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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

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

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

Labor Law

Navigating Minnesota’s Paid Family and Medical Leave Law

On May 25, 2023, Governor Walz signed Minnesota’s Paid Family and Medical Leave bill into law.  Minnesota will join 11 other states and Washington D.C. with paid leave laws.  Eligible workers will be able to begin receiving benefits on January 1, 2026, and employers will begin contributing to the program on the same date. The law creates a family and medical benefit insurance program administered by the Minnesota Departmentof Employment and Economic Development (DEED) – Family and Medical Benefits Division.  Similar to Minnesota’s unemployment insurance benefits program, DEED will maintain a premium account for each employer and an employee will apply for their qualified family or medical leave through DEED.  DEED will then determine the applicant’s eligibility and the amount of benefit available to the employee. However, an employer can apply to DEED for use of an alternative private plan that provides paid family or paid medical benefits. The private plans must meet the state requirements and are subject to approval by DEED. Eligibility Requirements and Benefit Amounts The law broadly covers private sector, state and local government employees regardless of employer size. This includes full-time and part-time employees, and contains limited exceptions for self-employed individuals, independent contractors, and seasonal employees.  A seasonal employee is defined as an individual employed in hospitality for no more than 150 days during any consecutive 52-week period. An application for benefits may be filed up to 60 days before the leave is taken. The statute provides that an applicant is eligible to receive benefits if: (1) the requested leave time is in the applicant’s benefit year; (2) the applicant was unable to perform regular work due to one of the six reasons listed below; (3) the applicant has at least 5.3 percent of the state’s average annual wage; and (4) the applicant has fulfilled the certification requirements. Benefits will be available to 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 A qualifying exigency arising from military service Maximum benefits will be calculated by applying a formula to an employee’s average work week and weekly wage during the base period with the highest number of wages.  Benefits will be paid weekly.  In a single benefit year, the total number of weeks an employee may take for medical leave or family leave is the lesser of 12 weeks or 12 weeks minus the number of weeks within the same benefit year that the employee received benefits for the other category of leave, plus eight weeks.  This means that an employee may take up to 20 weeks of paid leave within a single benefit year. For example, if an applicant took 12 weeks of leave to bond with a new child, they are still eligible for eight weeks of paid medical leave in that same benefit year. No benefits are paid for the portion of any week in which the employee receives vacation pay, sick pay, paid time off, workers compensation benefits or disability insurance benefits (paid in whole or in part by the employer).  An applicant may also take the leave intermittently. Relationship with Other Laws Minnesota’s Paid Family and Medical Leave law does not repeal Minnesota’s Pregnancy and Parenting Leave statute or the FMLA.  Rather, an employer may require leave taken under the Paid Family and Medical Leave program to run concurrently with leave taken for the same purposes under Minnesota Statute section 181.941 (Minnesota Pregnancy and Parenting Leave) or the FMLA.  Similarly, the length of leave available under the Minnesota Pregnancy and Parental leave may be reduced by paid parental, medical or sick leave so that the total leave does not exceed 12 weeks unless agreed to by the employer.  It is possible that an employee is eligible for Minnesota’s Paid Family and Medical Leave but does not qualify for leave under the FLSA. Employer Responsibility Employer premium rates beginning January 1, 2026, will be as follows: For employers participating in both family and medical benefit programs – 0.7% For an employer participating in only the medical benefit program and with an approved private plan for the family benefit program – 0.4% For an employer participating in only the family benefit program with an approved private plan for the medical benefit program – 0.3% Account premiums will be paid quarterly on taxable wages paid to employees.  Beginning January 1, 2027, annual premium rates will be adjusted based on the formula detailed in the statute. The law also includes an employee charge back.  This requires that employers pay a minimum of 50% of the annual premiums and employees pay the remaining portion, if any, of premiums not paid by the employer. Notice Requirements The law also includes notice requirements for both the employee and the employer.  For the employee, if the leave is foreseeable, an employee must provide at least 30 days’ advance notice before leave is to begin.  Otherwise, notice must be given as soon as practicable.  An employee must provide verbal or written notice sufficient to make the employer aware that the employee needs leave and the anticipated timing and duration of leave. However, an employer may require that an employee comply with its usual notice and procedural requirements for requesting leave, unless unusual circumstances cause the reason for the employee’s need for leave. An employer must post in a conspicuous place on each of its premises, a workplace notice prepared by the commissioner describing the family and medical leave benefits. The notice must be in English and each language other than English which is the primary language of five or more employees or independent contractors of that workplace if such notice is available from DEED. Additionally, an employer must issue the following information to its employees within 30 days from the beginning date of each employee’s employment, or 30 days before premium collection begins, whichever is later: An explanation of the availability of family and medical leave benefits provided under the statute; The amount of premium deductions made by the employer; The employer’s premium amount and obligations; The name and mailing address of the employer; The identification number assigned to the employer; Instructions on how to file a claim for family and medical leave benefits; The mailing address, email address, and telephone number of the department; and Any other information required by the department. The employer must obtain the employee’s written or electronic acknowledgement of receipt of the information. In conclusion, employers should be proactive in bringing their policies into compliance with the new Minnesota Paid Family and Medical Leave law.  The law provides employers a small grace period until January 1, 2026.  Our labor and employment attorneys at Larkin Hoffman will continue to monitor any changes to legislation and keep our readers updated as the landscape develops.

