costs if the employee does not remain an employee for a particular duration. If the proposed rule is enacted, employers will need to evaluate all agreements that may fall under the FTC’s broad definition of a non-compete agreement in order to provide the required notice of recission to employees. Failure to properly rescind all existing non-competes could result in an FTC enforcement action and penalties. The FTC voted 3-1 to publish the Notice of Proposed Rulemaking, which is the first step of the administrative rulemaking process. The next step of the rulemaking procedure is a 60-day public comment period. The FTC will then review comments and consider whether to make changes and issue a final rule. The proposed rule is guaranteed to face a variety of legal challenges. FTC Commissioner Christine S. Wilson, who voted against the proposed rule, issued a statement in which she provided potential bases for legal challenges that could be asserted against the enforcement of the proposed rule. Those potential legal challenges include: (1) the FTC doesn’t have the legal authority to make and enforce this rule; (2) this rule may be of such great significance that it may only be enacted by the legislature; and (3) if congress did delegate legislative authority to create this rule to the FTC, such a delegation of authority would be unconstitutional. Next Steps The final rule, yet to be published, may be different from the proposed rule. There is a 60-day comment period in which the public can submit comments, objections or support for the proposed rule. Employers have the right to submit comments, and it can be expected that various business and employer associations and organizations will submit comments and objections to the proposed rule. Employers should engage legal counsel to analyze existing practices that may be impacted by the proposed rule and identify which agreements and employees are subject to existing non-competes Employers and their legal counsel should determine if there are alternative legal protections that can be put in place in order to best protect confidential information and other business interests without risking classification as an unenforceable non-compete agreement under this proposed rule. Pending Attempts to Ban Non-Competes Statewide in Minnesota Just into the legislative session, the Minnesota legislature is considering a pair of companion bills in the House (HF295) and Senate (SF405) that aim to invalidate a large sum of employment-based non-compete provisions. If these bills can muster enough political support to become law, all non-compete agreements with employees in Minnesota that earn under a certain annual salary and would require “garden leave” payments for employees making above the salary threshold, which are payments made after the termination of the employment relationship which provide the former employee with some compensation during the restricted period.The salary required to have an enforceable non-compete agreement under the initial drafts of these bills is at or above the median family income for a four-person family in Minnesota as determined by the US Census Bureau. For employees that satisfy the income threshold and can have a valid non-compete, the required garden leave payments must be at least half of the employee’s highest annualized salary within the prior two years and must be paid on a pro rata basis over the entire course of the restricted period. Each bill, as currently formatted, define a “covenant not to compete” as an: [A]greement between an employee and employer that restricts the employee, after termination of the employment from performing: work for another employer for a specified period of time; work in a specified geographical area; or work for another employer in a capacity that is similar to the employee’s work for the employer that is party to the agreement. Like the rule proposed by the FTC on a national level, the Minnesota bills do not apply to non-compete agreements that are made as part of the sale of a business. Both bills contain a provision that only applies to non-compete agreements agreed to by an employee without the assistance of counsel wherein the bills invalidate any choice of law provision that would require an employee to litigate or arbitrate outside of the state of Minnesota or apply the law of another jurisdiction and deprive the employee of its protections under this law. As an additional protection for employees who entered into the agreement without assistance of counsel, if the employee is forced to invalidate a choice of law provision in a non-compete, the employee will be entitled to reasonable attorney fees. At this time, neither bill has left the committee stage. However, we will continue to monitor these bills as they progress through the legislative process.

