Employment & Labor Blog

Can Employees Be Prohibited From Recording Workplace Conversations?

The recording of workplace conversations is an issue more employers are confronting. Employees, for example, may wish to secretly record conversations with a supervisor to garner evidence that the supervisor is harassing or engaging in discriminatory behavior, or otherwise failing to apply workplace rules consistently. What can employers do to address these issues? Can they prohibit employees from recording such conversations? One-Party vs. All-Party Recording Consent Laws The answer first depends upon the law in the employer’s state. Some states have “one-party” consent laws and some have “all-party” consent laws. One-party consent means it is lawful for any participant in the conversation to secretly record it. All-party consent means that all parties to the conversation must consent to the recording. Minnesota and Wisconsin are examples of the majority of states that only require one-party consent (Minnesota Statute 626A.02 and Wisconsin Statute 968.31). A minority of states, including California and Illinois, require all-party consent. California actually makes it a crime to record a conversation without all parties’ consent. Federal Labor Regulations May Supersede State Recording Laws Putting recording consent laws aside, employers may consider implementing no-recording policies. However, there are risks: the National Labor Relations Act (NLRA) prohibits employers from taking action against employees who engage in “protected concerted activity” to improve working conditions, or otherwise prohibiting such conduct or retaliating against it. (Read our blog post about protected concerted activity under the NLRA here.) Recent decisions state that employer policies which prohibit all recording of conversations by employees, regardless of their context, violate this law.  One such decision was issued by the National Labor Relations Board (NLRB) against Starbucks in 2023. There, several Starbucks employees were protesting working conditions, contending that management was unlawfully discriminating against other employees. The employees secretly recorded their conversations with management regarding the issue and were subsequently fired. The Starbucks store at issue was in Philadelphia, and it maintained a policy which prohibited employees from secretly recording workplace conversations. Moreover, Pennsylvania is an all-party consent state. Despite those facts, the NLRB held that Starbucks had unlawfully retaliated against the employees for exercising their rights under the NLRA. The employees contended they had secretly recorded the conversations with management out of fear they would be retaliated against, and they wanted to preserve evidence of the conversations to support a claim for such retaliation if and when it occurred. The NLRB agreed that the employees had the right to record the conversations, and held that the NLRA preempts any state law (such as all-party consent laws) which otherwise act to infringe upon employees’ rights under that statute. Ultimately, the NLRB ordered Starbucks to reinstate the employees and pay them full back pay. In light of the potential risks of no-recording policies, as highlighted by the Starbucks decision, employers should think twice before implementing blanket prohibitions against recording workplace conversations. Instead, consider enacting something less than a full prohibition on recording, with exceptions for communications regarding issues such as workplace grievances. A carve-out in the policy for conduct protected under the NLRA should also be included, although there is no guarantee that it will save an otherwise overly broad prohibition on recording.    Please contact one of Larkin Hoffman’s Labor and Employment attorneys for more information and assistance.

New Employment Laws

The “Big Beautiful Bill’s” Overtime Tax Exemption: What Employers And Employees Need to Know

Most of you will recall President Donald Trump’s “Big Beautiful Bill” which Congress passed in the summer of 2025. One of its most noteworthy provisions created significant buzz around its so-called “tax exemption for overtime pay.” As we approach income tax season, employers and employees are looking for clarity on this legislation’s real impact. Here’s what employers and employees should know. What Is Overtime Pay? Overtime pay, generally, is compensation that employees who are covered under overtime law receive when they work more than 40 hours in a week. Under federal law, those extra hours must be paid at 1.5 times the employee’s regular hourly rate. Clarity Around The Overtime Tax Deduction It is important to note that the new bill did not eliminate taxes on overtime. Rather, it provided a federal tax deduction to employees for “Qualified Overtime Compensation” between 2025 and 2028. This means employees may deduct up to $12,500 annually -- or $25,000 if married and filing jointly -- for qualified overtime compensation. What is qualified overtime compensation? It is not the entire amount of pay received for the overtime hours. To the contrary, it is only the additional 50% an employee receives on top of their regular hourly rate as required under federal law. Regular pay during overtime hours and any extra premiums mandated by state laws (such as double time in some states) do not qualify for this federal tax deduction. Employer Responsibilities: Withholding and Payroll Taxes Despite the tax deduction for employees, employers should know that all overtime pay remains subject to withholding and payroll taxes. Employers should continue withholding from overtime pay as usual. It is the employee’s responsibility to determine whether they are entitled to the deduction for their overtime, the amount of the deduction, and to claim that deduction on their tax returns.  Employers, however, should be on the lookout for employees who submit revised W-4 forms to adjust their withholding amounts to address the new overtime deduction. If an employee submits a new W-4, the employer must make the necessary withholding adjustments. Communication About Overtime Tax Changes To prevent confusion, employers should educate themselves around what the so-called tax exemption for overtime really is, and what it is not, and be ready to address employee questions. Employers should consider providing a summary of this information to their employees. However, employers must be careful not to cross the line and provide actual legal or tax advice to their employees, and any summary should make clear it does not constitute actual advice (and neither does this post).  In short, overtime pay remains taxable under the Big Beautiful Bill, but some employees may be able to claim a federal tax deduction for a portion of it. While the IRS is likely to issue further guidance in the near future, if you have any questions, please contact an attorney in Larkin Hoffman’s Employment Law Group.