June 1, 2023

Labor Law

The Death of Noncompetition Agreements in Employment within Minnesota

The Minnesota legislature has enacted a statute rendering noncompetition agreements in the employment context unenforceable, provided they are entered into after the effective date.  Governor Walz is expected to sign the bill.  The legislation applies to all future covenants not to compete and will take effect on July 1, 2023.  Consequently, this new statute does not apply to noncompetition agreements entered into prior to July 1, 2023. The statute prohibits all noncompetition agreements with employees and independent contractors with two exceptions: Noncompetition agreements agreed upon during the sale of a business.  In such cases, the person selling the business and the partners, members, or shareholders, and the buyer of the business may agree on a temporary and geographically restricted covenant not to compete.   This agreement will prohibit the seller of the business from carrying on a similar business within a reasonable geographic area and for a reasonable length of time. Noncompetition agreements agreed upon in anticipation of the dissolution of a business.  The partners, members, or shareholders, upon or in anticipating of a dissolution of a partnership, limited liability company, or corporation may agree that any or all of the parties will not engage in a similar business within a reasonable geographic area where the business has been conducted. The statute applies solely to noncompetition agreements and explicitly excludes nondisclosure agreements, trade secret or confidentiality agreements or non-solicitation agreements (such as non-solicitation of customers and employees). The term “employee” is defined to include independent contractors. Noncompetition agreements and clauses entered into prior to July 1,2023 will continue to be enforceable. Other Provisions It is common in many employment or separation agreements to include a provision that requires an employee or former employee to agree that the law applicable to the agreement is other than Minnesota law.  This statute prohibits an employer from requiring an employee who lives and works in Minnesota to agree, as a condition  of employment, to a  provision that would (1) require the employee to resolve a claim arising in  Minnesota outside the state or (2) deprive the employee of the substantive protection of Minnesota law with respect to a controversy arising in Minnesota.  Any contract or provision agreement that violates these choice of law requirements is voidable by the employee. If a provision is rendered void at the request of the employee, the matter shall be adjudicated in Minnesota and Minnesota law shall govern the dispute. In addition to injunctive relief and any other remedies available, a court may award reasonable attorney fees to an employee enforcing their rights under this statute. Employers with questions about the application of this new statute and the appropriate immediate actions to address it should consult a Larkin Hoffman attorney.

May 23, 2023

Labor Law

The Future of Employment Settlement Agreements

The National Labor Relations Board (NLRB) has issued a significant decision threatening the viability of provisions routinely included in employment settlement agreements.  In the McLaren Macombdecision, the NLRB ruled that an employer violated the National Labor Relations Act (the “Act”) when it offered severance agreements to 11 terminated employees containing confidentiality, nondisclosure and non-disparaging provisions. The clauses at issue are: Confidentiality Agreement.  The Employee acknowledges that the terms of this Agreement are confidential and agrees not to disclose them to any third person, other than spouse, or as necessary to professional advisors for the purposes of obtaining legal counsel or tax advice, or unless legally compelled to do so by a court or administrative agency of competent jurisdiction. Nondisclosure.  At all times hereafter, the Employee promises and agrees not to disclose information, knowledge or materials of a confidential, privileged, or proprietary nature of which the Employee has or had knowledge of, or involvement with, by reason of the Employee’s employment.  At all times hereafter, the Employee agrees not to make statements to Employer’s employees or to the general public which could disparage or harm the image of Employer, its parent and affiliated entities and their officers, directors, employees, agents and representatives. These provisions are typically included in employee separation agreements however, the NLRB deemed them as unlawful.  Section 8(a)(1) of the Act prohibits an employer from interfering with, restraining and coercing employees in the exercise of the rights guaranteed to them in Section 7 of the Act.  Section 7 guarantees employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from such activities.” Why Was the Confidentiality Provision Found to be Illegal?  In the McLaren decision, the NLRB decided that the confidentiality provision prohibited employees from engaging in communications with a wide range of third parties in circumstances where the communication could be related to the workplace.  Communications about the workplace are protected by Section 7, unless the communication is “disloyal, reckless or maliciously untrue to lose the Act’s protection.”  The provision could also be interpreted to prohibit contacting or communicating with the NLRB. The NLRB discussed how the prohibition of an employee’s discussion with other employees is unlawful if it prevents an employee from: assisting co-workers with workplace issues concerning their employer communicating with others about their employment, including a union and the NLRB As a result, any restriction in a separation agreement which limits the right of an employee to discuss workplace issues with other employees, the NLRB, or a labor union, is unlawful. Why Was the Non-Disparagement Provision Found to be Unlawful? The NLRB discussed how public statements by employees about the workplace are “central to the exercise of employee rights under the Act,” even if they harm the image of the employer.  The NLRB found the prohibition in the nondisclosure provision that prohibits an employee from making any “statements to [the] employer’s employees or to the general public which could disparage or harm the image of [the] employer” to be unlawful. The NLRB stated that an employee’s critique of an employer’s policies is clearly protected under the Act unless it is reckless and maliciously untrue. What Does This Mean for Employers? On March 22, Jennifer Abruzzo, General Counsel of the NLRB issued a Memorandum stating that she wanted to assist NLRB regions in responding to inquiries from employers, employees, labor unions and the public about the implications of the McLaren case.  Among the points discussed are: Nondisparaging and confidentiality provisions in supervisor separation agreements may not be prohibited.  Supervisors are not “employees” under the National Labor Relations Act, and therefore are not protected by the Act.  However, if a provision implies that a supervisor is prohibited from participating in an NLRB proceeding the severance agreement could be unlawful. The McLaren decision will be enforced retroactively.  Ms. Abruzzo wrote that there could be cases where a severance agreement entered into beyond the 6-month statute of limitation could be found to be illegal if it chills the exercise of Section 7 rights. Because the offer of a severance agreement containing an overly broad non-disparagement and/or confidentiality provision could be found to be unlawful, employers should consider contacting employees subject to such severance agreements and advising them that the provisions are null and void, and that the employer will not seek to enforce the agreements. Confidentiality and non-disparagement provisions which are narrowly drafted may be lawful.  She gave as examples of provisions that may be lawful, a confidentiality clause that only prohibits disclosure of the financial terms, limits the dissemination of proprietary or trade secret information for a period of time, based on legitimate business justifications, or is limited to employee statements that are maliciously untrue or made with reckless disregard for their truth or falsity A generic “savings clause” may not necessarily cure an overly broad provision.  Ms. Abruzzo has asked the NLRB to formulate a statement of rights that affirmatively and specifically describes an employee’s statutory rights and states that no employment rule should be interpreted as restricting those rights. Ms. Abruzzo wrote that employment agreements containing confidentiality and non-disparagement clauses may also violate the Act.  She listed other provisions which may be problematic because they might interfere with an employees’ exercise of Section 7 rights such as non-compete clauses, no solicitation clauses, no poaching clauses, broad liability release, and covenants not to sue that go beyond the employer and/or may go beyond employment claims, cooperation requirements involving current or future investigations or proceedings involving the employer.  She did not provide any details as to how these provisions may violate the Act. Employers must be cautious of the scope of non-disparagement and confidentiality provisions in severance agreements and employment agreements.  Such clauses must be drafted as narrowly as possible, to protect legitimate business interests rather than employee communications to other employees, to labor organizations and to the NLRB.