January 23, 2023

Labor Law

Larkin Hoffman’s Employment Attorneys Help Navigate Workplace Issues During COVID-19

As COVID-19 restrictions continue to ease, many employers are navigating the best path forward for their business to ensure we keep our communities healthy while also protecting against potential litigation. Employers and employees are asking many questions about their rights and thoughtful comprehensive planning and policies are necessary. Employers have questions about whether they are able to mandate vaccines or whether they should offer employees an incentive to be vaccinated. Employers also want to know about their obligations to accommodate vaccine exemptions; should employers develop remote work policies; and what reasonable accommodations need to be made while operating during a pandemic? Larkin Hoffman’s employment attorneys Phyllis Karasov, Dan Ballintine and Andrew Moran recently sat down for Finance and Commerce in the webinar Returning to Work in the Short Term and for the Long Haul to address legal and human resources questions that employers are facing. As a follow-up to the webinar, our attorneys have put together an updated version of their Minnesota Employers Guide to Navigating Workplace Issues During COVID-19, originally published last October, to help answer new questions your organization may be facing and to help businesses avoid potential pitfalls and unwanted outcomes. Larkin Hoffman’s employment law team identifies and resolves workplace issues in this rapidly evolving and highly regulated area. Our attorneys provide counsel and advice to businesses, public employers and other organizations about all aspects of the employment relationship. As Congress, state legislatures, local government and the courts continually change employer obligations and employee rights, employers need experienced counsel to help confront problems and comply with applicable law. We provide advice to employers across the full range of employment law and human resources. Please reach out to any of our employment attorneys if you have questions or need guidance about how to best handle your employment matters during the pandemic. To read and download a copy of the updated guide Minnesota Employers Guide to Navigating Workplace Issues During COVID-19, click here. To register and listen to a free recording of the Finance and Commerce webinar Returning to Work in the Short Term and for the Long Haul, click here.

April 19, 2021

Labor Law

Minneapolis Employers Beware – Supreme Court Upholds City’s $15 per Hour Minimum Wage

The Minnesota Supreme Court, the state’s highest court, decided to uphold the minimum wage ordinance which was enacted by the City of Minneapolis back in 2017 and which will eventually require Minneapolis employers to pay workers $15.00 per hour. Those Minneapolis-based employers which were holding out hope that the Minneapolis ordinance would ultimately not be enforced must comply with its minimum wage requirements. The name of the decision is Graco, Inc. v. City of Minneapolis. Minneapolis Ordinance Background As most Minneapolis-based employers know, in June of 2017, the Minneapolis City Council voted to enact an ordinance which sets certain minimum wage rates for hours worked by employees within the geographic boundaries of the City of Minneapolis. As of January 1, 2020, the effective minimum wage for large employers (with more than 100 employees) is $12.25 per hour, and the minimum wage for small employers (with 100 or fewer employees) is $11.00 per hour. These rates are higher than those required under state law (the Minnesota Fair Labor Standards Act, or MFLSA) which are $10.00 per hour for large employers (with an annual revenue of $500,000 or more) and $8.15 per hour for small employers (with an annual revenue of less than $500,000). Graco’s Lawsuit Later in 2017, Graco, Inc. sued the City of Minneapolis, along with others, and argued that the ordinance was preempted by the MFLSA and should be permanently enjoined. The district court denied the injunction and ruled that the Minneapolis ordinance was not preempted by the MFLSA as the MFLSA sets a floor, not a ceiling, for minimum-wage rates, which leaves the door open for municipalities to establish higher minimum wage rates. The Court of Appeals agreed, setting the stage for a decision by the state’s highest court. In upholding the Minneapolis ordinance, the Supreme Court emphasized that the specific language of the MFLSA requires only that employers pay “at least” the minimum wage required under that law, meaning that the legislature set a floor, not a ceiling, on the hourly rate that employers can pay. The Supreme Court further noted that employers can simultaneously comply with both laws, meaning there is no conflict between them. Finally, and importantly, the Supreme Court rejected the contention that the MFLSA impliedly preempts the Minneapolis Ordinance by occupying the entire field of minimum wage regulation in Minnesota. Although time will tell, this reasoning by the Supreme Court sets the stage for other cities to enact ordinances with minimum wage rates that are higher, and more restrictive, than those required by state law. St. Paul has already passed its own minimum wage ordinance, set to take effect in stages in 2020 and the following years, and Minnesota employers could soon be forced to navigate multiple cities with varying minimum wage rates. Print:

February 12, 2020

Best Practices

It’s Party Time!