New Employment Laws

New Employee Break Requirements in Minnesota

Overview of the New Law All employers should be aware of a new law in Minnesota which, effective on January 1, 2026, revises certain breaktime requirements for employees. Currently, Minnesota law generally requires that employees be given one reasonable “rest” break for every four hours of consecutive work, and one meal break for every eight hours. Fifteen minutes is presumed to be “reasonable” for the rest breaks (though less time might be acceptable, depending upon the circumstances), and 30 minutes is presumed reasonable for the meal break.  Rest Break Requirements Starting January 1, the new law clarifies that employers must allow 15- minutes or enough time to use the nearest restroom – whichever is longer – for each rest break during every four consecutive hours worked. Assuming the nearest restroom is accessible within fifteen minutes, this essentially means an employee must be allowed at least one 15-minute paid break for every four hours they work. It is unknown whether the “consecutive” hours worked calculation can be interrupted by something like the meal break and, therefore, how to treat an employee that has not worked four consecutive hours due to a meal break. A fair reading of the statute is that if a meal break is unpaid and not considered “hours worked,” then it interrupts the “consecutive” hours of work and the calculation to determine when the employee must be allowed to take the rest break resets after the meal break. The Minnesota Department of Labor also directs that rest breaks of at least 20 minutes can be unpaid if the employee is “completely relieved of duties” for the break period. Shorter rest breaks must be paid. Meal Break Requirements Employees working six or more hours must be allowed a meal break of at least 30-minutes. This meal break can be be unpaid if employees are completely relieved from their work duties. It is unclear whether employees can choose to waive (work through) the meal break. Since the statute uses the word “allow”, it is possible that employees will not be required to take the meal break if they choose not to. Employers should clearly document if an employee chooses not to take a meal break (to avoid a claim by employees that they were denied the break),and may still require meal breaks and dictate when breaks occur within each six hour work period. Implementation and Best Practices It is likely the Minnesota Department of Labor will issue further guidance before January 1.  Employers should inform management and employees about the new rules. Additionally, it’s best to notify employees of either when they can, or must, take these breaks. For example, an employee scheduled from 6:30 a.m. to 1 p.m. could be notified that their scheduled rest break is from 9-9:15 a.m. and scheduled unpaid meal break is from 11:30 a.m. to 12 p.m. These times could be staggered for different employees working the same “shift” to limit interruption of work as much as possible. Guidance from the Department of Labor’s website confirms: “The employer can set the hours an employee works, including when a meal or rest break can be taken.” Legal Assistance Please contact any member of Larkin Hoffman’s Employment Law Group for assistance with these revised Minnesota breaktime requirements.

Contracts

New NLRB General Counsel Rescinds Key Opinions on Non-Competes and Restrictive Covenants

The law regarding the enforceability of non-competition agreements and other restrictive covenants has been in flux, to say the least, over the last few years.  New laws, such as Minnesota’s ban on non-competition agreements signed by employees on or after July 1, 2023 (but explicitly allowing customer non-solicitation provisions) under Section 181.988 of the Minnesota Statutes, have been enacted.  The similar, nationwide ban on non-competition agreements, promulgated by the Federal Trade Commission, has apparently evaporated.  That trend has now continued at the National Labor Relations Board (NLRB).  NLRB Policy Shifts Under Different Administrations During the years of the Biden administration, the General Counsel (GC) of the NLRB issued several policy memoranda, essentially providing guidance on the enforceability of non-competition agreements and other restrictive covenants with employees under the National Labor Relations Act (NLRA). Although the NLRB GC policy memoranda are not law, they serve as important indicators of the agency’s priorities, contain guidance for use by field staff in efforts to enforce the NLRA, and inform unions, employers and employees about how the GC intends to address controversial issues under the NLRA’s terms. On May 30, 2023, for example, the NLRB GC issued policy memorandum 23-08, asserting that most non-competition agreements with non-management employees are unlawful under the NLRA because such restrictions “chill” employees from engaging in conduct, protected under the NLRA, to engage in concerted activity to improve working conditions.  In essence, the GC asserted that since non-competition agreements effectively prevent employees from seeking new jobs in their fields, those agreements also effectively prevent them from opposing practices at their current employers due to fear they will not be able to secure alternative employment.  Later, in policy memorandum 25-01 issued on October 7, 2024, the NLRB GC further proposed sweeping remedies to address the perceived negative impact of these types of agreements. In addition, in policy memorandum 23-05, the NLRB GC also double-downed on the controversial decision in McLaren Macomb, where the NLRB essentially ruled that confidentiality and non-disparagement clauses in severance agreements with certain employees violate the NLRA unless they are narrowly tailored. It appears all of that has now changed. On February 14, 2025, the new NLRB GC, William Cowen, who recently took office during the second term of President Trump, issued policy memorandum 25-05. This memorandum rescinded several of the pro-employee policy memoranda issued by the GC during the Biden-era, including those addressed above.  It suggests that the new NLRB GC and, potentially, the NLRB itself, has much different policy priorities than those of the former GC.  Impact on State-Level Non-Compete Laws It is not yet clear whether or how the NLRB will act in connection with the new GC’s apparent policy shift but, under the Trump administration, it is likely that more pro-employer members will be appointed to the Board and that the policy shift will play out in future NLRB decisions. This will likely include a shift back toward allowing non-competition, confidentiality and non-disparagement provisions in agreements with non-management employees under the NLRA.  However, it is important to note that policy changes at the NLRB have little to no effect on state laws like Minnesota’s ban on non-competition agreements under Section 181.988 of the Minnesota Statutes. Please reach out to me (Dan Ballintine) or any member of Larkin Hoffman’s Employment Law Group for further information or assistance with related issues.

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.

