Employment & Labor Blog

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 On May 14, 2026, the U.S. Department of Labor (DOL)’s Wage and Hour Division formally rescinded the Biden administration’s 2024 overtime rule, which would have significantly increased the minimum salary threshold required to classify employees as exempt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

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.

May 27, 2026

Four Months of Minnesota Paid Leave: Frequently Asked Questions

It’s been about four months since the Minnesota Paid Leave Act took effect. We have received many questions from clients since January 1, 2026, some of which are more difficult to answer than others. The Minnesota Department of Employment and Economic Development (DEED) has not published any statistics regarding the number of applications filed for paid leave, the average waiting period for approval or denial, and other similar questions. However, in a March 20 interview, DEED Deputy Commissioner Evan Rowe provided metrics for the paid leave program: As of March 2026: 64,500 applications submitted. 49,834 decisions issued. 33,800 approvals. Two-thirds of applications resolved within 21 days. A team of about 80 adjudicators are reviewing applications. With the significant number of applications being submitted, it’s clear that paid leave is impacting many Minnesota workplaces. Here are a few common questions our employment law attorneys have fielded from employers. Common Questions About Minnesota Paid Leave Question: What are the rules when an employee does not work 100% of the time in Minnesota for a Minnesota employer? Answer: This depends on where the work is physically performed. If an employee works at least 50% of the time from Minnesota, that employee is covered by Minnesota Paid Leave. This includes employees who primarily work from home in Minnesota, even if they spend some time working in other states. If an employee works in one state other than Minnesota more than 50% of the time, the employee is not covered. However, if an employee does not work at least 50% of the time in any single state, but they live in Minnesota, then the employee is covered. Question: We are restructuring a department, and one employee will be laid off. That employee is currently on paid family and medical leave. Can we lay them off during leave or do we have to wait until the leave is complete? Answer: An employee can be terminated while on paid leave if their position has been eliminated, but the employer must prove that the employee would have been laid off due to restructuring or other reasons. If an employee is laid off during paid leave, the employer is not obligated  to continue the leave or maintain group health plan benefits if it can prove that the employee would have been laid off if not on leave (unless there is a collective bargaining agreement that provides otherwise). Question: We currently offer short-term disability insurance, which is a supplemental benefit. How can we know what the employee will be paid as the Paid Leave benefit? Answer: Supplemental benefits are certain benefits that compensate an employee during a paid leave. Examples include short-term disability benefits, paid time off, vacation, and salary continuation. Supplemental benefits can be used to “top off” the paid leave benefit up to the amount of the employee’s regular pay. The employer decides whether to allow supplemental benefits, and if they do, the employee can decide whether to use such benefits. However, an employee cannot be paid more than their regular salary during a paid leave. In some cases, an employee who receives both a supplemental benefit and paid leave may end up being paid more than their regular salary. This is not permitted, and requires the employee to refund the excess to either the employer or the state. However, it is unclear how to determine whether the refund goes to the employer or the state, or how the refund is administered if owed to the employer. In light of the ambiguity of these sections, employers may choose to delay paying the supplemental benefit until a determination has been made, either by the state of Minnesota or the employer’s self-insured plan administrator, about the employee’s Paid Leave benefit amount. This will likely result in a delay of supplemental benefit payments to the employee, but it is the safest route for employers. Question: We offer a short-term disability plan for our employees. Should we continue to offer this plan in light of the Act? Answer: This decision is entirely up to the employer, with the understanding that an employee with a salary continuation plan, such as short-term disability, may be unlikely to receive the full benefit. This is because these benefits can only be paid to “top off” the amount received as a Paid Leave benefit. An exception to this would be a long-term insurance plan with benefits that extend beyond the time period during which the employee is on paid leave. For example, if an employee is being treated for cancer, and will be on leave for more than six months, the employer may want to offer long-term disability benefits to that employee. The employer should work with its insurance broker or disability insurance carrier to determine if there are options for changing the circumstances under which an employee receives these disability benefits. If you have any additional questions about paid leave in Minnesota, please contact our Larkin Hoffman employment law attorneys. 

May 6, 2026

Labor Law

Why All Employers Should Understand Protected Concerted Activity

Recently, a client asked me to draft a policy which prohibits employees from writing or saying negative comments about other employees. The client was concerned about the toxic environment that was developing in the workplace because of social media posts. I explained to my client that the National Labor Relations Act (“NLRA”) prohibits employers from restricting or prohibiting employees from discussing workplace issues. Employers often fail to realize that the NLRA can protect employees even in non-union workplaces. One such scenario involves concerted activity, which refers to situations where employees act together, or on behalf of one another, to improve their wages, hours, or working conditions. These activities are protected, whether a workplace is unionized or not. What is Protected Concerted Activity? Protected concerted activity is broadly thought of as an activity involving two or more employees, or one employee acting on behalf of others, relating to workplace conditions like scheduling, wages and benefits, safety or management practices. Examples may include a group of workers raising concerns about workplace safety, organizing to request schedule changes, or discussing pay or benefits with each other and/or management. It can also include one employee speaking to management on behalf of a group of employees about these types of issues. An employee’s right to engage in concerted protected activity means that the employer may not discharge, discipline, threaten or coercively question an employee on the basis that the employee engaged in the protected activity. Common Policy Risks to Avoid This topic is relevant for all employers because company policies may be problematic even if they unintentionally restrict employees’ rights. Common areas of risk include: Social Media Policies: Broad statements like “employees may not post negative comments about the company or its employees” may unlawfully restrict an employee’s right to discuss workplace issues even outside of work. The language in a social media policy should be drafted so that it could not reasonably be construed to infringe on employees’ rights to protected concerted activity under the NLRA. Confidentiality: While employees may not disseminate trade secret or confidential information, employees generally have a right to discuss wages and working conditions. Workplace Conduct: Policies requiring employees to always be positive or respectful may be problematic if applied to limit legitimate discussions about workplace issues or complaints. Complaint Reporting: Open door policies are generally considered a good practice, but employers should not actively discourage employees from discussing workplace issues with each other before going to management. Recording Policies: Employers should refrain from prohibiting outright all recording of company meetings and conversations. Although it is lawful to prohibit recording of confidential and trade secret information, a complete prohibition of any and all discussions and meetings may infringe on an employee’s right to record protected concerted activity. Recommendations for Employers Company policies should be specifically tailored to define unacceptable workplace behavior while avoiding vague language such as “prohibiting inappropriate discussions” or “making negative statements.” Policies should also be drafted to protect legitimate business interests without restricting employee discussions about workplace conditions. Finally, policies should be consistently enforced in the workplace and regularly reviewed by legal counsel to ensure compliance. Larkin Hoffman’s labor and employment attorneys can assist in creating and administering workplace policies that avoid potential NLRA violations. Contact us to learn more.

March 31, 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

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.

January 29, 2026

New Employment Laws

Employers – Are You Prepared for Minnesota Paid Family and Medical Leave?

Final reminder! As previously reported, Minnesota’s new Paid Family and Medical Leave (“PFML”) law, is effective January 1, 2026 but includes requirements that employers must meet prior to January 1. The PFML law broadly covers nearly every employer, regardless of business size, revenue or number of employees and covers nearly every employee working or residing in Minnesota. Under PFML, employees can take up to 12 weeks of paid Family Leave or 12 weeks of medical leave in a single benefit year. Employees who need both family and medical leave during a benefit year are eligible to take a combined 20 weeks of leave. Paid leave payments are made by the State directly to the employee and the program is funded through premiums that may split between employers and employees. However, employers must pay at least half of the premium. PFML will be administered by the Minnesota Department of Employment and Economic Development and employee rights under the new law will be enforced by the Minnesota Department of Labor and Industry. The PFML law’s effective date is just around the corner and there are several actions employers must take now: December 1, 2025, Deadline: Notify employees in writing about the PFML program before December 1, get acknowledgements of receipt of the notice from employees by December 1, and hang the required PFML poster in the workplace. Appoint a Paid Leave Administrator to keep track of employees’ leave and to coordinate paid leave with other time off and benefits the employer offers and manage PFML communications and documentation. Open a Paid Leave Administrator account at paidleave.mn.gov. Determine how the PFML premium will be split between the employer and employees. Update employee handbook or other internal policies to address PFML and other leaves offered by the employer. Update any forms which employers use for leave requests to include the PFML. Train human resources and other management staff about this new law and communicate with your employees. Larkin Hoffman’s labor and employment attorneys are ready to assist employers in drafting compliant PFML policies, updating employee handbooks to reflect any required legal changes, and helping employers with any other legal tasks to ensure compliance with the PFML law. To learn more about PFML, visit our previous Employment and Labor Law Blog posts linked below: Reminder: Minnesota’s Paid Family Leave Law is Coming Soon Construction Employers Could Face Workforce Management Challenges Under Minnesota’s New Paid Family and Medical Leave Law Employers with questions about the PFML law should contact any of Larkin Hoffman’s labor and employment attorneys.