The time has come for companies to begin planning their 2019 holiday parties. While these events are a great way to show appreciation for employees and build morale, they can present certain risks for employers. Being mindful of the following issues can help employers avoid complaints, or worse, lawsuits, associated with holiday parties. Alcohol While alcohol is common, and often expected, at holiday parties, employers can and should be mindful of potential problems which could follow, including employees driving after drinking at the party. If an employee drives drunk and injures another person while driving home from the party, a lawsuit could follow in which the employer could potentially be exposed to liability. The best way to avoid alcohol-related problems at a holiday party is to consider some or all of the following suggestions: • Use drink tickets rather than an open bar to limit consumption; • Offer taxi or Uber credits to employees; • Instruct bartenders not to overserve and to monitor employees’ alcohol consumption; • Close the bar well before the party comes to an end; and/or • Before the party, remind employees in writing that, although alcohol will be served, employees are still expected to behave professionally and that anyone who plans to drink must secure a ride home. In addition, employers should consider designating one or more managers to be on the lookout for anyone who appears to be impaired so that any problems can be addressed early on. Sexual Harassment Harassment claims often go hand in hand with alcohol consumption. While employers certainly do not need to hand out copies of their harassment policies at the entrance, they should be conducting harassment trainings with their employees and reminding employees of harassment policies on an annual basis, if not more often. Doing so will place the issue in employees’ minds and potentially help support a legal defense to any harassment claim down the road if an incident does occur. Discrimination In general, employers should avoid making holiday parties about one particular holiday or another. Instead, the celebration should be inclusive of all employees’ beliefs and cultures. A holiday party with overt religious references may cause an employee who believes that he or she has been the subject of religious discrimination with one more reason to voice a complaint or assert a claim. The same applies to other forms of holiday celebration (e.g. “secret Santa” gift exchanges which can make non-Christians feel excluded). While an employer’s reference to Christmas, Hanukkah or any other seasonal religious holiday is unlikely to be the reason an employer has legal exposure, it certainly won’t help when defending against a claim based upon religious discrimination or harassment. Mandatory Attendance and Wage and Hour Issues Every company wants its holiday party to be well attended. Some go so far as to make attendance mandatory. However, if an employer tells nonexempt employees that attendance at the party is required, the employer may be opening itself up to a host of Fair Labor Standards Act (FLSA) and state law claims. If attendance at a holiday party truly is mandatory, it is likely employees will have to be paid for the time they spend there. Additional relevant factors include whether the party takes place during working hours and on or off the company’s premises. If an employer does not plan to pay non-exempt employees for attendance at its holiday party, the employer should make clear, in writing, that attendance is optional (and ideally, that the party will take place outside of working hours and away from the employer’s office). Conclusion These are just a few of the commonsense tips employers should have in mind when preparing for and hosting holiday parties. Although not all employers (and certainly not all employees) will necessarily embrace these tips, they can help holiday parties serve as a fun-filled event rather than a source of liability and legal headaches.