Collective Bargaining

The Changing Landscape of Union Organizing and Worker Activism

Union organizing is down as compared to previous years, but that does not mean employers should believe that support for labor unions has decreased.  NLRB records indicate that the number of representation petitions filed in 2020 is dramatically down from each of the previous four years.  This reduction in representation petitions can be attributed to the challenges for union organizers to personally meet with employees, as well as the fact that for many employees, their primary focus has been on retaining their jobs, looking for jobs, and keeping food on the table.  Joining a union may not be the highest priority for many employees. We are seeing a lot of signals that union activity will be strong once the vaccine is widely available and employers are able to return to their former production and service levels.  Many employees question whether their employers are implementing adequate safety precautions or providing sufficient personal protective equipment.  Some employees have experienced a layoff, are concerned about a layoff, or feel they should be given more flexibility for leaves of absence due to the illness or vulnerability of their family members.  Employees may believe these problems can be addressed by electing a union to represent them.  We have heard that some employees want their employers to advocate for social activism and be involved in championing organizations seeking to promote racial justice, such as Black Lives Matter.  Again, they think a union will buoy these efforts. What steps can an employer take to prepare for a  possible increase in union activity?  Obviously, positive employee relations and human resources practices will go a long way to persuade employees their employer respects and values their contributions and reduce interest in union representation.  Other suggestions include: When the employer becomes aware of employee concerns, respond to them. Employees who feel ignored may be convinced that they need a third party to represent them. Supervisors should have a positive relationship with their employees. Treat subordinates with respect.  Listen to their problems. Management should be visible and show an interest in their employees. Walk through the workplace and talk to employees.  Welcome employees to come into their offices to talk to them.  Employees need to feel their opinions matter. Train supervisors about what they can say about labor unions and union representation. When a union petition has not been filed, there is far more flexibility in what supervisors can say to employees to educate them that a union will not make the workplace any better and that a union cannot carry out most of its promises.  Many supervisors feel uncomfortable when asked by employees about labor unions because they do not understand what they can legally say to employees. Be aware of the representation process when a petition is filed with the NLRB. There is a short time period between the date the petition is filed, and the election is held, so an employer should be ready to act once made aware a petition has been filed, rather than spending several days learning about the process. Supervisors should have their eyes and ears open so they can detect whether employees are interested in a union. Sometimes the petition is a complete surprise, but often, the supervisors are already aware of employee discontent.  Sometimes this discontent can be addressed so that employees do not feel they need a third party to represent them. Listen to the podcast of Phyllis Karasov, with assistance from her colleague Dan Ballintine, to learn about union organizing going on in the Twin Cities, as well as what to expect with union organizing when the pandemic is over.

Best Practices

The Minnesota Employer’s Guide to Navigating Workplace Issues During COVID-19

When COVID-19 began its pernicious spread, causing Americans to lock down and employers to close or curtail their workplaces, lawyers were busy advising clients on required leaves of absence, the eligibility of laid-off employees for unemployment compensation and other paid benefits, as well as other legal issues associated with closing a business or sending a workforce home. Employees are a company’s most important asset.  Without employees, an employer is unable to manufacture its goods, provide the services it offers, or engage in its normal business activities.  We have seen many clients struggle to balance the business and financial needs of their company with compassion and concern for their employees. As restrictions and shut-down orders are diminishing, many companies are moving from concerns about closing their business to consideration of the best way to operate during the pandemic.  Many employers continue to allow all or a substantial number of employees to continue to work from home, but are seeking advice on how best to ensure employee accountability and efficiency when working remotely.  Other employers are dealing with the challenges of returning employees to the workplace when some do not want to return. The Labor and Employment Law practice group at Larkin Hoffman thought it would be helpful to prepare a resource that employers could use as a starting point for evaluating the legal issues associated with operating a business in the current COVID-19 environment. We have prepared The Minnesota Employer’s Guide to Navigating Workplace Issues During COVID-19 to assist employers grappling with the complex legal and human resources questions that arise.  This guide is an additional resource to the articles, blog posts, webinars and podcasts which can be found in Larkin Hoffman’s COVID-19 Resource Center.  Please understand that this guide is not intended to be definitive legal advice, but rather a resource for employers to review in order to identify potential issues and when to seek legal counsel to assist with the implementation of decisions. Our labor and employment attorneys are available for consultation and advice during the pandemic.  We hope you find The Minnesota Employer’s Guide to Navigating Workplace Issues During COVID-19 to be a helpful resource. View and download a copy here.

Best Practices

Should You Buy Employment Practices Liability Insurance?