November 21, 2025

New Employment Laws

No Delay: Minnesota’s New Construction Independent Contractor Rules Move Forward

As many Minnesota construction industry businesses are aware, the Minnesota legislature changed the independent contractor law related to workers in the construction industry, including replacing the former 9-part test for determining a worker’s status with a 14-part test effective March 1, 2025. The law also makes general contractors potentially liable for all misclassifications of workers by subcontractors in violation of the law.  If the individual is not properly classified, the law provides for significant damages, penalties (up to $10,000 for each individual misclassified as an independent contractor) and compensatory damages for each violation. In addition, owners, officers, or agents of a business may be held individually liable if they “knowingly or repeatedly engaged in any of the prohibited activities” set forth in the law. A business may also be ordered to pay “the value of supplemental pay including minimum wage; overtime; shift differentials; vacation pay; sick pay; and other forms of paid time off; health insurance; life and disability insurance; retirement plans; saving plans and any other form of benefit; employer contributions to unemployment insurance; Social Security and Medicare and any costs and expenses incurred by the individual resulting from the business’s failure to classify, represent, or treat the individual as an employee. The Minnesota Department of Labor and Industry and the Minnesota Attorney General have authority to enforce the law and consider the following factors in handing down the discretionary penalties: the willfulness and gravity of the violation, any history of past violations, the number of violations, and any economic benefit gained by the person committing the violation. Certain aspects of the legislative changes were challenged as unconstitutional, with the plaintiffs seeking an injunction against the law’s enforcement. On October 24, 2025, the Eight Circuit Court of Appeals unanimously declined to issue a preliminary injunction against the recent changes to the law relevant to the construction industry. Meaning that businesses in Minnesota must continue to comply with the changes to the independent contractor law.   The court’s decision serves as a reminder to businesses with workers in the construction industry of the importance of ensuring continued compliance with the law to avoid significant penalties. This means evaluating all construction industry independent contractor relationships and the relationships of any subcontractors under the 14-part test to confirm that workers are properly classified. In the construction industry, to be considered an independent contractor, an individual operating as a business entity must establish all of the following requirements are met at the time services are provided or performed: Was established and maintained separately from and independently of the person for whom the services were provided or performed; Owns, rents or leases equipment, tools, vehicles, materials, supplies, office space or other facilities that are used by the business entity to provide building, construction or improvement services; Provides or offers to provide the same or similar building, construction or improvement services for multiple persons or the general public; Is in compliance with all of the following:Holds a federal employer ID number, if required by federal law; Holds a Minnesota tax ID number, if required by Minnesota law; Has received and retained 1099 forms for income received for building, construction or improvement services performed, if required by Minnesota or federal law; Has filed business or self-employment income tax returns including estimated tax filings with the federal IRS and the Minnesota Department of Revenue; and Has completed and provided a W-9 federal income tax form to the person for whom the services were provided, if required by federal law; Is in good standing with the Minnesota Secretary of State, if applicable; Has a Minnesota unemployment insurance account, if required by the Unemployment Compensation law; Has obtained required workers compensation insurance coverage, if required by the Workers Compensation statute; Holds current business licenses, registrations and certifications, if required by applicable statutes; Is operating under a written contract to provide or perform the specific services for the person that:Is signed and dated by both an authorized representative of the business entity and of the person for whom the services are being performed; If fully executed no later than 30 days after the date the work commences; Identifies the specific services to be performed under the contract; Provides for compensation from the person for the services provided under the contract on a commission or per job or competitive bid basis and not on any other basis; and The requirements of item b shall not apply to change orders; Submits invoices and receives payments for completion of the specific services performed under the written proposal, contract or change order in the name of the business entity; The terms of the written proposal, contract or change order provide the business entity control over the means of performing the specific services and the business entity in fact controls the performance of the specific services; Incurs the main expenses and costs relating to providing or performing the specific services under the written proposal, contract or change order; Is responsible for the completion of the specific services to be performed under the written proposal, contract or change order and is responsible for failure to complete the specific services; and May realize additional profit or suffer a loss if costs and expenses to perform the specific services under the written proposal, contract or change order are less than or greater than the compensation provided under the written proposal, contract or change order. For now, the new 14-Factor test is in place for independent contractor classification in the construction industry. A business must meet all 14 of these requirements for the worker to be properly classified as an independent contractor. Construction businesses working with independent contractors need to examine those relationships and make sure each independent contractor meets all of the requirements of the 14-Factor test and continues to meet those requirements at each point where the independent contractor is providing work and services for the business. This can be a complicated analysis and process. Additionally, since subcontractors can be independent contractors and use independent contractors, general contractors need to take necessary steps to confirm the subcontractors meet the 14-part test, including having subcontractors attest that they meet the 14-part test and if they use independent contractors, that those contractors meet the test. Contact any member of Larkin Hoffman’s Labor & Employment Law Group for assistance with Minnesota’s independent contractor requirements.

October 30, 2025

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

General Matters

Balancing Free Speech and Workplace Policy: Strategies for Employers

In today’s digital age, employees are increasingly active on social media, sharing opinions that can sometimes impact their employer’s reputation. For business leaders - whether a restaurant, a retail store or a manufacturer - understanding your rights and responsibilities when employees post controversial content is essential. The Scenario Imagine one of your employees, Jane, an active user of social media, posts several discriminatory comments about a religious group on social media. She recommends against hiring them and labels this religious group as terrorists. It is also clear from Jane’s posts and profile that she is employed by your company. You feel these posts are appalling, and you are concerned about their impact on your company’s brand and customers’ trust.  The situation raises two questions: Does Jane have a right to free speech under the First Amendment?  Can you terminate Jane for her posts?  Understanding the Law The answers to these questions are “No,” and “It depends.” First Amendment In regard to the first question, the First Amendment applies to government agencies and does not apply to the private sector. Private sector employees do not have the same protections as public sector employees. Jane’s conduct is not governed by the First Amendment.    However, the answer to the second question is more complicated.    The National Labor Relations Act (NLRA) The NLRA protects employee communications that concern the workplace. Employees are allowed to vent and complain about their supervisors or their employer, or about work-related issues, whether to each other or on social media.  However, the line between work-related speech and non-work-related speech can be gray.  Case Study: Home Depot and Protected Speech Last year, the NLRB ruled against Home Depot in a case involving its New Brighton, Minnesota store. Shortly after George Floyd’s killing, Antonio Morales began wearing a hand-drawn Black Lives Matter (BLM) marking on his orange Home Depot apron. During this time period, there were several racially related incidents at the store. Morales was told by the Home Depot he could not work unless he removed this marking. He resigned, alleging race discrimination.  Morales filed a charge with the National Labor Relations Board alleging he was terminated because he engaged in protected concerted activity. The NLRB agreed, holding that the BLM insignia was an outgrowth of prior employee complaints about racial discrimination at Home Depot. The BLM marks on the Home Depot apron constituted protected concerted activity. Therefore, the NLRB concluded that Home Depot unlawfully constructively discharged Morales by conditioning his return to work on removing the BLM markings from his apron. Applying the Law to Social Media Posts Why is this case relevant to an employer’s right to discipline Jane because of her social media posts supporting discrimination against a religious group? How do Jane’s discriminatory posts relate to the workplace?  The answer lies in what else is going on at your company and whether this conduct can be considered related to the workplace. Private employers can prohibit speech at work and away from work that is discriminatory, threatens violence or otherwise violates company policies.  However, in most cases, an employer cannot prohibit speech that discusses work-related issues. Questions Employers Should Ask As you consider whether to terminate an employee for social media posts, you should ask yourself several questions: Business Impact: How do the posts affect your business? Are you receiving complaints from customers? As a customer-driven business, you have the right to protect your brand and the product or service you sell. Are the posts disrupting your business? Employee Relations: Are you receiving complaints from other employees about the posts?  Are the posts causing divisiveness in the workplace and adversely affecting morale? Safety: Are the posts threatening or promoting violence? Policy Violations: Do the posts violate any of your company’s policies? Union/Legal Protections: If your employees are represented by a labor union, does the collective bargaining agreement contain any limitations on your right to discipline or terminate an employee, or contain provisions that protect posts on social media? Best Practices for Employers Consult Legal Counsel: You should consult with legal counsel regarding laws or ordinances that prohibit discipline for social posts. Laws vary by state, and some protect employees from discipline for political activity or lawful conduct outside of work. In Minnesota, employers are prohibited from economic reprisals, threats of loss of employment or physical coercion because of the employee’s political activity.  Other states such as California and New York, have laws that prohibit retaliation for lawful conduct that occurs outside of work. Consider Alternatives: Before terminating, consider speaking with your employee about the impact of their posts. Ask if they are willing to remove or clarify them. Sometimes, actions short of termination can resolve the issue and reduce the negative impact of the posts and reassure your customers and your employees. Ensure Consistency: Treat the employee posting as you would any other employee in similar circumstances to avoid claims of discriminatory treatment. Although you may not have experienced these exact circumstances with other employees, the company may have disciplined other employees for conduct that adversely affects morale or impacts the business.   Training and Policy Recommendations There are many actions your company can take to train employees: Explain that the First Amendment does not apply to private workplaces. Talk to employees about the mission of your company and the effect that their social media posts can have on your company’s business, so that they understand that they should carefully consider how their posts can affect your business. Consider adopting a social media policy that prohibits employees from posting threats of violence or harassment or any language that violates company policies. Request employees focus on respect and inclusivity in their posts. It is to be expected that the tensions in our country will spill over into the workplace. Employers should be cautious yet deliberative in addressing social media posts that can affect business, customers or employees. By understanding the law, asking the right questions and fostering a respectful workplace, you can protect your brand without violating the law.

September 24, 2025

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.

August 26, 2025

New Employment Laws

Reminder: Minnesota’s Paid Family Leave Law is Coming Soon

We first reported on Minnesota’s Paid Family Leave Law (PFL) in 2023, in which we described the basics of the law and the eventual effects on employers operating in the state. Although a number of updates and clarifications have been made since 2023, the effective date of January 1, 2026 has not changed. The following is a quick primer on the basics, including some changes since we first reported on the law. A Reminder of the Basics The law broadly covers nearly every employer, regardless of business size, revenue or number of employees. It covers nearly every employee, including full time, part time, temporary and most seasonal workers but contains limited exceptions for self-employed individuals, independent contractors and seasonal employees.  Benefits will be available to eligible employees who are unable to perform their work due to one of the following reasons: A serious health condition of the employee or their family member Safety leave To provide family care Bonding leave Pregnancy or recovery from pregnancy Military family leave “Family member” includes the employee’s spouse or domestic partner, child (including biological, adopted, step, or foster children, or a child raised by the employee even if not legally related), parent or legal guardian, sibling, grandchild, grandparent or spouse’s grandparent, son-in law or daughter-in-law or anyone close to the employee who depends on the employee like family, even if not related by blood. To qualify, an employee must also have earned at least $3,700 (or 5.3% of the state’s average annual wage) during the last twelve months, submit a completed certification form confirming the condition or need for time off and have PFL leave available. Employees can take up to twelve weeks of paid family leave or twelve weeks of medical leave in a single benefit year. Leave can be taken in multiple blocks for added flexibility. Employees who need both family and medical leave during a benefit year are eligible to take a combined twenty weeks of leave. Paid leave payments are made by the state directly to the employee and is funded through premiums that are split between employers and employees. Employees in their current role for at least ninety days who take PFL are entitled to return to the same or an equivalent position when they return to work, and employer benefits are maintained during an employee’s leave. Employers are prohibited from discriminating or retaliating against employees for taking PFL. Updates You Might Have Missed 1. Expanded Eligibility The law allows self-employed individuals to contribute to the PFL fund, making them eligible for the benefits as well. 2. Increased Benefit Amounts The premium rates have been increased to 0.88 percent. The statute permits the rate to be adjusted annually. Employees can receive up to 90% of their weekly wages during their leave, with a cap on the maximum payout. The maximum benefit amount has been increased to $1,372.00 per week. What Should You Be Doing Now? Familiarize yourself with the eligibility requirements. Understand wage replacement rates and weekly benefit calculations to ensure your payroll processing team is prepared. Begin updating employee handbooks, other internal policies, and leave request forms to include PFL. Train your Human Resources staff and communicate with your employees. Considering that employees will be eligible to take PFL beginning on January 1, 2026, now is the perfect time to ensure that all stakeholders understand what is required to comply with the law. Employers with questions about the PFL law should contact Nic Puechner at (952) 896-3297 or npuechner@larkinhoffman.com.