November 26, 2019

Reminder: EEO pay data must be submitted by September 30, 2019

By September 30, 2019, employers with 100 or more employees are required to submit pay data for 2017 and 2018 to the Equal Employment Opportunity Commission. This submission is known as the Component 2 EEO-1 survey, and covered employers should have received both an email notification and a letter providing their UserID which is needed to access the online filing system for the EEO-1. Background Under the Obama administration, the EEOC proposed a series of revisions to Form EEO-1 to include the collection of pay data along with the demographic data that the Form already included. After the United States Office of Management and Budget stayed the requirement to collect the pay data, a legal challenge ensued. Earlier this year, a federal court ruled that the stay was improper and accordingly, that the revised EEO-1 data must go into effect in 2019 and the EEOC must collect the pay data. Although the court ordered the EEOC to collect 2018 pay data by the September 30, 2019 deadline, the EEOC went further and is requiring covered employers to submit pay data from both 2017 and 2018 by the deadline. Although the Office of Management and Budget has appealed the court’s decision, the appellate briefing schedule will not be complete until October 9, 2019, which is afterthe deadline to submit the required pay data. General Requirements Component 1 EEO-1, which requests demographic data regarding ethnicity, race and gender information regarding a covered employer’s workforce, still must be submitted. Component 2 EEO-2 seeks information regarding pay and hours worked, broken down into 12 pay bands across job categories, from a low of less than $19,239 and a high of $208,000 and over. Employers can use any pay period between October 1 and December 31, known as the Snapshot Period, to determine if they employ the required number of employees. Only those employees on the payroll during the Snapshot Period are required to be reported. Accordingly, if an employer’s workforce fluctuates around the minimum number of employees (100), the employer may be able to use a Snapshot Period which falls below the required minimum. Employers with payroll, timekeeping or other outside vendors should determine whether those vendors can assist with collecting the required data, as some of the required data may already be in the possession of those vendors. Employers should also identify which of their systems house the relevant demographic, pay and hours-worked data, how that data is stored, in order to streamline the collection and reporting processes. The EEOC opened an electronic portal on July 15, 2019, for employers to begin submitting their 2017 and 2018 pay data. That portal is known as the Component 2 EEO-1 Online Filing System home page. Of course, there are additional legal considerations surrounding the collection of race, ethnicity and gender information. Employers with questions about whether or not they are required to submit Component 2 EEO-1, or how to collect and analyze the required data, are encouraged to consult the EEOC’s Frequently Asked Questions and instructions, or consult with legal counsel.

September 18, 2019

Employee Handbooks and the NLRB – Is the Line Moving?

As discussed in a prior post , the National Labor Relation Board (NLRB) continues to target certain employee work rules and policies, including employee handbook provisions, as running afoul of the National Labor Relations Act (NLRA). Although the current NLRB has reversed several previous NLRB decisions regarding handbook policies, the line between permissible policies and those found to interfere with and chill employee rights to engage in protected concerted activity remains blurry at best. In June of 2019, the NLRB Office of General Counsel released an Advice Memorandum which assessed the legality of ten different employee handbook provisions. In analyzing these and similar employer policies, the NLRB typically balances the nature and extent of the potential impact on Section 7 rights (i.e. employees’ rights to engage in protected concerted activity) and the legitimate business justifications associated with the requirements. For employers, however, this balancing creates considerable uncertainty as to what policies will and will not run afoul of the NLRA. The provisions, along with the determination reached by the NLRB in the Advice Memorandum, are summarized below: Confidentiality:“Obtaining unauthorized confidential information pertaining to clients or employees.” This was found to be a lawful confidentiality rule. Confidentiality:“. . . all information gathered by, retained or generated by the Company is confidential. There shall be no disclosure of any confidential information to anyone outside the Company without the appropriate authorization. . . nothing in this policy is intended to infringe upon employee rights under Section Seven (7) of the National Labor Relations Act (NLRA).” This rule was found to be unlawfully overbroad, because its definition of confidential information is so broad that it could easily be interpreted to include information regarding wages and working conditions. Civility and Disruptive Behavior:“Rude, discourteous or un-businesslike behavior; creating a disturbance on Company premises or creating discord with clients or fellow employees.” This was found to be a lawful civility/disruptive behavior rule. Solicitation/Distribution:“Soliciting, collecting money, or distributing bills or pamphlets on Company property by employees during non-working time, including rest and meal periods, is not restricted so long as such activity is in good taste.” This was found to be a lawful solicitation/distribution policy. Conduct:“Un-business-like conduct, on or off Company premises, which adversely affects the Company services, property, reputation or goodwill in the community, or interferes with work.” This was found to be a lawful conduct rule. Civility and On-Duty Conduct:“Disparaging, abusive, profane, or offensive language (materials that would adversely or negatively reflect upon the Company or be contrary to the Company best interests) and any illegal activities—including piracy, cracking, extortion, blackmail, copyright infringement, and unauthorized access to any computers on the Internet or email—are forbidden.” This was found to be a lawful combination of civility and on-duty misconduct policies. Social Media Access:“Company electronic assets may not be used to access these [social media] accounts.” This was found to be a lawful social media access rule. Social Media Postings:“Employees should refrain from posting derogatory information about the Company on any such sites and proceed with any grievances or complaints through the normal channels.” This rule was found to be unlawfully overbroad, because a rule prohibiting disparagement of the employer has a significant impact on NLRA rights and concerted criticism of an employer’s employment and compensation practices is central to rights guaranteed by the NLRA. Civility in Postings:“Employees may not post any statements, photographs, video, or audio that reasonably could be viewed as disparaging to employees.” This was found to be a lawful civility rule. Social Media Postings:“Employees may not post to any on-line forums . . . providing any Company telephone number or extension. Do not create a link from any personal blog, website or other social networking site to a Company website without identifying oneself as an employee of the Company.” The ban on providing the employer’s telephone number was found to be unlawful, because the ban effectively prohibited employees from soliciting customers and/or the public to call the employer to express support for Section 7 activities. The self-identification requirement for social media postings was found to be lawful. Personal Cell Phones:“The use of personal cell phones or other mobile devices is prohibited during working hours for personal use, including phone calls, texting and downloading of web content.” This rule was found to be unlawful as it could be read to prohibit cell phone use during break times and lunch, times at which employees have a right to engage in Section 7 communications.