March 28, 2023

Labor Law

Employer Non-Competes Under Threat by FTC Proposal

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

January 23, 2023

Labor Law

Two Employment Bills Expected to Pass in Minnesota

The 2023 Minnesota Legislative session has begun and two legislative employment proposals that have been in the mix in previous years may finally be enacted because of Democratic control of both chambers of the legislature. It is expected that some form of these two proposals will become law this session. The first would create a statewide paid family and medical leave program administered by the Department of Employment and Economic Development (DEED) and the second would require employers to provide a minimum amount of paid sick and safe time benefits to employees. S.F. 2-H.F. 2 Paid Family and Medical Leave This proposal creates a family and medical benefit insurance program administered by the Commissioner of Employment and Economic Development (DEED). The bill would create a new family and medical benefit insurance account with the state, and within that account, DEED would be required to maintain a premium account for each employer. Eligible employees would make a claim against the state benefit account (as opposed to the employer or the employer’s insurance provider) and benefits would be paid by the state. Benefits would be available to 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 A qualifying emergency arising from military service Maximum benefits will be calculated by applying a formula to an employee’s average work week and weekly wage during the base period with the highest number of wages. Benefits will be paid weekly. In a single benefit year, employees are eligible to receive up to 12 weeks of the Paid Family and Medical Leave benefit. Applications for benefits are submitted to DEED, not to the employer. The proposed statute does not apply to independent contractors unless they apply to be covered and outlines its own definition of an independent contractor. The bill discusses the requirement that an employee submit certification for certain types of leave. Leave can be intermittent. No benefits are paid for the portion of any week in which the employee receives vacation pay, sick pay, paid time off, workers compensation benefits or disability insurance benefits (paid in whole or in part by the employer). An employer can apply to DEED for use of a private plan that provides paid family or paid medical benefits. Plans must meet the state requirements and are subject to approval by DEED. Employer premium rates in the current proposal, beginning January 1, 2024, would be as follows: For employers participating in both family and medical benefit programs – 0.6% For an employer participating in only the medical benefit program and with an approved private plan for the family benefit program – 0.486% For an employer participating in only the family benefit program with an approved private plan for the medical benefit program – 0.486% Account premiums would be paid quarterly on taxable wages paid to employees. Beginning January 1, 2026, the Commissioner of DEED is required to adjust the annual premium rates based on the formula determined by DEED. S.F. 34-H.F. 19, Earned Sick and Safe Time Although several cities already have enacted sick and safe time ordinances, the legislative proposal would make earned sick and safe time (ESST) a state requirement. This proposal would require all Minnesota employers to provide their employees up to 48 hours of ESST per year. The paid time off would accrue at a rate of 1 hour for every 30 hours worked. The bill defines an employer as any person who has one or more employees and includes both public entities and private businesses. Employees may use earned ESST to: Care for themselves or a family member’s mental or physical illness, injury or other health condition. Seek preventative medical or health care. Seek relief from domestic abuse, sexual assault or stalking of themselves or a family member, including obtaining services from a victim’s services organization. Obtain psychological counseling, relocation or legal advice/legal action for sexual assault, domestic abuse or stalking. Deal with the closure of employee’s place of business due to weather or public emergency. An employer must permit an employee to carry over accrued but unused ESST to the following year. At no time can the employee have more than 80 hours of unused ESST, unless allowed by the employer. An employer can fulfill the obligation to provide ESST with a paid time off (PTO) policy, provided the accrual and use of PTO complies with the ESST statute. Construction employers can meet the ESST requirements by paying prevailing wage. Employees of a business that has acquired or merged retains any sick and safe time accrued during their employment if they are retained by the new employer. The Commissioner of Labor and Industry enforces this policy, and it would be effective 180 days after final enactment of the legislation. Conclusion This is a summary of only a portion of each bill. Both proposals will undoubtedly change as they progress through committees of both houses. Employers should expect that some form of both proposals will be adopted. Our government relations team will be tracking the progress of these two proposals. If you would like updates on one or both proposals, please contact Phyllis Karasov.

January 17, 2023

General Matters

Can a Noncompete be Enforced in Wisconsin?