July 23, 2025

Minneapolis Expands Civil Rights Ordinance, Including State’s First Protections for People with Criminal Records

The City of Minneapolis has expanded its Civil Rights Ordinance to include new protected classes, including a first in Minnesota: a protection for people with criminal records. If you are an employer who is located in Minneapolis, has employees performing work in the city (even partially) or contract with the City, here is what you need to know before the new Ordinance goes into effect on August 1, 2025. New Protected Classes Justice-Impacted Status -- This is Minnesota’s first legal protection for individuals with a criminal record. “Justice-impacted status” refers to a person’s criminal record, including arrests, charges, convictions, incarcerations or past or present probation. Under the new Ordinance, any adverse decision by an employer based on justice-impacted status must ensure that such a decision was reasonably based on the relationship of the underlying conduct of the criminal history to the role’s responsibilities. Factors such as the nature and gravity of the offence, whether or not the individual was convicted, the person’s age when the alleged crime was committed, time passed since the conviction, evidence of rehabilitation and any potential risk to property or to the safety or welfare of employees or the general public must be taken into consideration. Additionally under the Ordinance, the employer may not make an adverse employment decision based on an arrest that did not result in a conviction, except that for pending criminal matters. An employer is not prohibited from making an adverse employment decision based on a reasonable consideration of the above described factors. Even with this expanded legal protection, employment standards that comply with state or federal laws or contracts, such as employment standards for law enforcement officers or those who work with children, remain in place. Height and Weight -- Discrimination based on an employee’s height and weight is now prohibited in Minneapolis. This includes discrimination based on a perception that an individual is too tall or short, or too fat or thin, regardless of numerical measurement. However, this provision does not apply when federal, state or local law requires such consideration. For example, an employer may have grounds to discriminate on the basis of height or weight if those factors prohibit the individual from performing the essential functions of the job and there are no reasonable accommodations the employer can make. Housing Status -- Whether the individual has or does not have a fixed regular nighttime residence. Expanded Definitions of Existing Protected Classes Race – Similar to the Minnesota Human Rights Act, race now includes traits associated or perceived to be associated with race, including skin color, certain physical features, hair texture and protective hair styles. “Protective hairstyles” includes hairstyles such as afros, braids, locks and twists. Undue Hardship – An amendment deletes the factors to be considered in determining if undue hardship exists and instead defines undue hardship as “a situation requiring significant difficulty or expense when considered in light of a number of factors, determined on a case-by-case basis and specific to the area of discrimination.” Disability – The amendments expand the definition of disability to include an impairment that is episodic or in remission that would materially limit a major life activity if the condition is active. The definition also now includes pregnancy-related limitations. Pregnancy -- Employers must accommodate pregnancy-related limitations, even if they don't qualify as a disability, unless the employer can demonstrate that the accommodation would impose an undue hardship. An employer must engage in an interactive process with the employee to find accommodations. Familial Status -- While familial status has been a protected class under the Civil Rights Ordinance, it now includes caring for one or more individuals who cannot manage their own physical health or safety. Religion -- The Ordinance states employers must provide religious accommodation unless the employer can demonstrate that it would cause undue hardship. What Employers Need To Do Now Impacted employers should review their employee handbooks, procedures for workplace accommodations and other written procedures or policies to ensure compliance with the new amendments.

July 7, 2025

The Ever-Changing State of the NLRB: Where It Stands Today

Many employers are asking what, if anything, is happening at the National Labor Relations Board (NLRB). The NLRB’s recent instability has left employers struggling to understand what the current status of the Board is and what to expect next. The State of the NLRB Under President Trump In his first week in office, President Donald Trump terminated NLRB General Counsel Jennifer Abruzzo and subsequently appointed long-time NLRB Regional Director William Cowen as Acting General Counsel. In an unprecedented move, Trump then fired NLRB Board Member, Gwynne Wilcox – a democratic appointee – and the Chair of the NLRB. Wilcox challenged her termination. The Supreme Court recently ruled against reinstating her while she continued her challenge, and the parties fully briefed and argued their positions. Notably, in the May 22, 2025 unsigned decision, in a 6-3 ruling the court suggested that the president likely has the constitutional authority to terminate NLRB members. Where Things Stand Today The Board, which remains reduced to two members (one Republican appointee and one Democratic appointee), does not have a quorum (three board members are needed), and cannot adjudicate cases or set new legal precedent. The last time this happened, the Board attempted to continue business as usual. However, in New Process Steel v. NLRB, the Supreme Court held that the Board could not act without a quorum and invalidated all Board decisions issued when it had only two members. Until at least one of the vacant Board positions is filled, the Board cannot act. With that being said, employers should understand that the regional NLRB offices will continue to process unfair labor practice charges and determine whether charges have merit. Where regions find that charges have merit, they will seek settlement and, if the case is not settled, issue a complaint. Furthermore, regions will continue to process representation case petitions for representation, hold administrative hearings, conduct elections and certify election results. However, there will be no appeals to the NLRB from administrative law judge decisions until the NLRB has a quorum. What to Expect from the NLRB Moving Forward I had the opportunity to hear Acting General Counsel Cowen speak recently and took away two main points: (1) Budgetary restrictions – specifically those imposed by the Department of Government Efficiency (DOGE) – have brought most agency action to a halt and (2) the agency will be moving away from the prior General Counsel’s pro-labor initiatives and back toward enforcing long standing Board precedent. One case that will likely receive the NLRB’s focus, either from the General Counsel or the Board once it has a quorum, is the 2022 Thryv, Inc. decision that greatly expanded remedies that could be imposed against employers to include consideration of significant financial costs, such as out-of-pocket medical expenses, missed mortgage payments, credit card debt or other costs that are a direct or foreseeable result of the unfair labor practices by employers. Prior to this decision, the NLRB was generally constrained to awarding employees back pay and reinstatement in situations where they were terminated in violation of the National Labor Relations Act If employers are wondering about the status of an unfair labor practice charge, the likely answer is that Board staff are currently preoccupied with the impacts of the DOGE, budgetary restraints and being understaffed. The normally slow-moving speed of the NLRB is now almost at a standstill. By no means should employers take this as a sign that labor laws and current precedent will not be enforced. Employers should continue to appropriately respond to unfair labor practice charges alleging that they have violated the National Labor Relations Act, or to representation petitions filed by labor organizations. The Larkin Hoffman Labor & Employment practice group continues to monitor the everchanging landscape of the NLRB. Contact Chris Chantry or Phyllis Karasov with your NLRB, union, or other labor law-related questions.

June 5, 2025

New Employment Laws

Construction Employers Could Face Workforce Management Challenges Under Minnesota’s New Paid Family and Medical Leave Law

Starting January 1, 2026, Minnesota’s state-mandated Paid Family & Medical Leave (PFML) program becomes effective, giving most employees access to paid leave for medical or family reasons. While all industries will need to prepare, construction employers could face unique challenges because of the project-based, seasonal nature of their workforce. Minnesota’s new paid leave law states that employees will be eligible for up to 20 weeks of paid leave for their own serious health condition, bonding with a new child or caring for a family member with a serious medical condition. The new law has the potential to greatly impact seasonal employers, such as construction companies, by affording workers numerous employment protections, including the right to reinstatement after taking PFML leave.  Guaranteed Return to Work According to the new PFML law, employees who take leave must be returned to the same job or an equivalent position when their leave ends. Meaning they are entitled to similar pay, benefits, duties and work conditions. If an employee filled the role temporarily, the original employee has a legal right to come back. Employees on PFML leave are also entitled to any nondiscretionary pay increases they would have received if they had been continuously employed, such as cost-of-living adjustments or across-the-board raises. The law does not however, “prohibit an employer from accommodating an employee's request to be restored to a different shift, schedule or position which better suits the employee's personal needs on return from leave, or to offer a promotion to a better position.” Under Minnesota’s PFML law, reinstatement includes resuming group insurance coverage without requiring a new waiting period, restoring participation in retirement and pension plans without loss of service credit or vesting status, and reinstating sick leave, vacation accruals and other benefits as if the employee had not been on leave. All covered employees who have earned at least 5.3% of the statewide average annual wage in the past year (currently $3700) are eligible for paid leave. However, the job protections for employees begin after 90 calendar days from the date of hire. Limitations on Reinstatement While employees generally have a right to reinstatement after taking PFML, there are some limitations that may be particularly relevant when working on construction sites: No Greater Rights Than if Continuously Employed Employees on leave are treated as if they had been continuously working. If they would have been laid off or their position eliminated during the leave, the employer is not required to reinstate them. Layoffs During Leave If an employee is legitimately laid off while on leave due to a project ending or a workforce reduction, the employer’s obligations to continue health benefits and guarantee reinstatement also end at the time of the layoff. However, the employer must be able to prove the layoff would have happened regardless of the leave. Shift Eliminations or Reduced Overtime If shifts are eliminated or overtime hours are cut during the leave, employees are not entitled to return to those specific shifts or overtime. Fixed-Term or Project-Based Employment If an employee was hired for a specific time period or project and that term or project ends during their leave, the employer is not required to continue benefits or reinstate the employee once the work is complete. Special Rule for Construction Employers The return-to-work clause can be waived for employees in the construction industry covered by a collective bargaining agreement (CBA) with a construction trade union that maintains a hiring hall. However, the waiver must be specifically drafted to comply with the law which requires, among other things, that the waiver is set forth in clear and unambiguous terms. Start Preparing Now Although January 1, 2026 seems far away, there are several things a construction contractor can begin to consider or plan to implement as we get closer to the effective date of the paid leave statute. Construction contractors should start reviewing their employment policies, onboarding procedures and union agreements. If a contractor is negotiating a collective bargaining agreement, the contractor may want to negotiate a waiver. Supervisors, foremen and project managers need training on how to manage PFML leave requests without violating employee rights. Employers should review existing leave policies and make necessary changes so that FMLA, pregnancy and parenting leave and PFML align. Employers should consider whether they want to request an exemption from the PFML law with a private plan that covers family leave and/or medical leave. Employers should keep an eye out for the notices which DEED will require employers to post. Planning ahead could save costly headaches or legal challenges. This blog focuses only on the employee reinstatement provisions of Minnesota’s Paid Family and Medical Leave law. There are many other components of the law that employers must consider. If you have questions or need guidance, please contact Phyllis Karasov at pkarasov@larkinhoffman.com. 