Over the past decade or so, more and more employers have purchased employment practices liability insurance (EPLI) through their agents. In general, EPLI provides employers with coverage, usually for both defense costs and damages potentially awarded in cases involving claims of discrimination or harassment by employees, overtime, and other allegedly unfair employment practices. At first glance, EPLI coverage seems to be a no-brainer: the employer pays a premium and gains the peace of mind from knowing that if a lawsuit is commenced, insurance will generally pick up the tab, subject to exhaustion of some type of deductible. But employers should not be too hasty to sign the dotted line on an EPLI policy. Often, such policies allow the insurer to dictate the lawyer who will represent the employer in any litigation. And in most cases, that lawyer will be from a firm which is listed as one of the insurer’s “panel counsel,” a group of firms that have contracted with the insurer to keep their rates down in return for referrals of EPLI cases. That, in and of itself, can create a conflict of interest. Any lawyer an employer hires to defend it should solely look out for the interests of the employer. But with panel counsel, the lawyer often has the competing concern to maintain a solid relationship with the insurer which, after all, is feeding cases to the lawyer. That can create situations where the lawyer is not necessarily doing what is solely in the best interests of the employer. For example, an employer may wish to exonerate itself and take a case to trial. The insurer, of course, may prefer to avoid that expense and push for a quick settlement. This can present a conflict for the lawyer, who was brought into the case by the insurer and almost certainly hopes to continue to get referrals of cases from the insurer in the future. In a real-world example, in the summer of 2019, an employer sued its EPLI insurer and its panel-provided lawyer in the Los Angeles Superior Court for bad faith and legal malpractice. The employer, who had been sued by a former employee on a multitude of claims, alleged the lawyer consistently treated the insurer as the true client, and defended the case in a manner which directed liability to the claims with little or no insurance coverage and away from those for which there was strong EPLI coverage. In other words, the lawsuit alleged the lawyer handled the case with an eye toward benefitting the insurer, as opposed to the employer, who should be the true client. And potential pitfalls with EPLI coverage are not limited to the possible conflicts of interest with panel counsel. Many EPLI policies limit the type of claims they cover. For example, they often exclude contractual claims for wages, or payment of damages for overtime. In situations where an employee has asserted a myriad of claims against an employer, as is often the case, it is typical for only some of the claims to be covered by insurance. In those situations, the EPLI insurer may agree to pay for an employer’s defense, but only to the point where the claims covered by insurance remain in the case. If the insured claims are successfully dismissed, an employer may have to find new counsel at that point to continue to defend the uninsured claims. The employer is also using an insurance selected attorney to represent them in a claim which is not covered and for which they may not have as much interest as they do in a covered claim. Many employers decide to hire their own counsel to represent them in uncovered claims to protect them from a disinterested insurance attorney. In the end, EPLI coverage can certainly be a smart and integral part of employers’ risk mitigation strategies. But do not sign such policies blindly. Consider adding clauses which allow the employer to choose its own lawyer and give the employer sole discretion on when to settle and determine strategy for defending the case, and other such clauses.

Legal Warning to Employers: Don’t be too Quick to “Friend” Your Employees on Facebook!‎

In the face of the ever-evolving world of social media, employers face a myriad of challenging ‎issues relating to their employees’ use of their own, personal sites, such as Facebook and blogs. ‎These issues include how to handle employees who post information about the employer, how to ‎deal with employees who use sites to harass other employees, and how to address employees ‎who use social media to post complaints relating to their employment. Though these, and other ‎issues, have faced employers for several years, the legal system still only offers a somewhat ‎haphazard set of laws which regulate what employers can and cannot do to address employees’ ‎use of social media.‎ Currently, more than a majority of states have laws which address these issues. Minnesota, ‎however, is not one of them. Several states have current legislation pending. And the laws of ‎states which already have such laws in place offer greatly varied protections. Most of these laws ‎serve to protect employees, however, as opposed to the rights of employers. These laws generally ‎prohibit employers from requesting or requiring passwords or user names to their employees’ ‎personal, social media accounts. Others prohibit employers from “friending” employees on social ‎media or requiring employees to divulge posted information. Many of these laws also prohibit ‎employers from retaliating against employees who act to enforce their rights under these social ‎media laws. While current state laws either provide little guidance, or only protection for ‎employees, many of the state laws do allow employers to prevent employees from posting ‎confidential or trade secret information about their business, and to monitor (and prohibit) ‎employees’ use of social media on employer-owned or issued devices, and/or during work hours. ‎ At the federal level, no law currently regulates private employers’ use of, or access to employees’ ‎social media, in any direct manner. The National Labor Relations Act has been interpreted to ‎prevent employers from disciplining employees who engage in “concerted activity” through ‎social media communications about working conditions with other employees, however. But the ‎NLRB seems to be loosening these restrictions, which were largely promulgated in decisions ‎issued during the Obama presidency. And any use of social media to discriminate against ‎employees and applicants in protected classes such as race, gender, religion, etc. would be illegal ‎under Title VII.‎ At the end of the day, it is imperative that all employers have a good working knowledge of the ‎social media laws, if any, in their state. Policies should also be prepared and reviewed, and ‎supervisory staff trained to be able to address these issues. ‎

Supreme Court to Decide Important Issue for Employers Regarding LGBTQ Discrimination