Employers often require employees to sign agreements which include restrictive covenants.  “Restrictive covenants” include noncompete agreements, non-solicitation restrictions (prohibiting solicitation of customers and/or employees), and confidentiality and nondisclosure agreements. These agreements can be important to protect the employer from the employee working for a competitor, or disrupting customer relationships after the employer has invested in that employee through training and the disclosure of proprietary information.  This article focuses on noncompetition and non-solicitation agreements signed by employees in the state of Wisconsin. Wisconsin courts are generally hostile to noncompetition agreements.  Wisconsin has a statute which allows a judge to void a noncompetition agreement that does not contain the elements described in the statute. In some states, including Minnesota, courts are allowed to modify a restrictive covenant so that it can be enforced.  In Wisconsin, if the restrictive covenant is deemed to violate this statute, it is unenforceable in its entirety. So what does a noncompetition or non-solicitation provision in the state of Wisconsin need to say to make it enforceable? The covenant must be necessary for the protection of the employer. The agreement should expressly state why and how the agreement is necessary to protect the employer. Simply restricting ordinary competition is not sufficient; the agreement should describe the special facts and circumstances which support the rationale for the restrictive covenant.  For example, if the employee has contact with the employer’s customers, the protection of these customer contacts may justify a non-solicitation restriction. The time limit should be reasonable. Wisconsin courts have held that a reasonable time frame for a nonsolicitation or noncompetition agreement is determined by facts and circumstances of the specific case.  Although there are no clear rules as to the definition of a “reasonable” period of time, Wisconsin courts have recognized that a two-year time limitation is reasonable. The geographic scope should be reasonable. The reasonableness of a geographic restriction is determined by the facts and circumstances of the particular situation.  The restriction cannot encompass territory where the company does not do business.   An agreement can list specific customers with whom the employee can have no contact or for which a new employer can have contact, or it can describe the territory in which the employee is subject to the limitation. It is not sufficient to simply says the employee cannot work anywhere in the marketplace.  It should be noted that non-solicitation restrictions may be enforced by a court without a specified geographical territory if the facts and circumstances warrant.  A provision which disrupts a customer relationship, regardless of where the customer is located, may be enforced if the relationships are critical to the employer enforcing the agreement. The restriction should not be unduly harsh to the employee. Courts are concerned as to whether a restrictive covenant prevents the employee from working anywhere and from using their skills anywhere.  Courts consider a number of factors, such as the economic conditions, the employee’s age and education, and the impact of the restriction on the employee’s ability to use their skills.  The noncompetition and non-solicitation agreement should not be so unreasonable the employee can’t find a job. The restrictive covenant should not violate public policy. For example, does the covenant contribute to the shortage of specialized services or education?  Does the restriction result in a monopoly because the employer is the only company that provides the services or products in issue?  The noncompetition and non-solicitation agreement should not impose a restraint of trade because it is so broad. Lastly, when an employee is employed in Wisconsin an employer can require that the employee sign a non-compete as a condition for employment to continue. This is different from many other states, including Minnesota, which require the employer to provide consideration to a current employee for the non-compete to be valid and enforceable.  In Wisconsin, an employee can be required to sign a noncompete any time after employment begins, without receiving additional pay or benefits for signing the noncompete. Although Wisconsin has a statute that limits the circumstances under which a noncompetition or non-solicitation provision will be enforced, if drafted properly, these kinds of restrictions can be enforced. ____________________ About the Author Phyllis Karasov advises businesses on labor and employment matters and has substantial experience drafting, interpreting and enforcing noncompetition agreements, confidentiality agreements, ‎and separation agreements.  Her clients come from a variety of sectors, including healthcare, construction, manufacturing, education and nonprofits. Phyllis also provides counsel in all areas of human resources, including hiring, handbooks, regulatory compliance, discrimination, sexual harassment, discipline and termination, Americans with Disabilities Act, OSHA rules and the Family and Medical Leave Act.  Phyllis is licensed to practice in both Wisconsin and Minnesota.  Phyllis is also a regular contributor to Larkin Hoffman’s Employment and Labor Law Blog. Contributor Michael Salchert has been advising dentists in corporate, business, real estate and transactional matters for more than 35 years.  As a member of both the Wisconsin and Minnesota Bar Associations, he primarily works with professionals on the sale or purchase of professional practices, providing general business advice including employment and other business contractual and real estate matters.  Michael leverages his longtime business experience in counseling his clients on a wide range of business and legal issues.