May 9, 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

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.

March 25, 2025

New Employment Laws

Potential Implications of Using Artificial Intelligence to Drive Employment Practices

It is no secret that the use of artificial intelligence, or “AI,” is increasing every day in every sector of life. Thus, it should come as no surprise that employers are turning to AI to assist with a wide range of employment practices, including hiring and recruitment, measuring employee performance metrics and enhancing workplace efficiencies. However, employers utilizing AI in their employment practices must ensure that they are doing so without violating any state laws. A Patchwork Approach to AI Regulation in Employment We see the beginnings of a patchwork-style approach to regulating the use of AI in employment law practices, with several states introducing or enacting laws that impose restrictions and requirements on AI-driven employment practices. New York’s governor Kathy Hochul recently announced a proposal that the state’s Worker Adjustment and Retraining Notification (WARN) Act be expanded to require businesses with 50+ employees to report AI-driven layoffs, which would make New York the first state to impose transparency on employers who utilize AI to replace jobs typically performed by humans. Illinois recently amended its Human Rights Act in two notable ways with respect to the use of AI. First, an employer commits a civil rights violation under the Act if it uses AI that has the effect of subjecting employees to unlawful discrimination or uses zip codes as a proxy for protected classes. Second, an employer commits a civil rights violation if it fails to notify employees of the use of AI in making employment decisions. The new law is relatively broad and applies to all employers employing one or more employees in the state. This law is currently scheduled to take effect January 1, 2026. Colorado’s law is aimed at preventing “algorithmic discrimination” when “high-risk” AI systems are used to make, or are a “substantial factor” in making, “consequential decisions” when utilized. Thus, an employer’s use of AI tools that play a “substantial factor” in employment decisions in hiring, retention, or promotion may likely be considered “high-risk” AI systems subject to the law. The law is currently scheduled to take effect February 1, 2026. California’s Attorney General has issued legal advisories reinforcing that AI is already subject to existing laws and that an employer’s use of AI to drive employment decisions are not exempt from anti-discrimination and privacy laws. Minnesota's Emerging AI Regulations Although no such law has been enacted in Minnesota yet, it may be coming. On February 11, 2025, the Minnesota Senate’s Committee on Labor convened to discuss the need for regulatory measures to protect workers from potential risks of AI in the workplace. This means that Minnesota has now joined over thirty states that have formed some version of an AI taskforce to issue recommendations that will inevitably inform additional legislation. Employer Considerations Amidst Changing AI Regulations Due to this rapidly changing legal landscape, employers already utilizing AI in employment practices should review the use of such technologies to ensure they are not creating additional risks. In addition, employers should also evaluate their contracts with AI developers to ensure the product they receive will not violate state anti-discrimination laws, as the new AI laws generally do not enable employers to escape liability merely because they did not develop the AI product being utilized in the workplace. Need Assistance? If you have any questions or would like help finding additional resources, please reach out to me at npuechner@larkinhoffman.com.

February 26, 2025

New Employment Laws

Preparing for Workplace ICE Raids

We have received numerous inquiries from clients with concerns about President Trump’s declaration that the U.S. Immigration and Customs Enforcement (ICE) will be aggressively investigating workplaces where undocumented workers are employed. Employees are asking for reassurances from their employers about safety, and clients are asking what they can do to prepare for an ICE raid. Understanding the Purpose and Triggers of an ICE Raid The purpose of an ICE raid is to locate and detain undocumented workers. Typically, an ICE raid would follow either a complaint or a reasonable suspicion that the employer is employing undocumented workers. Often this suspicion is based on a previous ICE audit of the employer’s completion of Form I-9s. As a result of the audit, ICE suspects that the employer’s noncompliance with Form I-9s means the employer may employ undocumented workers. ICE Agents Need Search Warrant to Enter Private Spaces ICE agents are allowed to enter public spaces without a search warrant. They are only allowed to enter non-public areas with a search warrant. If a search warrant is presented to the employer, the employer must allow the ICE agent(s) to enter the areas designated in the search warrant. The search warrant may also designate certain documents which are to be seized. These documents can be personnel files and Form I-9s, but they could also include payroll records. Steps to Follow if an ICE Raid Should Occur Monitor ICE Agents An employee should accompany the ICE agents as they walk through the worksite.   Verify Warrant Scope If an agent requests documents which are not listed in the search warrant, the employee should respectfully inform the agent that they are not entitled to review that document.    Limit Access If an agent seeks to enter nonpublic areas without a search warrant, or areas not listed in the search warrant, the employee should politely resist this effort.    Avoid Interference At no time should the employee block or physically interfere with an ICE agent.   Document Everything Careful notes should be taken of the specific areas which the agent visits, and what was taken.   Limit Communication Employees are not required to answer questions: they can either refuse to answer or ask agents to direct questions to the designated employer representative. Steps to Prepare for a Possible ICE Raid ICE usually does not give advance notice of ICE raids so they are almost always a surprise.  Train Your Staff Determine which employee will be the first to interact with ICE agents who visit the facility. This could be the receptionist. Train that individual as to which employer representatives must be contacted, how to respond when an ICE agent first enters the worksite and which employer representative will accompany the ICE agent(s).   Audit and Update Employee Records Conduct an audit of personnel files of all current employees and employees employed in the past three years. If a Form I-9 is missing for a current employee, contact that employee and complete the Form I-9. If an employee’s visa has expired, contact the employee and request a visa renewal. The Form I-9 should be updated with this new information. By proactively remedying any lapses in the completion of Form I-9s the employer is reducing the likelihood that ICE will have reason to visit the site.   Verify Employee Documentation Learn how to authenticate the documents an employee furnishes in connection with the Form I-9.  The US Citizenship and Immigration Services (USCIS) has published a handbook for employers that provides guidance on the proper way to complete Form I-9s, what types of documents are acceptable and other issues regarding completion of the Form I-9s. Find the handbook here: https://www.uscis.gov/i-9-central/form-i-9-resources/handbook-for-employers-m-274   Review E-Verify Compliance If you use E-Verify, review previous E-Verify submissions, and if a submission is missing, submit that employee to E-Verify.   Advise Employees to Bring ID to Work Employers should consider recommending to all employees that they bring identification to work, including visas and even passports, when applicable. There have been stories about ICE agents detaining employees who are U.S. citizens, possibly because of their race or national origin. Many employees are looking to their employer to support and protect them. However, employers cannot give legal advice to employees about immigration status. If the employer wishes to provide assistance to employees who are concerned about being swept up in a raid, the employer, can provide brochures and pamphlets regarding immigrant rights that can be obtained from local or federal immigrant support organizations. We expect an increased number of ICE audits and raids. Employers can avoid problems if and when ICE shows up if they designate and educate employees how to greet and deal with an ICE agent. Employers can also go a long way by proactively reviewing their personnel files to confirm compliance or remedy any noncompliance in the completion of Form I-9s. If you have any questions or would like help finding additional resources, please reach out to me at pkarasov@larkinhoffman. 

January 29, 2025

New Employment Laws

Are Your Company’s “Stay or Pay” Agreements Legal?