For several years, employers have been uncertain whether discrimination based upon sexual orientation is illegal under federal law.  Although many states, including Minnesota, have enacted laws prohibiting such discrimination by employers located within their jurisdiction, many have not, leaving federal law as the only source for potential protection in such states. In three cases argued on October 8, 2019, the U.S. Supreme Court will decide whether Title VII of the 1964 Civil Rights Act (“Title VII”) prohibits employers from firing or taking other adverse action against employees due to their sexual orientation or gender identity/transgender status.  Two of the cases (Bostock v. Clayton County, Georgiaand Altitude Express, Inc. v. Zarda) involve gay, male plaintiffs who claim they were fired due to their sexual orientation (with one, a child welfare coordinator, being fired after joining a gay softball league and the other, a skydiving instructor, after disclosing his sexual orientation to a client).  The third case (R.G. & G.R. Harris Funeral Homes, Inc. v. EEOC) involves a female, transgender plaintiff who claims she was fired after announcing her transgender status and refusing to wear a suit and tie, which the employer required male employees to wear. In all three cases, the plaintiffs essentially argued that such discrimination is illegal under Title VII because it explicitly prohibits discrimination on the basis of “sex.” Their basic argument is that discrimination on the basis of sexual orientation or gender identity/transgender status is the same as “sex” discrimination because an employer is treating them differently because of their “sex” or gender in such cases.  For example, if an employer fires a man for being gay, he is essentially being fired for dating or having sexual relations with men.  But the same employer does not fire a woman for dating men.  The same issue arises when an employer fires a man for refusing to wear a suit, but does not fire a woman for insisting upon wearing a dress and not a suit.  In both examples, it follows the employer is firing the man due to his sex. The employers, in all three cases, essentially argued that the term “sex” does not include sexual orientation or gender identity/transgender status, and to claim that Congress intended as such when it passed Title VII in 1964 is preposterous. According to the employers, the plain meaning of “sex” is whether a person was born male or female, and nothing else.  Moreover, the employers warned that terrible, unintended consequences will result if such discrimination is prohibited, such as women’s shelters being required to hire men who identify as women to counsel women who have been raped. During oral arguments before the Supreme Court, some of the conservative justices asked questions expressing concerns that Congress, as opposed to the Court, should address these questions through the legislative process. This is especially true since the issues before the Court are whether Congress, through Title VII, prohibited discrimination on these bases: not whether such discrimination is prohibited under the fundamental rights set forth in the U.S. Constitution.[1]  Others expressed concerns for the First Amendment religious rights of employers, whose religion may be opposed to gay marriage, for example.  The more liberal justices seemed to rely upon the argument that the term “sex” in Title VII plainly and unambiguously prohibits any action against an employee which would not have been taken if the employee was a different gender. It is not yet known when the Court will rule in these important cases.  Stay tuned. [1] In 2015 the Supreme Court held that all 50 states must recognize gay marriages under the First Amendment in Obergefell v. Hodges.

Court Delivers Blow to EEOC’s Background Check Guidance

Employers use numerous tools to screen applicants and determine which one may be the best for the job including job applications, interviews, reference checks and criminal background checks. Criminal background checks can be highly useful for employers, and can legitimately weed out applicants who are not suitable for the position. Nevertheless, the Equal Employment Opportunity Commission (“EEOC”) has taken an aggressive stance in limiting their use under discrimination law. A federal court, however, just delivered a serious blow to the EEOC’s stance, which employers across the country can utilize in the defense of enforcement actions. The EEOC Guidance Issued in 2012 In April of 2012, the EEOC issued new enforcement guidance on employers’ use of criminal background information under the federal discrimination laws through which it attempted to clarify when employers may (and may not) consider criminal background information, and how. U.S. Equal Employment Opportunity Commission, Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII (Apr. 25, 2012) (“EEOC Guidance”). As support for the new guidance, the EEOC claimed that studies show certain racial minorities have a higher incidence of criminal records than whites and, therefore, hiring decisions based upon criminal records can end up having a disparate impact upon those minorities (meaning a higher percentage of racial minorities will end up being rejected from such jobs when compared with whites). The EEOC Guidance generally states that employers may only consider criminal records in employment decisions if “job related and consistent with business necessity.” It also sets forth detailed requirements that employers develop a “targeted screen” and make an “individualized assessment” before using criminal background information in hiring decisions which look at the nature and seriousness of the crimes, the nature of the job position in question, and the length of time since the applicant’s conviction or incarceration. Texas Sues and Obtains an Injunction Against the EEOC Guidance The State of Texas, through its attorney general, sued the EEOC in a Texas federal court, contending the EEOC had exceeded its authority in issuing the EEOC Guidance. The district court ultimately agreed and issued a permanent injunction, enjoining the EEOC and the United States government from enforcing the EEOC Guidance against the “State of Texas.” On August 6, 2019, the Fifth Circuit Court of Appeals affirmed this injunction. The Fifth Circuit held that the EEOC had no authority to issue the EEOC Guidance under federal discrimination laws and, in addition that it improperly issued the Guidance without going through the notice and comment period agencies are required to follow under the Administrative Procedures Act before promulgating an enforceable, substantive rule. Conclusions Although the court’s injunction was limited to blocking enforcement of the EEOC Guidance against the State of Texas, other public and private employers across the country can essentially utilize the same arguments made by the state in that case. It remains to be seen what the EEOC will do in light of the injunction, such as whether it will withdraw the EEOC Guidance, revise it or start the process over, or take another approach. As always, you should consult with legal counsel before making any decisions regarding your hiring practices. Please contact any of the attorneys in the Larkin Hoffman Employment Law Group for assistance.