June 16, 2022

Collective Bargaining

Employers Beware! NLRB General Counsel Seeks to Restrict Employer Free Speech

The National Labor Relations Board (NLRB) made two announcements recently that should be of concern to all employers with employees not represented by a union.  The first announcement was made by the NLRB General Counsel, Jennifer Abruzzo, who announced that she will seek to overturn an employer’s ability to enforce mandatory employee meetings during an organizing campaign.  This announcement coincides with another announcement by the NLRB stating they have seen a dramatic increase in union activity nationwide and particularly, they are seeing an increase in union representation petitions filed. NLRB General Counsel Declares War on Captive Meetings When an employer is confronted with an organizing effort by employees, an important tool in making the employer’s case to the employees is to hold employee meetings.  Often employees are required to attend the meetings during which an employer’s representative describes the reasons the employer is opposed to a union and why it is not in the employees’ best interests to vote for a union to represent them.  The meetings offer employers the opportunity to present facts and information that the unions do not give to employees.  Employers must be cautious in what they say at these meetings because they cannot make threats about what will occur if the union is voted to be the collective bargaining representative or make threats of disciplinary action that could result for the employees who support the union.  Employers can make many arguments that are not threatening or coercive.  For example, employers can explain the cost of union dues, make clear that the union cannot make the employer agree to any provision in a collective bargaining agreement, and remind employees that a labor union does not create jobs, customers, or work for the employees.  With proper preparation, employee meetings can be an effective way for management to communicate their message and persuade employees to vote against union representation. This important tool may be in danger.  Jennifer Abruzzo, General Counsel for the NLRB, has issued a Memorandum in which she asserts that NLRB cases that allow captive employee meetings should be overturned. In this memorandum, she seeks to restrict employers’ free speech during union organization campaigns. General Counsel Abruzzo stated in her Memorandum that she believes that mandatory meetings in which employees are forced to listen to their employer’s presentation concerning the exercise of their statutory labor rights involve “an unlawful threat that employees will be disciplined or suffer other reprisals if they exercise their protected right not to listen to such speech.”  She asserts that NLRB case precedent, which has allowed such meetings, is inconsistent with fundamental labor law principles and the National Labor Relations Act (the “Act”). Section 8(c) of the Act provides that expression of “views, argument or opinion” that “contains no threat of reprisal or force” is not an unfair labor practice.  Nonetheless, General Counsel Abruzzo asserts that despite this language in the Act, previous NLRB precedent was incorrect in holding that an employer does not violate the Act by compelling employees to attend meetings in which it makes speeches urging them to reject union representation. Therefore, she wrote, mandating that employees attend such meetings constitutes a captive audience, deprived of their statutory right to refrain from listening to such explanations.  She states that employees are compelled to listen by implying a threat of discipline, discharge, or other reprisal.  She argues that employees will feel threatened even though it is not stated explicitly. Ms. Abruzzo intends to seek a change in well-settled NLRB precedent by charging employers who conduct mandatory employee meetings during an organizational campaign with an unfair labor practice.  She wrote that she would propose that the Board adopt “sensible assurances” that an employer must convey to employees in order to make clear that their attendance is truly voluntary.  This would include statements that employees are not required to attend the meetings. Increase in Union Representation Petitions The NLRB announced that during the first six months of the 2022 fiscal year (October 1-March 31), union representation petitions filed at the NLRB increased by 57%.  A representation petition is a petition filed by employees or unions to request that the NLRB conduct an election to determine if employees wish to be represented by a union.  In order for the NLRB to proceed with an election, at least 30% of the employees in the bargaining unit (a group of employees with a clear and identifiable community of interest) must sign authorization cards stating that they wish the union to represent them for collective bargaining purposes. This increase in petitions is not a surprise.  We have seen that employees are increasingly coordinating their efforts to challenge employer practices, working conditions, safety conditions and wages.  The recent petitions filed at various Amazon and Starbucks sites are examples where employees have decided they need a third party to represent them in their demands for improvements in their wages and working and safety conditions. Conclusion This increase in labor activity nationwide is higher than any increase seen by the NLRB in the past 10 years.  Employers should prepare now for the possibility that a union may attempt to organize their employees, rather than wait for a representation petition.  They should identify what changes and steps they should take now to inoculate their workplace from a union’s effort to represent their employees.  Employers should think about improvements in wages, benefits and working conditions that would make employees disinterested in union representation. The NLRB may well accede to Ms. Abruzzo’s request to overturn the well-settled law and find that it is unlawful for an employer to require employees to attend employee meetings, particularly during an organizational campaign where the employers present nonthreatening arguments and reasons why a union is unnecessary.  If the NLRB decides as she is hoping they will, employers will lose a vital tool during an organizational campaign to persuade employees that it is unnecessary and not in their best interests to have a third party represent them.  This possibility, combined with the increase in union activity and employee interest in unions, is a warning to employers that they are not immune to union representation.

April 25, 2022

Collective Bargaining

Project Labor Agreements are Now Required for Large Federal Construction Projects

Last week, I wrote a blog post predicting that President Biden may be requiring project labor agreements (PLAs) on projects funded by the Infrastructure Investment and Jobs Acts, effective November 15, 2021 (link here).  That prediction has now become reality. On Friday, February 4, 2022, President Joe Biden signed Executive Order 14063 (EO 14063).  EO 14063 requires PLAs on federal large-scale construction projects. A “large-scale construction project” means a federal construction project for which the total estimated cost of the construction contract is $35 million or more.  Federal agencies, awarding any contract in connection with a large-scale construction project, must require every contractor or subcontractor engaged in construction on the project to agree, to negotiate or become a party to a project labor agreement with one or more appropriate labor organizations. Any project labor agreement reached pursuant to EO 14063 must: Bind all contractors and subcontractors on the construction project through the inclusion of appropriate specifications in all relevant solicitation provisions and contract documents; Allow all contractors and subcontractors on the construction project to compete for contracts and subcontracts without regard to whether they are otherwise parties to collective bargaining agreements; Contain guarantees against strikes, lockouts and similar job disruptions; Set forth effective, prompt and mutually binding procedures for resolving labor disputes arising during the term of the project labor agreement; Provide other mechanisms for labor management cooperation on matters of mutual interest and concern, including productivity, quality of work, safety and health; and Fully conform to all statutes, regulations, Executive Orders and Presidential Memoranda. EO 14063 contains some exceptions to the PLA requirement.  A senior official within an agency can grant an exception by providing a specific written explanation of why as least one of the circumstances described in EO 14063 exist: Requiring a PLA would not advance the federal government’s interests in achieving economy and efficiency in federal procurement. Such a finding must be based on the following factors: The project is of short duration and lacks operational complexity; The project will involve only one craft or trade; The project will involve specialized construction work that is available from only a limited number of contractors or subcontractors; The agency’s need for the project is of such an unusual and compelling urgency that a PLA would be impracticable; or The project implicates other similar factors deemed appropriate in regulations or guidance which may be issued pursuant to EO 14063. Based on inclusive market analysis, requiring a PLA on the project would substantially reduce the number of potential bidders so as to frustrate full and open competition. Requiring a PLA on a project would otherwise be inconsistent with statutes, regulations, Executive Orders, or Presidential Memoranda. President Biden stated that nothing in the Executive Order prohibits an agency from voluntarily requiring a PLA even though they are not required to do so by EO 14063. EO 14063 is effective immediately and will apply to all solicitations for contracts issued on or after regulations are issued by the Federal Acquisition Regulatory Council (FAR Council).  The Order states that the FAR Council must propose implementation regulations within 120 days of, February 4, 2022. Both union and non-union contractors should be alert to this significant new requirement for large-scale federal construction projects.  Union contractors should be aware that a PLA could apply certain working conditions to the project which are not contained in the contractor’s existing collective bargaining agreement(s). EO 14063 is a dramatic shift from the Executive Order President George H.W. Bush issued in 1992, which was rescinded by President Bill Clinton in 1993, and the Executive Order President George W. Bush signed in 2001, which was rescinded by President Barack Obama in 2009, both prohibiting the use of PLAs for federal construction projects. Please see Phyllis Karasov’s explanation of what a PLA is here.