Many employers use “stay or pay” agreements to seek reimbursement of certain costs advanced on behalf of the employee if the employee leaves their employment within a specified time period. Signing bonuses, training payments, relocation stipends and other cash payments are provided to employees on the condition that the employee repay all, or a portion, of these payments in the event the employee leaves the company’s employ within a set time. On October 7, 2024, Jennifer Abruzzo, General Counsel of the National Labor Relations Board (NLRB), issued a Memorandum to all regional directors, discussing “stay or pay” agreements, including Training Repayment Agreement Provisions (TRAPs). Ms. Abruzzo discussed her view that “stay or pay” provisions can interfere with, restrain or coerce employees in the exercise of the rights guaranteed in Section 7 of the National Labor Relations Act (the “Act”). She argued that employees subject to a “stay or pay” provision are discouraged from engaging in protected activity to change their working conditions in their current job, whether by organizing a union, collectively advocating for such changes, or concertedly threatening to quit if the changes are not forthcoming. Ms. Abruzzo argued that like non-compete agreements, “stay-or-pay” provisions restrict employee mobility, making resigning from employment financially difficult, and increase an employee’s fear of termination for engaging in conduct protected by the Act. Ms. Abruzzo will urge the NLRB to agree that any “stay or pay” provision under which an employee must pay their employer if they separate from employment, whether voluntarily or involuntarily, within a specified time period, is presumptively unlawful. She outlined criteria that employers must meet to rebut that presumption by proving that the “stay or pay” provision advances a legitimate business interest and is narrowly tailored to minimize any infringement of Section 7 rights. Criteria for Rebutting the Presumption To rebut the presumption, the employer must demonstrate that the provision: Voluntarily Entered Into in Exchange for a Benefit To minimize infringement on employee rights, the “stay or pay” provision must be fully voluntary. Employees should be given the option to accept the payment on the condition that it may be repaid within a specified time period or decline that benefit. If the employee declines the benefit because they do not want the risk of having to repay the employer, they cannot suffer any financial loss or adverse employment consequences. Employees must have the right to freely choose whether they want to enter into these agreements or provisions. So, for example, in a TRAP, the training repayment agreement will satisfy this criteria as long as the training is optional. The employee’s job cannot be conditioned on accepting that training. Any mandatory training, such as orientation sessions, on-the-job training or other specific instruction that the employer requires an employee to attend, will not satisfy this criteria. A Reasonable and Specific Repayment Amount In order for the repayment provision to be lawful, the repayment amount must be reasonable and specified. That means the repayment amount cannot exceed the cost to the employer of the benefit that was given to the employee. If the repayment amount is greater than the cost to the employer, the true purpose of this provision is not for recovery of an expense but rather, it is a coercive restriction on the employee’s ability to change jobs.  To satisfy the specificity requirement, the amount must be disclosed before the employee accepts the benefit subject to the “stay or pay” provision. A Reasonable “Stay Period” Whether a stay period is reasonable is going to be determined on a fact-specific basis. The factors to be considered include” the cost of the benefit given to the employee, its value to the employee, whether the repayment amount decreases over the course of the stay period, and the employee’s income.” If the cost of the benefit is significant, the stay period may be longer whereas lower cost benefits should be associated with shorter stay periods. In other words, the stay period should not be “unduly long and should be proportional to the benefit given to the employee.” No Repayment Required if Terminated Without Cause The “stay or pay” provision must state that the debt will not come due if the employee is terminated without cause. Ms. Abruzzo believes that a “stay or pay” provision that permits the employer to recoup a debt if it terminates the employee for any reason whatsoever is unlawfully coercive. Termination for any reason would include a retaliatory discharge because an employee engaged in protected activity.  She pointed out that by law, termination for engaging in activity protected by the Act is termination without cause and should not require repayment.  Remedies Ms. Abruzzo outlined potential remedies for an allegedly unlawful “stay or pay” provision. She described a series of scenarios in which the basis for finding the “stay or pay” provision to be unlawful will affect the remedy. For example, if the “stay or pay” arrangement was voluntarily entered into but the provision is illegal because it is not otherwise narrowly tailored in one or more ways, the employer would be ordered only to rescind and replace the provision with a lawful one. In those circumstances when an employer has attempted to enforce an unlawful “stay or pay” agreement, the employer would be required to retract the enforcement action and make employees whole for any financial harms resulting from its attempted enforcement. Ms. Abruzzo announced that she will grant employers a 60-day window from the date of issuance of the Memorandum to cure any preexisting “stay or pay” provisions that advance a legitimate business interest if the employer makes the necessary modifications in the provision to meet the criteria set forth by General Counsel Abruzzo. For example, the “stay or pay” provision should be modified to reduce the “stay or pay” period to a reasonable length, or language added to provide that the “stay or pay” provision does not cover no cause terminations. During this 60-day period, the employer must inform all employees who are subject to a “stay or pay” provision about these modifications. Ms. Abruzzo stated that she would not pursue a complaint against a preexisting arrangement if the employer makes the appropriate modifications to the “stay or pay” provision during the 60-day window and notifies employees of these modifications.  In addition, if, as a result of an unlawful “stay or pay” agreement, any employee was forced to repay an employer, or the employer commenced enforcement proceedings to collect the repayment, during this window, the employer must take the necessary steps to return any repayments collected from employees and make the employees whole.   Conclusion It should be noted that this Memorandum signals to the public what arguments General Counsel Abruzzo  will make to the NLRB once she finds a case where in her view, a “stay or pay” provision chills employees’ right to engage in protected activity.  The NLRB may not agree with her theory.  However, based on recent NLRB decisions which have largely upheld and approved of GC Abruzzo’s views and theories in other matters, it can be expected that the 5-person Board will adopt the position she describes in her October 7 Memorandum. Employers that use “stay or pay” provisions should seek guidance from legal counsel.  If you have any questions about the potential implications of the Memo or any other regulation on noncompete agreements, please contact Phyllis Karasov at pkarasov@larkinhoffman.com

October 21, 2024

New Employment Laws

The Changing Landscape of Independent Contractor Status in Minnesota

In Minnesota, as in other states and with the federal government, employers who wrongly classify workers as independent contractors are subject to significant penalties, interest, and taxes. The 2024 legislature enacted a number of changes to the various statutes that discuss the classification of workers as independent contractors. All Industries (Except Construction) Outside of the construction industry, the Minnesota Department of Labor and Industry evaluates worker classification using the state’s tests outlined by the Workers Compensation statute and the Unemployment Compensation statute. Additionally, certain industries have differing tests integrated into the evaluation process.  The changes enacted by the 2024 legislature clarify that an employer can be found liable if they: Fail to classify or treat an individual who is an employee as an employee in accordance with the requirements of any applicable local, state, or federal law. Fail to report or disclose to any person or to any local, state, or federal government agency an individual who is the person’s employee when required to do so under any applicable local, state, or federal law. Require or request an individual who is the person’s employee to enter into an agreement that misclassifies or treats the individual as an independent contractor. These new laws increase the penalties for each violation. An employer can now face a penalty of up to $10,000 for each violation. Additional penalties will be imposed for employers that, in addition to misclassifying a worker as an independent contractor, fail to report the individual as an employee to a state agency. Importantly, individual officers, partners, principals, and owners can be held personally liable for knowingly or repeatedly engaging in these violations. In addition, employers may be required to pay compensatory damages to each affected worker. Compensatory damages may include insurance, vacation pay, savings plans, and other employment benefits. Construction Industry Effective March 1, 2025, the nine-factor test which was previously in place for workers in the construction industry will be replaced with a new 14-factor test. In the construction industry, an individual is an independent contractor and not an employee of the “person” (which may be a sole proprietor, limited liability company, corporation, or other legal entity) for whom the individual is providing or performing services only if, at the time the services were provided or performed, the individual is operating as a business entity that: Was established and maintained separately from and independently of the person for whom the services were provided or performed; Owns, rents or leases equipment, tools, vehicles, materials, supplies, office space or other facilities that are used by the business entity to provide building, construction or improvement services; Provides or offers to provide the same or similar building, construction or improvement services for multiple persons or the general public; Is in compliance with all of the following:Holds a federal employer ID number, if required by federal law; Holds a Minnesota tax ID number, if required by Minnesota law; Has received and retained 1099 forms for income received for building, construction or improvement services performed, if required by Minnesota or federal law; Has filed business or self-employment income tax returns including estimated tax filings with the federal IRS and the Minnesota Department of Revenue; and Has completed and provided a W-9 federal income tax form to the person for whom the services were provided, if required by federal law; Is in good standing with the Minnesota Secretary of State, if applicable; Has a Minnesota unemployment insurance account, if required by the Unemployment Compensation law; Has obtained required workers compensation insurance coverage, if required by the Workers Compensation statute; Holds current business licenses, registrations and certifications, if required by applicable statutes; Is operating under a written contract to provide or perform the specific services for the person that:Is signed and dated by both an authorized representative of the business entity and of the person for whom the services are being performed; If fully executed no later than 30 days after the date the work commences; Identifies the specific services to be performed under the contract; Provides for compensation from the person for the services provided under the contract on a commission or per job or competitive bid basis and not on any other basis; and The requirements of item b shall not apply to change orders; Submits invoices and receives payments for completion of the specific services performed under the written proposal, contract or change order in the name of the business entity; The terms of the written proposal, contract or change order provide the business entity control over the means of performing the specific services and the business entity in fact controls the performance of the specific services; Incurs the main expenses and costs relating to providing or performing the specific services under the written proposal, contract or change order; Is responsible for the completion of the specific services to be performed under the written proposal, contract or change order and is responsible for failure to complete the specific services; and May realize additional profit or suffer a loss if costs and expenses to perform the specific services under the written proposal, contract or change order are less than or greater than the compensation provided under the written proposal, contract or change order. The individual’s business must meet all 14 of these requirements for the worker to be properly classifiable as an independent contractor. The statute provides for significant damages, penalties (up to $10,000 for each individual misclassified as an independent contractor) and compensatory damages for each violation. The new law makes general contractors potentially liable for a subcontractor’s misclassification of workers. A general contractor can be found liable for all misclassifications made by a subcontractor. And finally, the Department of Labor will have increased enforcement powers, including the ability to stop a construction project. Having this authority means that the Department of Labor can order a business to cease operating at a workplace until the Commissioner finds that the employer has made all required payments and is now in compliance with applicable law. What Does this Mean? Companies face significantly higher penalties for misclassifying a worker. All employers using independent contractors should review their relationships to confirm its workers are properly classified. Additionally, although construction employers have until March 1, 2025, before the new 14-factor test becomes effective, construction companies should do the same review of their independent contractor relationships. If a worker or a company does not meet all 14 factors, they will be deemed an employee.

July 3, 2024

New Employment Laws

Out With the New and In With the Newer? Eight Things Employers Need To Know About Minnesota’s Amendments to Earned Sick and Safe Time