August 1, 2019

A Primer on Non-Competition Agreements in Minnesota

Businesses constantly search for ways to protect their competitive advantages, customer relationships, confidential business information and trade secrets. Non-competition agreements (which often include confidentiality provisions) are usually part of those protection efforts. Despite the belief of many employers (and employees) that these non-competition agreements are unenforceable and not worth the paper they’re written on, they are both enforceable and extremely valuable when properly drafted. Attorneys, however, are often asked to revise or pursue enforcement of agreements which are unlikely to be enforced by courts because of one or more problems. Sometimes this is because “form” agreements are used for multiple employees that are not tailored to the specific circumstances of a particular business and/or position. Other times this is due to a failure of consideration relating to the timing of when an employee signed or was given the agreement. Non-competition agreements are enforceable under Minnesota law ifthey are supported by consideration, are necessary to protect a “legitimate business interest,” and they are no broader than necessary in scope and duration. Below is a brief overview of what these requirements actually mean, and some pointers Minnesota employers should consider in crafting those agreements. Although non-competition agreements are also frequently used in connection with the sale of a business and other settings, this post focuses on their use in the employment setting. How Do I Make a Non-Competition Agreement Enforceable?Present and Sign the Agreement Prior to Commencement of Employment or Provide Additional Benefit Like any contract, non-competition agreements must be supported by consideration (i.e. something valuable received in exchange for signing) to be enforceable. An employment offer can be sufficient consideration if the agreement is presented ancillary to the offer. Courts, however, will carefully scrutinize the timing of the notice and execution of a non-competition agreement to determine whether an employment offer is truly contingent upon the applicant’s execution of it. Employers should make clear, in writing, that a job offer is contingent upon the applicant’s execution of the agreement, provide a copy of the agreement before the offer is accepted, and obtain the signed agreement before the commencement of employment. If a non-competition agreement is not presented or signed until after employment has commenced, additional consideration needs to be provided (e.g. a raise or a bonus or cash payment that is not part of the employee’s compensation), and that consideration should be identified in the agreement. Make Sure Your Company has Legitimate Business Interests to Protect Courts have found a broad range of employer interests to be protectable by non-competition agreements including confidential information, customer goodwill, business relationships, and specialized employment training. Although these interests have generally been found to be deserving of protection, each agreement and employment situation is unique and considered as such by courts. Don’t Overreach – The Agreement Should Have a Reasonable Scope Assuming some restraint is needed to protect an employer’s business interests, non-competition agreements must be reasonable and no broader than necessary. Factors considered in assessing reasonableness include the nature and character of the restriction, its temporal length and its geographic scope. Although employers may want non-competition agreements to restrict former employees for several years and/or prohibit competition anywhere in the world, it is unlikely a court would enforce such broad restrictions in the employment context. In the employment context, Minnesota courts are reluctant to enforce agreements lasting longer than one to two years. They will uphold geographic limitations when narrowly tailored to protect the employer’s business interests. The primary factors considered by courts are the geographic area in which the employer operates, the nature of the employee’s position and the geographic area in which the employee actively worked and/or had customer contacts. Agreements which solely restrict solicitations of customers can be reasonable without a geographic limitation, but a temporal limitation is still required. If a non-competition agreement is overbroad, Minnesota courts may “blue-pencil” or modify its terms (e.g. reduce the term from three years to two years) and then enforce the modified scope. However, just because a court canmodify unreasonable terms does not mean that it will do so. In order to increase the likelihood of enforcement, businesses should craft restrictions so that they are no broader than reasonably necessary. Keep it Simple Businesses should use language that is well-defined and understandable. What does “solicit” mean? Does it include where a customer first approaches the former employee? Does it apply to, say, a broadly disseminated LinkedIn post, where the former employee’s connections include customers? Does it prohibit the actual rendering of services? The more understandable the language is, the better (although being toospecific in defining prohibited activities can result in the unintentional exclusion of conduct a company wishes to prohibit). Additional Considerations Although not discussed in detail here, there are several additional steps companies should take to maximize the likelihood of enforcement including the use of blue-pencil language, provisions making clear the restrictions survive the termination of employment and authorizing injunctive relief and recovery of attorneys’ fees, choice of law and forum selection provisions, and reminding employees of their obligations upon termination of employment. Businesses that take the time to evaluate each employment position and tailor restrictions are more likely to have those agreements enforced than those which employ a “one size fits all” approach.