Minneapolis Passes Ordinance Requiring New Employee Notices

On August 8, the Minneapolis City Council passed an ordinance requiring employers to provide new notices to employees effective January 1, 2020. The ordinance will apply not only to employers with brick and mortar locations within the City’s limits, but also employers outside the City with employees who work at least 80 hours each year inside its limits. Many of you are already familiar with the State of Minnesota’s so-called wage theft law, which took effect July 1, 2019, and imposed new employee notification requirements upon Minnesota’s employers. That new law was the subject of a recent article which I posted in Larkin Hoffman’s Employment Law Blog in June of 2019 and is attached here. The new Minneapolis ordinance essentially piggybacks on the State wage theft statute’s notification requirements, and mandates that additional information be provided. The State wage theft statute mandates that employers provide certain information in writing to new employees at the time of hiring, in addition to written notifications when changes are made. What is Different in the Minneapolis Ordinance? Under the new Minneapolis ordinance, employers are required to provide a written notice at the time of hiring, and prior to the commencement of work, which includes the following information (which is new/additional from what is required under the State wage theft law): the date on which employment will start; the employer’s policy regarding tips, and states that tip sharing is voluntary under Minnesota law (if the employee will be in a position to receive tips); the employer’s overtime policy applicable to the employee’s position and the rate of pay that will apply to straight time and overtime; and details about the employee’s rights under the Minneapolis Sick and Safe Ordinance (our previous article regarding the Minneapolis Sick and Safe Ordinance is attached here). The notice regarding the Minneapolis Sick and Safe Ordinance must provide how sick and safe leave is accrued at the employer, the first date when the employee will be entitled to use any accrued time under the ordinance, and the beginning and end dates of the employer’s year for purposes of sick and safe time accrual. Unlike the State’s wage theft notice requirement, the Minneapolis ordinance explicitly allows the notice to simply reference the employer’s handbook or other policies, which contain the required information, as opposed to repeating that information, in full, in the notice. But like the Minnesota wage theft notice, the Minneapolis ordinance requires employees to sign the pre-hire notice in order to acknowledge its receipt (although electronic signatures are acceptable). After the hiring, any changes to the information contained in that pre-hire notice will require an additional written notice to the employee prior to the date the changes take effect (which does not need to be signed). The Minneapolis ordinance also requires that any employee who is employed prior to January 1, 2020 be provided the equivalent of the full, pre-hire notice. The State wage theft law, to the contrary, allows employers to wait to provide the information required in the pre-hire notice to employees who were employed prior to its July 1, 2019 effective date until their terms of employment change. The Minneapolis ordinance requires that the notice be provided to all existing employees, who were hired prior to January 1, 2020, no later than the end of the first full payroll period in 2020 (i.e. employers are not allowed to wait until a change is made in their terms of employment to provide the information required in the pre-hire notice). The new Minneapolis ordinance also requires that earning statements be provided to employees every payroll period which include the amount of accrued sick and safe time available to the employee. Should Employers Start Working to Comply with the Minneapolis Ordinance Now? We recommend that employers hold off on preparations to comply with the Minneapolis ordinance until closer to January 1. A case is currently pending before the Minnesota Supreme Court which could affect the applicability of the Minneapolis Sick and Safe Ordinance to employers physically located outside the City. In addition, the City may issue guidance on the new ordinance in the future which could be of assistance. The Minneapolis ordinance provides an array of penalties that may be imposed on employers who fail to comply. Civil fines up to $2,000, liquidated damages and other remedies are available. Please contact one of our employment lawyers at Larkin Hoffman for any questions or assistance in complying with the new Minneapolis ordinance.

Minnesota Enacts New Wage Theft Laws and Employee Notice Requirements

The Minnesota legislature, at the end of its most recent session, passed sweeping new amendments to statutes which create criminal penalties for the failure to pay wages and impose requirements for employers to document the terms of employment with their employees.  The new amendments have not yet been signed into law by the Governor, but he has publicly indicated he will do so in the near future.  It is currently unclear whether the new requirements will take effect July 1 or August 1, 2019, so it is imperative that employers prepare now. Wage Theft Section 609.52 of the Minnesota Statutes (the criminal statute for theft) was amended to make clear that prison time can be imposed for wage theft.  “Wage theft” is defined as occurring “when an employer with intent to defraud”: fails to pay an employee all wages, salary, gratuities, earnings, or commissions at the employee’s rate or rates of pay or at the rate or rates required by law, including any applicable statute, regulation, rule, ordinance, government resolution or policy, contract or other legal authority, whichever rate of pay is greater; directly or indirectly causes any employee to give a receipt for wages for a greater amount than that actually paid to the employee for services rendered; directly or indirectly demands or receives from any employee any rebate or refund from the wages owed the employee under contract or employment with the employer; or makes or attempts to make it appear in any manner that the wages paid to any employee were greater than the amount actually paid to the employee. The statute defines the “employer” to mean “any individual, partnership, association, corporation, business trust, or any person or group of persons acting directly or indirectly in the interest of an employer in relation to an employee.”  In other words, individual employees of an employer who have control over the payment of wages can be prosecuted for a crime.  Wage theft is now punishable by imprisonment of up to twenty years and a fine of $100,000 for wage theft in excess of $35,000, ten years and a fine of $20,000 for wage theft exceeding $5,000, and five years and a penalty of $10,000 for wage theft exceeding $1,000. Earnings Statement As part of the new legislation, Section 181.032 of the Minnesota Statutes was amended to require that employers provide employees, at the end of each payroll period, an earnings statement which includes the following information (newly added requirements are italicized): the name of the employee; the hourly rate or rates of pay and basis thereof, including whether the employee is paid by hour, shift, day, week, salary, piece, commission or other method; allowances, if any, claimed pursuant to permitted meals and lodging; the total number of hours worked by the employee unless exempt [from minimum wage/overtime]; the total amount of gross pay earned by the employee during the period; a list of the deductions made from the employee’s pay, the net amount of pay after all deductions are made, the date on which the pay period ends, the legal name of the employer and the operating name of the employer if different from the legal name, the physical address of the employer’s main office or principal place of business, and a mailing address if different, and the telephone number of the employer. Information at Commencement of Employment Section 181.032 was also amended to require that employers provide new employees similar information at the commencement of employment.  Specifically, at the “start of employment, an employer shall provide each employee a written notice containing the following information”: the rate or rates of pay and basis thereof, including whether the employee is paid by the hour, shift, day, week, salary, piece, commission or other method, and the specific application of any additional rates; allowances, if any, claimed pursuant to permitted meals and lodging; paid vacation, sick time or other paid time off accruals in terms of use; the employee’s employment status and whether the employee is exempt from minimum wage, overtime, and any other provisions of Chapter 177, and on what basis; a list of deductions that may be made from the employee’s pay; the number of days in the pay period, the regularly scheduled pay date, and the pay day on which the employee will receive the first payment of wages earned; the legal name of the employer and the operating name of the employer if different from the legal name; the physical address of the employer’s main office or principal place of business, and a mailing address if different; and the telephone number of the employer. Employers must also “keep a copy of the [above] notice … signed by each employee acknowledging receipt of the notice.”  They must also “provide the employee any written changes to the information contained in the notice . . . prior to the date the changes take effect.” The notice must be provided to each employee in English, and include text provided by the Commissioner of the Minnesota Department of Labor & Industry that informs employees they may request, the notice be provided in a language other than English.  If requested, employers must provide the notice in the language requested by the employee, but the Commissioner must assist employers with translation of the notice in the languages requested by their employees. List of Personnel Policies Section 177.30 of the Minnesota Statutes was also amended to require that employers maintain a “list of the personnel policies provided the employee, including the date the policies were given to the employee and a brief description of the policies” as well as “a copy of the notice provided to each employee as required by Section 181.032 . . .including any written changes to the notice.”  It is possible that providing a list of the table of contents of an employee handbook may suffice with respect to policies contained within the handbook.  Employers must keep these records “readily available for inspection by the Commissioner upon demand” and “must be kept either at the place where employees are working or kept in a manner that allows the employer to comply with this paragraph within 72 hours.”  Failure to keep the proper records allows the Commissioner, in a wage dispute, to make his or her own determination of any wages that are due “based on available evidence.” A $5,000 fine for “each repeated failure” may be levied.  The new legislation also imposes criminal penalties upon employers who hinder or delay the Commissioner in the performance of his or her duties. To view additional information from the Minnesota Department of Labor and Industry please click here. Contact an attorney in Larkin Hoffman’s Employment Law Group if you have questions regarding these changes in the law or if you need assistance to comply with them.