Minnesota wasted no time before revisiting its Earned Sick and Safe Time law which originally took effect January 1, 2024. In late May, Governor Walz signed into law the legislature’s amendments to the state’s earned sick and safe (ESST) requirements. While many of the changes appear to be intended to resolve practical ambiguity uncovered over the course of the past few months, others present more material changes to the state’s policy. All but one of the changes are effective immediately and will force employers to quickly revisit their policies to ensure continued compliance. Here are the eight key changes employers need to know about: Employer’s Recordkeeping Responsibility Employers must provide each employee with both: (1) the employee’s current amount of earned ESST hours available; and (2) the total number of ESST hours used during a given pay period. However, the manner in which employers maintain and provide these records was granted more flexibility. Rather than mandating that employers provide this information on an employee’s earnings statement, employers are now permitted to select a “reasonable system” for providing its employees with this information, such as on an employee’s earning statement, a listing of the amount of ESST/PTO used and available, or through an online payroll platform accessible to the employees on an employer-owned computer during work hours. These records must be kept for three years and must be kept in a manner accessible upon 72-hour notice. Changes to ESST Usage Increments Initially, the law had required ESST be used “in the smallest increment of time tracked by the employer’s payroll system” so long as that increment is not more than four hours. Given that many employers track hours by one minute-increments, this approach was rather impractical. The amendment clarifies that an employer is not required to provide leave in increments smaller than 15-minutes. The law now requires employers to permit employees to use ESST in the same increment for which the employee is paid unless that increment is more than 4 hours or less than 15 minutes. If an employee is paid in increments greater than 4 hours, ESST usage must be permitted in at least 4-hour increments.  If an employee is paid in increments smaller than 15 minutes, an employer can mandate ESST usage be taken in 15-minute increments. Expanded Use: Bereavement Minnesota opted to expand the number of permitted uses of ESST. Employees are now allowed to use ESST to arrange or attend a family member’s funeral or memorial. Similarly, employees are permitted to use ESST to address financial or legal matters resulting from the death of a family member. More Generous Policies Employers that provide more generous paid leave policies that are used to satisfy its ESST obligations will soon be required to comply with ESST requirements for all paid leave. Unlike the amendments above, this change does not take effect immediately; instead, this change is takes effect on January 1, 2025. As of next year, if an employer’s more generous PTO policy is used to satisfy its ESST obligations, all hours of paid leave will be subject to the employer’s recordkeeping responsibilities, limitations on the employer’s ability to demand documentation in support of an employee’s use of leave, usage increment requirements, and any other rules that the Minnesota Department of Labor and Industry may implement. Payout Rate Employees must now receive paid leave at the same “base rate” as the employee earns from employment. “Base rate” means, for employees paid on an hourly basis, the same rate received per hour of work. This application of a base rate applies differently to those on different pay arrangements: Employees with multiple hourly rates must receive paid leave at the rate which would have been paid for the time during which leave was taken. Salaried employees must receive the same rate the employee would have been paid if the employee had not taken leave. Previously unaddressed by the statute, employees paid solely on commission, piecework, or any other basis aside from salary or hourly, must receive no less than the greater of the applicable local, federal, or state minimum wage. Thus, an employee’s commissions, overtime, bonuses, gratuity, and premium rates for certain days of the week or holidays are excluded from the calculation of the employee’s “base rate.” Supportive Documentation Requirements In the event documentation cannot be obtained by the employee without expense or within a reasonable time to support an employee’s use of ESST for absences related to domestic abuse, sexual assault, or stalking of the employee or the employee’s family, “reasonable documentation” may be submitted to justify the employee’s use of ESST. “Reasonable documentation” may include a written statement by the employee. Definition of Employee Originally, an employee was defined as a person who performs at least 80 hours of work in a particular year for Minnesota employer. Now, an employee is defined as a person who is anticipated to perform at least 80 hours of work in the given year. The key distinction here is that employees no longer need to actually perform 80 hours of work before becoming eligible for ESST. Employer Liability and Penalties Minnesota decided to be less forgiving of employer noncompliance and impose double damage penalties. Employers that fail to provide or permit the use of ESST may now be held civilly liable to employees for twice the amount the paid leave that should have been provided. Likewise, Employers that fail to “possess sufficient records to determine the amount of [ESST] an employee should have been provided” will be subject to liability for twice the amount “equal to 48 hours of [ESST] for each year [ESST] was not provided.” Recommendations Despite the legislature’s attempt to bring clarity to Minnesota’s ESST laws, many of the provisions remain ambiguous. Now that the Minnesota Department of Labor and Industry has been given authority to implement ESST regulations, it is possible that regulations designed to resolve remaining ambiguity are forthcoming. For now, it may be necessary for employers make immediate changes to company policy to ensure continued compliance, and to avoid steep penalties, following these amendments. Specifically, employers should: Consult their payroll providers to ensure that accurate ESST records are maintained and are accessible to employees. Consider eliminating separate bereavement leave policies now that such use is eligible for ESST. If a more generous PTO, vacation or other paid time off policy is offered in addition to ESST, such additional PTO/vacation policy must comply with the notice, documentation and other provisions of ESST.  Employers who do not want to incorporate all of the ESST requirements into their PTO/vacation policy, consider implementing separate PTO/vacation and ESST policies to avoid having to treat an employee’s entire PTO balance as ESST. To preserve the separation between PTO and ESST policies, the PTO/vacation policy must expressly exclude use for personal illness or injury. It is important for employers to stay on alert for potential regulations on this topic now that the Department of Labor and Industry has been given rulemaking authority. 

June 25, 2024

New Employment Laws

Intellectual Property and the Proposed Ban On Non-competes

Considerable drama has played out in recent weeks related to the Federal Trade Commission’s (FTC) proposed ban on non-competes.  The agency announced its proposed ban on April 23, 2024, prompting several articles, comments, and the prompt filing of two lawsuits challenging the proposal.  It has also been noted that non-competes are currently banned in Minnesota, California, North Dakota, and Oklahoma, with several other states considering non-compete bans in some form.  While it is difficult to predict exactly what will happen with the federal ban proposed by the FTC, it is clear that these types of restrictions (i.e., non-competes in general) are becoming less popular and perceived as being considerably undesirable.  My colleagues, Phyllis Karasov and Tyler Hartney recently outlined the status of the FTC's non-compete ban, and related court actions that have occurred.  While the FTC’s proposal is being challenged and not likely to take effect for some time, all of the recent discussion and press related to non-competes highlights the fact that intellectual property protections will continue to provide meaningful business advantages for many types of organizations.  As is well recognized by many businesspeople, the use of trademarks and service marks to protect a corporate identity, the use of patents to protect inventions and ideas, and the careful management of trade secrets can ensure that companies’ intangible assets are protected and retain value. The FTC has estimated that a ban on non-competes will result in 17,000-29,000 more patent filings each year, a 2.7% increase in startups, and higher earnings for typical workers.  This suggest that the FTC clearly appreciates that a thoughtful strategy of utilizing patents and other intellectual property tools to protect valuable corporate assets remains a valid, effective and an important tool for businesses.  In addition to patent filing, this strategy will likely include the enhanced management of trade secrets.  In addition to the better known copyright, patent and trademark filings, trade secrets can take on many forms and have the potential to create even further business advantages.  In the new frontier, where non-competes are banned nationwide, the closer management of these corporate intangible assets (processes, formulas, designs, innovative business approaches, valuable contacts, etc.) will likely be cataloged and managed more closely.  Again, the nationwide ban of non-competes faces challenges, and time will tell what the FTC action eventually looks like.  Regardless, this serves as a good reminder to think about and make strategic decisions regarding the intellectual assets that your company has. 

May 9, 2024

New Employment Laws

Legal Challenges Say “Not So Fast” to FTC’s Noncompete Ban

As many of you probably already know, the Federal Trade Commission (the “FTC’) issued a Final Rule outright banning employment-based noncompete agreements. The ban is expected to go into effect in August. The three key takeaways from the Final Rule are: Employers may no longer require or enforce employment-based noncompete agreements with any employees. This prohibition applies retrospectively, which means that even noncompete agreements (with the exception of those with “Senior Executives”) executed before the rule’s effective date will become invalidated by the rule. Employers will be required to provide notice to employees whose noncompete agreements are no longer enforceable. This news has made massive head waves. Employers’ inboxes are likely inundated with literature about what this Final Rule means for them. Who Can Avoid the Rule? The rule has extremely broad application; however, there are a select few noncompete agreements that will survive the FTC’s prohibition and those groups need not concern themselves with reading any further: Non-Profit Organizations: The FTC only governs for-profit businesses and thus this rule will not impact nonprofit organizations. Franchisors: While the FTC rule does apply to employees that work for franchisees, the rule does not apply to noncompete agreements executed between franchisors and franchisees. Sale of a Business: The FTC rule does not apply to noncompete agreements executed in connection with the sale of a business. Senior Executives: As noted above, the Final Rule excludes noncompete agreements with “Senior Executives” from its retrospective application. This means that pre-existing noncompete agreements with Senior Executives will stay intact. According to the rule, to qualify as a “senior executive,” an employee must make at least $151,164 annually and be in a “policy-making position.” However, following the effective date, employers cannot enter into any employment-based noncompete agreements with any employees, including Senior Executives. Not So Fast, FTC When the FTC announced its proposed rule, it was heavily scrutinized even by dissenting FTC Commissioners. At that time, FTC Commissioner Christine S. Wilson indicated she believed the rule was susceptible to legal challenges on several bases: (1) the FTC does not 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. Now that the FTC has issued a Final Rule, it did not take long for these legal challenges to come. In fact, within just hours of the Final Rule being published, a Dallas-based tax services firm filed a lawsuit in the Northern District of Texas seeking to block the rule. Shortly thereafter, the US Chamber of Commerce along with other business associations filed a lawsuit in the Eastern District of Texas in another attempt to block the rule. So, You’re Saying There’s a Chance The FTC’s rule will become law 120 days after it is published in the Federal Register, which is expected to occur within the coming days. But given the current legal challenges it is facing, there is a chance that the rule will not get that far. The best course of action for employers right now is to stay patient and stay vigilant. If none of the legal challenges are successful in putting the enforcement of this rule on pause, employers will want to start putting together a compliance plan together as we get closer to it becoming law. Wait - Aren’t Minnesota Employers in Compliance Already Because of State Law? Not quite. Last summer, Minnesota joined California, Oklahoma, and North Dakota in banning post-employment based noncompete agreements. While Minnesota’s law does share some similarities with the FTC’s Final Rule (exception for noncompete agreements associated with the sale of a business; not banning the use of non-disclosure, non-recruitment, and non-solicitation agreements), there is one key distinction: Minnesota’s law did not retroactively apply to invalidate noncompete agreements entered into before July 1, 2023; thus, the FTC’s Final Rule is more expansive in its prohibition. Because of the retroactive component, compliance with the FTC rule will require compliance efforts from Minnesota employers in addition to the efforts previously made to comply with the Minnesota law; specifically, Minnesota employers will be required to track down all their non-senior-executive workers currently subject to a noncompete agreement with the company in order to provide notice that the noncompete is no longer enforceable. What Would an FTC Rule Compliance Plan Look Like? While it may be best to sit still in the meantime, if/when it appears these legal challenges have failed to stall or stop the rule from going into effect, employers will want to establish a compliance plan with the following: Determine Who Is Exempt: Because the rule does not apply retrospectively to noncompete agreements with “Senior Executives,” employers will likely need to consult counsel to determine which existing noncompete agreements, if any, can remain in effect. Provide Notice to Impacted Workers: Employers will be required to notify workers subject to noncompete agreements rendered unenforceable that their restrictions are no longer in effect. An example of language to include in the notice is set forth below. Consider Alternative Protections: Employers will need to remove noncompete provisions from their agreements going forward and should consult with counsel to determine what alternative protections they might utilize to protect the goodwill of its business. Other protections include:Non-Disclosure/Confidentiality AgreementsThese are designed to protect the confidential information of the company such as intellectual property, financial data, customer lists, or other sensitive business information from being used outside the employee’s course of employment with the company. Non-SolicitationThese are utilized to prevent former employees from soliciting customers, suppliers, and even employees away from the company. Non-Solicitation clauses can prohibit a former employee from disrupting and interfering with the company’s customer relationships. Model Notice Language Incorporated into the Final Rule is the following recommended model language for informing a former employee that his or her noncompete is no longer enforceable: A new rule enforced by the Federal Trade Commission makes it unlawful for us to enforce a non-compete clause. As of [DATE EMPLOYER CHOOSES BUT NO LATER THAN EFFECTIVE DATE OF THE FINAL RULE], [EMPLOYER NAME] will not enforce any non-compete clause against you. This means that as of [DATE EMPLOYER CHOOSES BUT NO LATER THAN EFFECTIVE DATE OF THE FINAL RULE]: You may seek or accept a job with any company or any person—even if they compete with [EMPLOYER NAME]. You may run your own business—even if it competes with [EMPLOYER NAME]. You may compete with [EMPLOYER NAME] following your employment with [EMPLOYER NAME]. The FTC’s new rule does not affect any other terms or conditions of your employment. For more information about the rule, visit ftc.gov/noncompetes. Complete and accurate translations of the notice in certain languages other than English, including Spanish, Chinese, Arabic, Vietnamese, Tagalog, and Korean, are available at ftc.gov/noncompetes. Employers that utilize the model language will be presumed to have adequately complied with the rule’s notice requirement.