February 8, 2022

Collective Bargaining

Project Labor Agreements and Government Funded Infrastructure Projects: What You Need to Know Now

As many construction contractors are aware, the new Infrastructure Investment and Jobs Act, effective on November 15, 2021, includes significant monies for transportation, roads, bridges, rail, and other infrastructure construction.  President Biden has encouraged public governmental agencies to use project labor agreements (PLAs) on these government-funded infrastructure projects. What is a PLA? A PLA requires that all contractors and subcontractors working on the project, whether union or non-union, sign and be bound by a PLA with the local building and construction trade council for work performed on the project.  Members of a building and construction trades council include most labor unions in the construction industry including the operating engineers union, the carpenters union, and the laborers union.   PLAs are intended to cover the period during which the public project is under construction and ends when the project ends.  PLAs result from a public agency including a requirement for a PLA in a construction project’s bid specifications. For projects which require a PLA, the contractor must sign the PLA and agree to be subject to specified provisions in the collective bargaining agreement of the union(s) which traditionally represent the classification of employees employed by the contractor. For example, the operating engineers’ local union would traditionally represent heavy equipment operators and in this case, an excavating subcontractor would be subject to the wage and benefit provisions of the local operating engineers’ collective bargaining agreement.  Many public agencies have been requiring PLAs for years, but we can expect to see an increase in the number of projects that will require a PLA in light of the current political environment.  One advantage to public agencies is that a PLA promises that none of the union members of the local building and construction trades council will engage in a strike during the project.  Obviously, this commitment from the unions avoids the delays and disruption that a strike can cause to a project. Today, nearly 87% of the construction industry is non-union.  A PLA, which covers both union and non-union contractors, subjects the non-union contractors to many of the requirements of an applicable union collective bargaining agreement.  The contractor or subcontractor is not required to sign the actual collective bargaining agreement; however, the PLA makes the contractor/subcontractor subject to certain provisions of a collective bargaining agreement, such as wages and benefits. Why Should a Contractor or Subcontractor Care? Although many non-union contractors believe that a PLA is not something they need to be concerned about, the fact is that if a non-union contractor wants to work on a public project, they should expect that they may be required to sign a PLA. Contractors who bid and are awarded work on a public job may not always be aware that the job is going to be governed by a PLA. Among other things, a PLA requires the contractor to agree to pay the applicable union wages, to contribute to union fringe funds, to use a union hiring hall, and to comply with both governmental and union rules on payroll and recordkeeping.  Employees of a non-union contractor cannot be required to pay full union dues and become union members, but they can be required to pay a monthly agency fee to the union in lieu of union dues. Union hiring halls are prohibited from discriminating between union and non-union members when referring employees to projects but, obviously, it is not always easy to identify when discrimination occurs. Minority and women affirmative action goals, as well as requirements that a percentage of subcontractors be Disadvantaged Business Enterprises (DBEs), can conflict with a contractor’s obligation to hire from a union hiring hall.  For many contractors and subcontractors, the requirement that they hire employees from a union hall makes it difficult to meet affirmative action and DBE goals. We have worked with many non-union contractors’ signatories to a PLA and have seen how the application of a PLA can discourage the subcontractors a construction company normally works from agreeing to work on a PLA project. In that case, contractors have to find different subcontractors, with whom they have little or no familiarity, but who are willing to sign a PLA. Further, the PLA typically allows union business agents to enter a project and talk to employees, and many non-union contractors do not want to expose their employees to continuous visits from union representatives.  Contractors often view a PLA as an open door to a union petition for representation of their employees. Construction contractors can expect a significant flow of public work as a result of the Infrastructure Investment and Jobs Act but should be aware that many of these jobs will be governed by a PLA.

February 2, 2022

Best Practices

The Roller Coaster Continues: OSHA’s Emergency Temporary Vaccine Standard for Large Employers