The Department of Labor Takes Another Swing at Increasing the Mandatory Minimum Salary for Exempt Employees

In the latest move in the proverbial tug of war over possible changes to the overtime laws, the Department of Labor (“DOL”) announced a potential new rule on March 8 that would increase the salary required for the so-called “white collar exemptions” under the Fair Labor Standards Act  from $23,660 to $35,308, with automatic cost of living adjustments thereafter.  In other words, in order for a white-collar employee to be exempt from minimum wage and overtime requirements, he or she will not only have to perform duties which meet one of the applicable duties tests for exemption, but will also have to be paid a minimum salary more than 50% higher than under the old rule. The proposed rule, if adopted, will not take effect until January of 2020.  No changes to the “duties” test requirements are part of the proposed rule. Where We Were Two Years Ago Many of you may recall that the DOL previously announced a rule that would have doubled the minimum salary necessary for exempt status under the white-collar exemptions from $23,660 to $47,476, to take effect in December of 2016. In a lawsuit filed by the attorneys general of several states, a federal judge in the Eastern District of Texas, however, issued a nationwide injunction against that rule and subsequently entered a final judgment, effectively killing it.   The Texas court held the DOL exceeded its authority in attempting to promulgate the new rule. In essence, the court reasoned that such a significant increase in the salary requirement for exempt status would effectively supplant an analysis of the job duties required for the exemptions.  The court explained that because Congress expressed a clear intent in the federal overtime laws to exempt certain categories of jobs from overtime requirements based on the jobs’ primary duties, such a drastic and broad increase in the salary requirement would effectively, and impermissibly, override congressional intent. It is unclear whether a similar challenge will be mounted against the newly proposed DOL rule and, if it is, how a court will rule.  Although the new proposed minimum salary is far less than the one proposed in 2016, the logic the Texas court employed to strike it down seems no less applicable.  It is also possible that Congress will intervene. Regardless, the proposed rule is subject to a notice period of 60 days, during which time employers and others may submit comments before any final rule is announced. Is the Increase in Minimum Salary a Good Idea? It is debatable whether the DOL’s proposed rule is a good idea.  On one side, an argument can be made that a salary of $23,360 is well below the poverty line and should be raised so employees, who often work far in excess of 40 hours per week without overtime, can make a “livable wage.”  On the other side, such an increase, like the increases in minimum wages we are seeing across the country, artificially increases the cost of labor rather than leaving the determination of that cost to market forces.  As any economist will tell you, artificially increasing the cost of labor will have a tendency to reduce the demand.  Employers could reduce their workforces, increase the workloads of their exempt staff, or be able to demand stronger educational and/or experience backgrounds for employees in exempt positions, leaving less qualified candidates in the dust.  Also, an increase in the cost of labor will likely increase the prices of the goods or services employers charge their customers, leading to decreased demand at the consumer level and, in turn, potential employee layoffs.   If history has taught us anything, it’s that employers and their customers will likely make changes in response to the increased costs imposed by such a rule change, and those changes could cut against the very reason the rule was put into effect:  i.e. protection of employees.