April 29, 2024

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

Redefining Workplace Boundaries: The NLRB’s Limitations on Employee Handbook Policies

Many employers have a policy in their employee handbook or in employment agreements that requires an employee to devote their full time to the employer’s business (i.e. no “moonlighting”). For example: Except as hereinafter provided, the Employee shall at all times during the continuance of this Agreement devote her full time to the conduct of the business of the Employer and shall not directly or indirectly, during the term of this Agreement engage in any activity competitive with or adverse to the Corporation’s business or welfare whether alone, or as a partner, officer, director, Employee, advisor, agent or investor of any other individual corporation, partnership, joint venture, association, entity or person. This sounds reasonable, right? Not to the NLRB’s Division of Advice, which provides advice to regional offices as to whether particular conduct violates the National Labor Relations Act (the “Act”). In a recent memorandum (the “Memo”), the Division of Advice found this provision to be unlawfully overbroad, opining that the policy would have a “reasonable tendency to chill employees in the exercise of their Section 7 rights” and that it would prohibit employees from engaging in union organizing or protected concerted activities that the employer could deem to be “adverse” to its business. Additionally, the Division of Advice thought that the provision could potentially prevent an employee from engaging in outside employment. Quoting from the Memo: “The General Counsel takes the position that rules or contract provisions directly or indirectly prohibiting moonlighting are generally unlawful...” The Stericycle Decision The Division of Advice’s memorandum is not the first time the NLRB has scrutinized language in employee handbooks that the agency interprets as overly restrictive of employee rights. In the recent NLRB decision in Stericycle, Inc., the Board stated that an employee handbook rule or policy is unlawful if it has a reasonable tendency to chill employees from exercising their Section 7 rights. Employers must now prove that there is a legitimate and substantial business interest in the rule and that they cannot advance the interest with a more narrowly written rule. Employers are going to have to consider the “potential” impact and interpretation of a rule and whether their business interests can be achieved with a narrower rule. The types of policies that could be challenged under the Stericycle standard include confidentiality policies, sexual harassment policies, dress codes, and collegiality and civility policies. Under the new standard, if any of these policies could be reasonably construed to interfere with employees’ exercise of Section 7 rights, these policies would be considered unlawful by the NLRB. Other Challenged Policies Other employment policies which have recently been challenged include noncompetition provisions. The General Counsel argues that non-compete provisions are overbroad when the provision could reasonably be interpreted by employees to limit their ability to resign by denying them the ability to seek other opportunities for which they are qualified. In September 2023, the NLRB’s General Counsel commenced a lawsuit against Harper Holdings, LLC (which does business as Juvly Aesthetics), challenging the company’s requirement that if an employee receives certain training, they must repay all, or a portion of, the training costs if they leave employment within a specified period. It is clear that the General Counsel and the NLRB are expanding the definition of protected concerted activity and are concerned about policies which limit the mobility of employees in changing employment. Recommendations When employers create work rules, they should consider whether there is a potential in the work rule to be interpreted to chill an employee’s right to discuss with other employees or with a labor union their concerns and issues about wages, hours and working conditions. At the present time, if an employee handbook policy is the subject of an unfair labor practice charge, and the employer policy and rule is deemed to be unlawful, the NLRB would order that such policy or rule must be withdrawn, with no financial penalty to the employer. If the employer disciplines or terminates an employee for violating a work rule that the NLRB finds to be unlawful, then the employer will be liable for backpay and if applicable, reinstatement of the disciplined employee. These are all very recent challenges. We don’t know if the NLRB will agree with the Division of Advice’s memoranda, or if the NLRB decisions will be affirmed by a federal court of appeals.  However, it is reasonable for employers, whether union or nonunion, to examine work rules to confirm they are necessary, yet narrow enough, to protect the employer’s business interests while not infringing an employee’s Section 7 rights. Employers should expect that the NLRB will continue to limit what employer policies can say.

April 17, 2024

Labor Law

NLRB Significantly Broadens Scope of Joint-Employer Standard

On October 26, 2023, the National Labor Relations Board (NLRB) issued a final rule redefining “joint employers” under the National Labor Relations Act (NLRA).  Approved three-to-one along partisan lines, the new rule mirrors the Board’s proposed rule that was published in September 2022.  The new rule expands the definition of joint employers to include entities that have indirect authority over the terms of employment for workers employed by another business – even when such control is not actually exercised.  This means that a wide array of businesses will be treated as joint employers under the NLRA that were not previously classified as such. Understanding the Law  The new rule, which goes into effect on December 26, 2023, classifies an entity as a joint employer if it has the authority to control at least one of the “essential terms and conditions of employment” affecting workers employed by another business.  The rule provides an exclusive list of such terms and conditions: wages, benefits, and other compensation; hours of work and scheduling; the assignment of duties to be performed; the supervision of the performance of duties; work rules and directions governing the manner, means, and methods of the performance of duties and the grounds for discipline; the tenure of employment, including hiring and discharge; and working conditions related to the safety and health of employees. Significantly, this test may be met even if control of these conditions is not actually exercised or is only exercised indirectly.  This standard represents a sharp break from the NLRB’s 2020 rule requiring “substantial direct and immediate control” over the terms and conditions of employment.  The NLRB has justified this change by arguing that businesses that do not exercise the level of control over employment terms required to meet the old rule may still have a significant influence over the employees of another business and should thus be subject to the obligations that come with joint-employer status. Who Is Affected? Franchisors are among the most obvious businesses impacted by the new rule.  Given the prevalence of provisions in franchise agreements relating to the terms and conditions listed above, franchisors will have to re-examine their franchise agreements and operating manuals to determine whether they are now joint employers with their franchisees.  The new rule’s relative ambiguity will present a challenge to franchisors as they grapple with how best to maintain adequate control over their franchise systems and still avoid joint-employer status under the NLRA.  Other businesses that may be affected include temporary agencies and staffing firms. Effect of Joint-Employer Status Classification as a joint employer is accompanied by a variety of significant consequences.  One such effect is the obligation to bargain with unions representing jointly employed workers over the terms of employment that the joint employer controls or has the authority to control.  Joint employers are also liable for the other employer’s unfair labor practices and are subject to union picketing that would otherwise be unlawful in the event of a labor dispute. Conclusion This new rule represents the most significant broadening of the definition of joint employer that the NLRB has taken to date.  It is thus likely to encounter protracted legal challenges.  While only time will tell if the NLRB’s newest change to the joint employment standard will survive these legal challenges, affected businesses should consider whether they fall under the new joint employer definition and be mindful of the effects of this classification.

November 11, 2023

Drugs and Alcohol

Navigating the Legalization of Marijuana: Updating Drug and Alcohol Policies

Last week, we posted a blog addressing how the recent legalization of recreational cannabis in Minnesota may affect employee drug-testing policies. We now direct our attention to employers with questions about their general drug and alcohol policies. Here are some things to consider when changing an existing drug and alcohol policy. Understanding the Law As discussed in the prior blog, the Minnesota Drug and Alcohol Testing in the Workplace Act (“the Act”) has always prohibited impairment in the workplace, and that has not changed. Under the new law, an employer is not required to permit or accommodate cannabis use, possession, impairment, sale, or transfer while an employee is working or while an employee is on the employer’s premises, or operating the employer’s vehicle, machinery, or equipment. Therefore, even though another Minnesota law, the Consumable Products Act (the “CPA”), prohibits an employer from restricting an employee’s lawful off-duty use of cannabis, nothing in the law requires employers to accommodate or permit an employee’s on-the-job possession or use. Review Your Drug and Alcohol Policy When looking to an existing drug and alcohol policy, employers should pay attention to ensure that the policy does not restrict an employee’s off-duty rights. For instance, we often see policies that broadly prohibit an employee’s use of “controlled substances” unless prescribed by a physician for treatment. Marijuana and cannabis products are no longer considered “controlled substances” as they were prior to August 1st of this year, so that prohibition is problematic under the law. In light of this definitional shift, and because pursuant to the CPA an employer may not discipline or discharge an employee because he or she engages in the lawful use of cannabis products off-premises during nonworking hours, employers should consider an impairment-based policy instead. By shifting the focus to what is prohibited while at work, the employer eliminates the risk of restricting what the employee is legally free to do during their off time. Train Supervisors Minnesota law continues to permit an employer to discipline, discharge or take other adverse personnel action against an employee for using, possessing, selling or being impaired while an employee is working, on the employer’s premises, or operating the employer’s vehicle machinery, or equipment. The Act allows an employer to take adverse action against an employee if, as the result of consuming cannabis, the employee “does not possess that clearness of intellect and control of self that the employee otherwise would have.” The person most likely to identify an employee who meets this standard is the employee’s supervisor. Employers should provide employers with training on the symptoms of impairment that can result from use of cannabis products so that supervisors can recognize an impaired employee. Supervisors should be made aware of their critical role in evaluating whether an employee is impaired as a result of using cannabis. Considerations for Job Applicants Employers should be mindful of how the legalization of cannabis alters the rights of not only existing employees but applicants as well. The CPA also protects an applicant’s use of lawful consumable products off the employer’s premises during nonworking hours. Therefore, regardless of whether an employer actually conducts pre-employment testing, the law now makes it unlawful to withdraw an offer of employment based on the candidate’s off-duty, off-premises use of marijuana and cannabis products. Conclusion With the passage of Minnesota’s recreational cannabis law, employers will need to revisit their drug and alcohol policies, as well as any hiring policies and practices affected by the law, to ensure they are legally compliant. Employers need to work with supervisors to assist in recognizing an employee who, as the result of consuming cannabis products, does not possess the clearness of intellect and control that the employee usually has. Employers who have questions about any of this new legislation should contact a Larkin Hoffman attorney.