Most of our readers are aware that on November 9, 2021, OSHA issued an Emergency Temporary Standard (ETS) requiring covered employers (employers with 100 or more employees) to require employees to be vaccinated against COVID-19.  The ETS allows employers to decide whether to adopt weekly COVID-19 testing and mask mandates in lieu of vaccinations.  On November 12, the U.S. Court of Appeals for the Fifth Circuit prohibited the ETS from taking effect, additional lawsuits were also filed against OSHA.  All lawsuits were consolidated and assigned to the Sixth Circuit Court of Appeals.  On December 17, the Sixth Circuit Court of Appeals dissolved the order of the Fifth Circuit and reinstated the ETS. Many employers and state attorneys general requested that the U.S. Supreme Court pause the Sixth Circuit Order.  These petitioners asked the Supreme Court to fast-track their appeals and temporarily stop enforcement of the ETS while the Supreme Court considers the appeal.  The Supreme Court declined to stop the enforcement. The Supreme Court has scheduled oral arguments for January 7, 2022, on both the OSHA ETS and the Interim Final Rule, requiring health care workers to be vaccinated, issued by the Centers for Medicare and Medicaid Services. What should an employer do? Large employers who are subject to the ETS are presented with the dilemma of whether to prepare for enforcement of the ETS or delay until the U.S. Supreme Court rules on the appeal from the Sixth Circuit Court of Appeals order.  OSHA has announced that in light of the uncertainty caused by the appeal to the U.S. Supreme Court, they have delayed the original effective date of the ETS.  OSHA has stated that it will not issue citations for non-compliance with any requirements of the ETS before January 10, 2022, and will not issue any citations for noncompliance with the testing requirements before February 9, so long as an employer “is exercising reasonable, good faith efforts to come into compliance” with the vaccine standard. We recommend that covered employers with 100 or more employees begin to prepare for the implementation of the ETS so that they are ready when it comes into effect.  With oral arguments before the U.S. Supreme Court scheduled for January 7, it is unlikely that any decision will be issued until after January 10, the date OSHA has set as the effective date of the ETS.  Therefore, as of January 10, 2021, covered employers must begin to exercise “reasonable, good faith efforts to come into compliance” with the vaccine standard. Employers should take the following steps while waiting for the Supreme Court’s ruling: Develop a mandatory vaccine policy. Determine whether to adopt weekly testing for employees who do not wish to be vaccinated. This policy must require that unvaccinated employees wear face coverings. If weekly testing will be allowed in lieu of vaccinations, unvaccinated employees should provide proof of a negative test by February 9, 2022. Determine the process for employees to request religious or medical exemptions, and who will be involved in making decisions on these requests. Develop forms for employees to request exemptions. Collect vaccine status information for your employees and develop the required vaccination roster showing the vaccination status of each employee. Develop compliance training for managers involved in implementing the vaccination/testing policies. Deliver information about the policies to employees as required by the ETS. The ETS requires that employers pay up to four hours of paid time off to non-exempt employees to obtain the required vaccination so employers should begin preparations for payments.  In addition, the ETS requires that employees be given reasonable paid time off, including paid sick leave, to recover from the side effects following each dose of the vaccine. The tumultuous introduction of the ETS has caused uncertainty and confusion for employers.  However, at present, the OSHA ETS goes into effect on January 10 and employers cannot afford to simply do nothing and wait for the Supreme Court to rule.  Employers must engage in good faith efforts to come into compliance with the ETS by January 10, 2022. If you have questions about the ETS or would like further guidance please contact Phyllis Karasov at pkarasov@larkinhoffman.com.

December 27, 2021

Labor Law

Mandatory COVID-19 Vaccinations and Testing Issued by Federal OSHA

Update 11/8/21 –  On Saturday, a three-judge panel in the U.S. Court of Appeals for the Fifth Circuit in Louisiana issued astay of enforcement of the OSHA rule mandating vaccines for employees of large businesses. The ruling blocks the OSHA rule as outlined below. We are following the situation and will keep you updated. On Thursday, November 4, 2021, Federal OSHA issued its emergency temporary standard (ETS) regarding mandatory COVID-19 vaccinations and COVID-19 testing.  The ETS will become effective on January 4, 2022.  The date by which employees must be vaccinated under the federal contractor rule was pushed back to the same date. The ETS requires employers to adopt mandatory vaccination policies for their workplaces.  The ETS does allow employers to also adopt a policy allowing employees to undergo regular COVID-19 testing and wear a face covering at work in lieu of vaccination.  The ETS makes it clear that OSHA prefers that employees be required to be vaccinated. A mandatory vaccination policy must require vaccination of all employees other than those employees: For whom a vaccine is medically contraindicated; For whom medical necessity requires a delay in vaccination; or Who are legally entitled to a reasonable accommodation because they have a disability or sincerely held religious beliefs, practices, or observances that conflict with the vaccination requirement. If an employer allows COVID testing in lieu of vaccination, employees who do not wish to be vaccinated must be tested for COVID-19 every 7 days.  Unvaccinated employees must begin wearing masks on December 5 and provide a negative COVID test beginning on January 4. The ETS does not apply to employers covered by the federal contractor rule requiring mandatory vaccinations.  However, if a federal contractor is not subject to the new federal contractor rule because their contract has not been renewed or extended, the contractor must comply with the ETS until they are covered by the federal contractor rule. The ETS also does not apply to employees while they are working from home, or who work exclusively outdoors. Beginning on December 5, the ETS requires employers to provide paid time off while an employee is being vaccinated or recovering from any vaccine side effects that prevent them from working.  Employers are not required to pay for the costs of the testing, or the time off for testing unless required by local or state law or a collective bargaining agreement. What Businesses are Covered The ETS applies to employers that have a total of at least 100 employees at any time the ETS is in effect.  OSHA determined that unvaccinated employees of these employers face a grave danger of exposure to COVID-19, including the Delta variant, while they are at work.  Because this grave danger applies to all unvaccinated employees who come into contact with other people in indoor settings as part of their employment, the ETS applies to all employers with 100 or more employees, regardless of industry. OSHA explained that the decision to limit the coverage of the ETS to employers with 100 or more employees is based on four reasons. OSHA is “confident” that employers with 100 or more employees can meet the ETS’ requirements promptly. OSHA is less confident that smaller employers can do so without undue disruption. The coverage threshold enables the ETS to reach two-thirds of all private-sector workers in the nation. The ETS will reach the largest facilities where the deadliest outbreaks of COVID-19 can occur. The 100-employee threshold is comparable with the size thresholds established by Congressional and agency decisions in analogous contexts. Who is included in the 100 employee threshold? For a company with multiple locations, all employees at all locations are counted for purposes of the 100-employee threshold for coverage.  The ETS states that in a traditional franchisor/franchisee relationship in which each franchise location is independently owned and operated, the franchisor and franchisees would be separate entities for coverage purposes. In situations where two or more related entities handle safety matters as one company, the employees of all companies making up the integrated single employer must be counted. In the case of employees of a staffing agency, only the staffing agency would count the jointly employed workers for purposes of the 100-employee threshold.  This means that the host employer does not count the staffing employees but would be covered by the ETS if it has 100 or more employees in addition to the staffing agency employees. In the construction context, each company working on a multi-employer worksite is treated differently in counting employees.  If a general contractor has more than 100 employees spread out over multiple construction sites, the employer is covered under the ETS even though it does not have 100 or more employees at any one worksite. In all regards, part-time employees are counted in calculating the 100 employees.  Remote workers are also counted. Legal Challenges Legal challenges to the ETS are expected.  The ETS states that it pre-empts any state or local laws that prohibit mandatory vaccination policies. Immediate Issues for Employers Employers will have to decide if they will require all employees to be vaccinated, or whether they will allow employees to be tested weekly in lieu of vaccinations.  Although the work involved in collecting and monitoring weekly test results can be burdensome, allowing employees to avoid vaccination by being tested may cause less disruption and turmoil than mandating vaccinations.  Employers should begin now to collect information about the vaccination status of their employees.  Employers must determine the vaccination status of each employee, collect acceptable proof of vaccination, and maintain records of each employee’s vaccination status. Responding to requests for a reasonable accommodation because of medical conditions or religious beliefs will also be time-consuming for employers.  Employers should develop forms and procedures for employees to request accommodations.  This process should be discussed in the written policy which OSHA requires.  Employees should be trained to review and decide on accommodation requests.  And as is the case with all medical information, employers should have protocols in place to preserve the confidentiality of vaccination status, requests for accommodation because of disabilities or other medical conditions. The ETS does not cover remote workers.  For employers who have struggled getting employees back into the office, the ETS may result in more requests to work from home. The fines for violating the ETS are high – $14,000 per violation.  Employers need to begin to consider these issues immediately. Please reach out to Phyllis if you have any questions regarding your labor and employment issues.  Phyllis can be reached at pkarasov@larkinhoffman.com or 952-896-1569.