The Battle Over LGBT Rights Rages On

Most of you will recall the fight in numerous political elections just a few years ago over the issue of whether same-sex couples have the right to marry.  The Supreme Court put the issue to rest through a decision in 2015, holding that the 14th Amendment of the U.S. Constitution provides the fundamental right and requires all 50 states to recognize same-sex marriages on the same terms as opposite-sex marriages.  While that decision was certainly pivotal and critical to the advancement of LGBT rights, it did not end the battle. The question of whether federal laws such as Title VII of the Civil Rights Act prohibit discrimination on the basis of sexual orientation or gender identity by employers remains unsettled.  Although many states, including Minnesota, have enacted laws prohibiting such discrimination, many have not, leaving federal law as the only existing source for protection in such jurisdictions.  One of the likely reasons why the confirmation hearing for recently appointed Justice Brett Kavanaugh to the Supreme Court was so hotly contested is that several decisions regarding this question are pending review by the court.  With the departure of Justice Anthony Kennedy, who authored many of the court’s pro-LGBT rights decisions, and the additions of conservative Justices Kavanaugh and Neil Gorsuch to the court, the potential for a halt to the advancement of LGBT rights is real. For example, two cases involving gay rights in employment have been presented to the Supreme Court for potential review.  In cases from the Second Circuit Court of Appeals and the 11th Circuit, the plaintiffs are gay and allege their employers discriminated against them on the basis of sexual orientation. In both cases, the plaintiffs argued that such discrimination is illegal under Title VII, which prohibits discrimination on the basis of “sex” but does not include the term “sexual orientation.” Their basic argument, in essence, is that discrimination on the basis of sexual orientation is “sex” discrimination because an employer cannot know if an employee is gay without knowing their sex and that of their partner’s. The 11th Circuit ruled for the plaintiff, holding Title VII prohibits such discrimination. The Second Circuit, however, ruled against the plaintiff on the same question. The losing parties in both cases sought review by the Supreme Court, which has not yet decided whether it will review them. And in a decision from the Sixth Circuit Court of Appeals, the court has been asked to decide whether Title VII similarly prohibits discrimination on the basis of gender identity, such as for employees who are transgender (the Sixth Circuit held it does, despite opposition from the Trump administration). Another pivotal issue for LGBT rights is the question of whether an employer’s religious or other First Amendment rights can somehow override laws prohibiting discrimination on the basis of sexual orientation or gender identity. You will recall the well-publicized case involving a Colorado bakery which was fined for refusing to make a wedding cake for a same-sex couple in violation of Colorado’s law prohibiting places of public accommodation from discriminating on the basis of sexual orientation. The Supreme Court ultimately avoided deciding the question of whether the bakery’s owner, who claimed his religion did not allow him to make or sell the cake, had the religious and free speech rights under the First Amendment to refuse service to the couple. Instead, the court reversed the fine on the narrow basis that the state commission had not employed religious neutrality while investigating and deciding the case. In a pending case out of Oregon, the primary question of First Amendment rights, at issue in the Colorado bakery case, is back again. There, a religious couple who owns a bakery contends the First Amendment gives them the right to discriminate against gay people, whether in connection with sales to customers or the hiring of employees, because homosexuality is against their religion. The Oregon state courts rejected their contention, but the couple has requested review by the Supreme Court. If the Supreme Court recognizes such a right under the First Amendment, employers across the country could utilize that defense in sexual orientation and gender identity discrimination cases under both state and federal anti-discrimination laws. It remains to be seen whether the Supreme Court will review any of these cases and, if it does, how it will rule with the addition of the two recent nominees from President Trump.

When Employees Need a Medical Leave, Complying With The FMLA Alone may be Insufficient

As many know, the Family Medical Leave Act (FMLA) requires employers with 50 or more employees to provide up to 12 weeks of unpaid leave to employees with serious health conditions. That leave is only available to eligible employees, generally those who have been employed for at least a year and worked at least 1,250 hours over the prior year. Many employers believe they do not need to grant any leave if the FMLA does not apply to them. Other employers believe that their obligation to grant a leave ends once the 12 weeks afforded under the FMLA is exhausted. Unfortunately, both of these common beliefs are often incorrect, and can lead to big legal problems. Reasonable Accommodation May Include an Extended Leave Under the federal Americans with Disabilities Act (ADA) and the state Minnesota Human Rights Act (MHRA), an additional leave of absence beyond that required under the FMLA for larger employers may be required as a reasonable accommodation of an employee with a disability. All employers with 15 or more employees must look at leaves of absence as possible reasonable accommodations under the ADA and MHRA. The courts have generally held that in cases where an employee has exhausted their FMLA leave, or where the FMLA does not apply, an employer need not grant an additional leave when it is entirely indefinite as to when and if the employee will be able to return to work and perform their essential functions. The courts have also held that an additional year of leave is generally unreasonable and not required.  But in cases where the employee and his/her doctor have indicated it is likely the employee will be able to return to work after an additional leave of reasonable duration, then the ADA and MHRA can require that the additional leave be granted. What is a “reasonable” duration for the additional leave depends on the circumstances. Engage in an Interactive Process The ADA requires covered employers to engage in an “interactive process,” meaning a dialogue with the employee and, in some cases, with the employee’s doctor, to determine the nature of the need for the extended leave and the prognosis for when the employee will be able to return to work. Recently, Larkin Hoffman attorney Chris Harristhal successfully argued at the Minnesota Court of Appeals that the MHRA does not require employers to engage in this interactive process. That decision, however, is currently under review by the Minnesota Supreme Court. Regardless, all employers covered under the ADA and MHRA should engage in the interactive process with employees to determine the type of leave they are requesting, how it is related to their medical condition, and their expectation for when and how they will be able to return to work. This process should be documented, and undertaken for all employees regardless if they have exhausted their FMLA leave or are otherwise not entitled to it. The decisions regarding medical leaves are very fact specific, and all employers should proceed cautiously with guidance from legal counsel in handling them.