August 23, 2023

Drugs and Alcohol

Navigating the Legalization of Marijuana: Update Your Drug and Alcohol Testing Policies

On August 1, 2023, recreational marijuana and cannabis products became legal in the state of Minnesota. Employers are now asking how this new law affects their employment policies and procedures. In the first of a two-part series of blog posts on how the legalization of marijuana affects drug and alcohol polices, we address whether employers need to modify their drug and alcohol testing policies in light of this significant change in the law. Here are some things to consider in changing existing testing policies and procedures. Understanding the Law Employers are concerned that employees are now allowed to come to work stoned. In fact, the opposite is true. The Minnesota Drug and Alcohol Testing in the Workplace Act (“the Act”) has always prohibited impairment in the workplace, and that has not changed. Under the law, an employer is not required to permit or accommodate cannabis use, possession, impairment, sale, or transfer while an employee is working or while an employee is on the employer’s premises or operating the employer’s vehicle, machinery, or equipment. Although an employer is not permitted to restrict an employee’s lawful off-duty use of cannabis, Minnesota law does not require that employers accommodate or permit an employee’s on-the-job possession or use. Consequently, drug and alcohol policies should include a provision explicitly prohibiting the use of cannabis, drugs and alcohol while working, operating company vehicles or on company premises. Review Your Drug and Alcohol Testing Policy The first step in modifying an existing drug and alcohol testing policy is to review the portion of the policy which prohibits the use of drugs (and alcohol) while working. With certain exceptions, which will be discussed below, the Act removes marijuana and cannabis products from the definition of “drug” for purposes of drug testing, and the substance is now considered separate from drugs and alcohol. Therefore, the definition of “drug” in the policy should no longer include cannabis; nor should it be so broad that it encompasses personal use of the substance off-premises during nonworking hours. Drug and alcohol testing policies should add cannabis to the provision prohibiting the use of drugs and alcohol while working, operating company vehicles or on company premises (e.g. “The Employer prohibits the use, possession, impairment, sale, or transfer of cannabis, drugs, and alcohol…”). When is Drug Testing Allowed? It is permissible to test for cannabis under the new law under certain scenarios, most of which will be familiar to employers with existing drug and alcohol testing policies. Employees may be subject to random testing for cannabis while working in safety-sensitive positions. Employees may also be tested when there is reasonable suspicion that they: Are under the influence of cannabis or other drugs; have violated the employer’s written work rules prohibiting the use, possession, sale, or transfer of cannabis, drugs, or alcohol; have sustained (or caused another to sustain) a personal injury; or have caused a work-related accident or were operating or helping to operate machinery, equipment, or vehicles involved in a work-related accident. Employees may also be tested during the post-treatment period (up to two years, depending upon the employer’s policy). Despite the fact that employers may still test under these circumstances, many drug and alcohol testing policies will nevertheless need to be amended because they have defined prohibited drugs to be those governed by the federal Controlled Substances Act, and while cannabis is a prohibited controlled substance under federal law, it is not a prohibited substance under Minnesota law. Under most circumstances, testing applicants for cannabis is no longer permissible, and the detection of marijuana in a drug test cannot be used as a reason for rescinding a job offer. However, for the following specific positions, applicants may continue to be tested for cannabis: Safety sensitive positions (jobs where impairment caused by cannabis usage would threaten the health and safety of any individual) Peace officers and firefighters Positions requiring face-to-face care, training, education, supervision, counseling, consultation, or medical assistance to children, vulnerable adults, or patients receiving medical, psychiatric, or mental health care services Positions requiring a commercial driver’s license or operating a motor vehicle for which state or federal law mandates drug or alcohol testing Employment funded by a federal grant or any other position for which state or federal law requires testing a job applicant or employee for cannabis Additionally, the employee protections for the use of marijuana as described above do not apply to all employees. There are exclusions when the specific work being performed requires that employees and job applicants undergo drug and alcohol testing or cannabis testing where: Federal regulations preempt state regulations regarding drug and alcohol testing or cannabis testing for specific employees and job applicants; Federal regulations or requirements are necessary for operating facilities under federal regulation; Drug and alcohol testing or cannabis testing is conducted pursuant to federal contracts for security, safety, or protection of sensitive or proprietary data; or State agency rules adopt federal regulations applicable to the interstate component of a federally regulated industry and the adoption of those rules is for the purpose of conforming the non-federally regulated intrastate component of the industry. Conclusion Considering marijuana’s lingering presence in the bloodstream, some employers might forgo testing altogether. However, those employing workers in safety-sensitive positions are likely to have a different perspective, since an employee coming to work under the influence could cause serious accidents, injury and even death to themselves or others. One thing is certain—all employers must reconsider their drug and alcohol testing policies to account for the legalization of recreational marijuana and cannabis products.

August 10, 2023

Labor Law

More Changes to Employment Laws by the Minnesota Legislature

In previous posts, we have discussed changes enacted by the Minnesota legislature regarding employment law.  The legislature also passed a number of bills which, although perhaps less significant than the ban on non-compete agreements, legalizing cannabis and providing paid sick and safe time, are still important for employers to know. Pay Transparency Minnesota now joins many other states in prohibiting employers from inquiring into a job candidate’s pay history for the purpose of determining salary and benefits.  The law also protects applicants from discrimination if they refuse to provide past salary information upon employer request.  This provision becomes effective July 1, 2023. Pregnancy Accommodations and Additional Protection for Nursing Mothers The legislature amended the statute which provides protection to nursing mothers by eliminating the requirement that break times for expressing breast milk apply only during the 12-month period after birth.  The law also clarifies that although break times used for expressing breast milk can run concurrently with other breaks, it is not required that they do so.  The current provision allowing employers to deny employees a break if it would “unduly disrupt operations,” has been eliminated. Furthermore, the amendments expand pregnancy accommodations by adding longer restroom, food and water breaks to the list of accommodations that do not require a health care provider’s certification.  The amendment also states that reasonable accommodations that should be considered include a temporary leave of absence, modifications of work schedules or job assignments, and providing more frequent and longer break periods. An employer cannot discharge, discipline, penalize, interfere with, threaten, restrain, coerce, or otherwise retaliate or discriminate against an employee for asserting rights under this statute.  Employers must also inform employees of their rights under these two laws at the time of hire or when an employee makes an inquiry about parenting leave.  If the employer has an employee handbook, they must include a notice outlining the employee rights under this law. These amendments become effective July 1, 2023. Captive Audience Meetings A new statute has been enacted which prohibits employers from holding mandatory meetings for the purpose of communicating their opinion on religious or political matters.  This statute prohibits employers from threatening to take or taking adverse action against employees who refuse to attend these meetings or refuse to receive or listen to an employer communication if it concerns the employer’s opinion about religious or political matters. The term “political matters” encompasses subjects related to “elections for political office, political parties, proposals to change legislation, proposals to change regulations, proposals to change public policy, and the decision to join or support any political party or political, civic, community, fraternal or labor organization.” “Religious matters” refers to topics related to religious belief, affiliation, practice, and the decisions to join or support any religious organization or association. The statute includes civil remedies and a right to bring a civil action.  This law goes into effect on August 1, 2023.  Laws such as this which have been enacted in other states have been challenged as violating the First Amendment and the supremacy clause of the Constitution.  It should be expected that this law will also be challenged. For Construction Employers A new statute provides that construction contractors must assume liability for unpaid wages, fringe benefits, penalties and liquidated damages owed to an employee or former employee by a subcontractor at any tier.  Further, the provision does not allow contractors, subcontractors, or their employees to contractually agree to circumvent this assertion of liability.  Any efforts to release or transfer liability that is now assigned to a contractor will be null and void.  Contractors retain the right to pursue actual and liquidated damages from a subcontractor who caused the contractor to pay damages. This statute also provides that within 15 days of a request by a contractor, a subcontractor must provide payroll records which contain all information required under the statute, which includes sufficient information to apprise the contractor of the subcontractor’s payment of wages and fringe benefit contributions.  This includes the names of all employees and independent contractors and local unions with which the subcontractor is a signatory to a collective bargaining agreement. The statute contains an exemption for any contractor or subcontractor that is a signatory to a bona fide collective bargaining agreement with a building and construction trade labor organization that: 1) contains a grievance procedure for recovering unpaid wages on behalf of covered employees; and 2) provides for the collection of unpaid contributions to fringe benefit trust funds. This law goes into effect August 1, 2023. Pregnancy and Parenting Leave Act Currently, the Minnesota Pregnancy and Parenting Act applies to employers with more than 15 employees and to employees who have been employed for at least 12 months for an average number of hours equal to one-half of the equivalent position.  This statute is amended to revise these definitions so that the statute applies to all employees and to employers with one or more employees. These amendments become effective on July 1, 2023. Restrictive Franchise Agreements Effective immediately: Franchisors are prohibited from restricting, restraining, or prohibiting franchisees from soliciting or hiring employees of other franchisees operating under the same franchisor. Franchisors are prohibited from restricting, restraining, or prohibiting a franchisee from soliciting or hiring employees of the franchisor. No later than one year from the effective date, franchisors must amend existing franchise agreements to delete any contract provisions that violate this law or sign a memorandum of understanding with each franchisee that provides that any contract term that violates the law is void and unenforceable. Employers who have questions about any of this new legislation should contact a Larkin Hoffman attorney. To read more about the recent changes in Minnesota’s employment laws. Please visit Larkin Hoffman’s recent Labor and Employment blog posts: Earned Sick and Safe Time is the Law Throughout Minnesota Navigating Minnesota’s Paid Family and Medical Leave Law Legalized Recreational Marijuana Use Has Arrived in Minnesota The Death of Noncompetition Agreements in Employment within Minnesota

June 8, 2023

Firm Highlights

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Health Care Attorney Angela Mamaril Joins Larkin Hoffman
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Larkin Hoffman Attorneys Named Top Lawyers by Minnesota Monthly
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Department of Labor Restores 2019 Salary Thresholds for FLSA Exemptions
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The FTC’s Aggressive Approach to Non-Compete Agreements
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Larkin Hoffman Attorneys Recognized in Legal 500’s Minnesota Elite Guide