March 15, 2019

Put the phone down!

In helping employers with their written employment policies, we are often asked whether it is necessary to have a policy regarding employees’ use of cell phones for work purposes while driving. The answer, as is often the case, is “it depends.” If your employees drive as part of their job or commonly use their cell phones for work purposes while driving, then your company should address cell phone use while driving in a written policy. A well-written policy can not only reduce the likelihood of accidents caused or contributed to by distracted driving, it can also help reduce your company’s liability in the event of an accident caused or contributed by your company’s employee. Why should employers care? Under the legal doctrine of respondeat superior, an employer can be vicariously liable for the torts of its employees when the employees commit wrongful acts within the course and scope of their employment. Stated otherwise, if an employee acts negligently and injures another person while acting within the scope of his or her employment, the employer could potentially be liable for the employee’s actions. Consider the following example. A company’s employee is speaking on the phone with a potential client while driving to a work meeting. While on the phone, the employee strikes another vehicle killing the driver of that vehicle. The family of the victim sues the driver and the company for millions of dollars in damages, arguing that the employee was negligent in causing the accident and the employer is vicariously liable since the employee was acting within the scope of employment (speaking on the phone with a potential client while driving to a work meeting). Another example is an employee who drives as part of his or her job—let’s say, making deliveries—and strikes a pedestrian while talking on the phone (or worse yet, while texting or emailing). Whether or not an employee has acted within the scope of employment depends upon the facts and circumstances of each individual case, but given their potential liability in these situations, employers should enact reasonable policies regarding employees’ use of cell phones while driving. If you don’t have a policy, create one There are a range of options to consider in enacting such a policy, from an outright ban on any cell phone usage, to a policy which requires the use of Bluetooth or hands free technology, to a policy which advises employees of the risks of cell phone usage while driving but does not actually prohibit the activity. At a minimum, a well-written policy should: Require employees to comply with state laws regarding cell phone use while driving (e.g. Minnesota’s prohibition on texting while driving); Require employees to utilize a Bluetooth or hands-free option where available if you expect them to use their cell phones while driving; Prohibit texting, emailing and messaging while driving; and Encourage employees to either plan calls while their vehicle is not in motion or pull off the road for lengthy calls. If you have a policy, train your employees and enforce it As with any workplace rule, merely having such a policy is not enough. Employees should be made aware of what the policy does and does not allow, how they should handle incoming calls while driving, and the potential consequences for violation of the policy. In addition, where employers learn that their policy has been violated, they should take appropriate disciplinary measures. Distributing the policy, training employees and enforcing the policy are all steps which can help reduce a company’s exposure in the event of an accident.

December 7, 2018

Why Does My Company Need an Employee Handbook?

A common question asked by employers, particularly new and/or smaller companies, is whether they should create an employee handbook. Although companies are not legally required to have an employee handbook, there are several important reasons (legal and non-legal) why they should do so. Communicate to Employees What is Expected of Them Handbooks are useful to employees in several respects. They introduce new employees to the company’s history and culture, identify what makes the company unique in its industry, and highlight benefits provided to employees (and eligibility requirements for those benefits). A well-written employee handbook will provide a clear description of the employer’s policies and employees’ responsibilities. Employees should have an understanding of what is expected of them and what they are (and are not) permitted to do. For example, if an employee has an unexpected absence, are there specific call-in procedures which must be followed? How much notice needs to be given to take vacation or paid time off? What are the policies regarding working off-the-clock or recording overtime? Many day-to-day questions raised by employees can be easily addressed in an employee handbook. Ensure Consistent Enforcement Workplace rules and policies are only effective if practiced and applied consistently. Inconsistent application of workplace rules can create the perception of unfair treatment and provide ammunition for discrimination claims by disgruntled employees (more on that below). A company’s failure to apply workplace rules consistently between men and women (or between members and non-members of other protected classes such as race, religion, sexual orientation, disability, etc.) can create the appearance that certain employees receive more favorable treatment. If the rules are made clearly in writing, they are more likely to be applied on a consistent basis. Practically speaking, having the same set of rules for all employees will make life easier for business owners. When policies are clearly communicated in writing, there is less need to think about how a certain situation should be addressed – and less occasion for employees to claim ignorance of a particular rule. Of course, there will be times when no written policy squarely addresses a particular issue, but a written handbook will provide a guidepost to help employers both avoid and deal with many day-to-day issues. Educate Managers It is equally important for managers and supervisors to understand what is expected of the employees they supervise. Although employers should always train managers and supervisors, the reality is that many managers do not receive the necessary training and are often required to deal with matters involving discrimination and harassment complaints and other disciplinary issues. A well-written employee handbook can serve as a guide when managers and supervisors answer questions or make decisions and ensure that their answers and actions are consistent with company policies and best practices. Ensure Compliance with State, Federal and Local Laws Every employer is subject to various state, federal or local laws. An employee handbook will communicate and identify the legal rights and obligations of employees. It will also remind managers and supervisors of those same rights, which can help avoid violations (incidental or not) of those laws. Many laws require employers to affirmatively provide notice of certain rights and obligations and an employee handbook makes it easy to organize and provide those legally required notices in one place. Help Defend Against Employee Claims Lawsuits and charges of discrimination are a fact of life for most employers. Even if a company does everything right, employees may feel they’ve been wronged and take legal action. A thorough employee handbook will contain equal opportunity, anti-discrimination and anti-harassment policies and establish reporting procedures for employees to follow should they feel they were subjected to discrimination or harassment. These policies help employers resolve complaints and take appropriate action before they rise to the level of a lawsuit or a charge of discrimination. If an employee does take legal action, these policies help demonstrate that the company exercised reasonable care and can provide a legal defense to future harassment claims if the employee fails to make a report. As mentioned above, having a clear set of rules will help employers apply rules consistently and fairly, which is helpful in defending claims of discriminatory treatment. Finally, obtaining a signed acknowledgement page from each employee will show that an employee knew about and agreed to follow the employer’s workplace rules. While creating an employee handbook may seem like a daunting task, particularly for a new or small business that is carefully managing its costs, the benefits of doing so cannot be overstated. If done correctly, the time spent creating and distributing an employee handbook will be considerably less than the time and money spent dealing with issues which would have been avoided by having a handbook in the first place.

September 20, 2018

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Andrew D. Moran

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Put the phone down!

Why Does My Company Need an Employee Handbook?

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