November 5, 2021

Accommodations

Undue Hardship for Religious and Medical Exemptions From a Mandatory COVID-19 Vaccination Policy

Many employers are adopting a mandatory COVID-19 vaccine policy, or they are required by owners, contractors, developers, or state, local or federal government to adopt such a policy for employees working on particular projects.  The recognized exceptions to mandatory vaccination policies are for employees who have a medical condition, or employees who have a religious objection to the COVID-19 vaccination. If an employee is entitled to an exemption from a mandatory vaccine policy because of a medical condition, the employer must determine if a reasonable accommodation exists so that the employee can continue to work without the vaccination.  Similarly, when an employee is entitled to an exemption because of a sincerely held religious belief, the employer should determine if a reasonable accommodation exists. Title VII prohibits religious discrimination and requires an employer to provide a reasonable accommodation for an employee’s religious beliefs.  A similar obligation to provide a reasonable accommodation exists under the ADA for a qualified employee’s known physical or mental limitations.  “Undue hardship” is the limitation on the obligation to provide a reasonable accommodation under both Title VII and the ADA.  However, the criteria for “undue hardship” are very different between Title VII and the ADA. Under the ADA, undue hardship means an action that requires significant difficulty or expense.  Accommodations may cause an undue hardship if the accommodation is unduly expensive, substantial, disruptive, or will fundamentally alter the nature or operation of the business.  The factors that are to be considered in determining whether an undue hardship exists include (1) nature of the accommodation; (2) the cost of the accommodation; (3) the employer’s financial resources; (4) the size of the business; and (5) the operation of the business. Another important aspect of the analysis under the ADA is whether the presence of an unvaccinated employee in the workplace poses a direct threat to the employee or others.  A direct threat is defined as “a significant risk of substantial harm to the health or safety of the individual or others that cannot be eliminated or reduced by reasonable accommodation.”  Assessment of whether there is a direct threat is very fact-based and dependent upon individual circumstances.  Among the factors to be considered is the type of work environment, whether the employee works with others, the ability to social distance, the extent of contact an employee has with co-workers, and whether the employee works indoors or outdoors. If an unvaccinated employee poses a direct threat to themselves or others, the employer must ascertain if a reasonable accommodation is possible.  If the employee does not pose a direct threat, the employer must allow the unvaccinated employee to perform their work at the employer’s location. In contrast, there is a much lower standard for undue hardship under Title VII when dealing with a religious belief.  Under Title VII, an undue hardship requires only “more than de minimus cost.”  Thus, the burden on an employer to accommodate a religious objection to a COVID-19 vaccination is lower than the burden to accommodate a disability-related objection to a COVID-19 vaccination. Despite the difference in the criteria for determining undue hardship in the case of religious objection vs. medical exemption, the accommodations for an unvaccinated employee are most likely the same.  Reasonable accommodations for both exceptions could include social distancing, working remotely, masking, weekly COVID testing, moving the employee to an isolated work location, reassignment, or changing work hours.  The difference is that if a reasonable accommodation for a sincerely held religious belief results in more than a minimal cost, the employer does not have to provide that accommodation.  On the other hand, if the accommodation is requested because of an employee’s medical condition, the burden the employer must accept is much higher under the ADA. An employer should engage in an interactive dialogue with the employee requesting an exemption, whether the request is based on a medical condition or a religious objection.  Regardless of the basis, the employer must consider which accommodations may be possible and discuss the options with the employee. Conclusion Employees have the right to request an exemption from a mandatory COVID-19 vaccination policy because of a disability or because of a sincerely held religious belief.  When a request for an exemption is made, employers must assess whether a reasonable accommodation exists such that an unvaccinated employee can continue to work, or whether such accommodations pose an undue hardship to the employer.  While the standards for undue hardship are different when analyzing a religious objection vs an exemption for a medical condition, the accommodations may not be that different.  Regardless of the basis for the exemption request, an employer should document the request, the reason(s) for the request, any documentation submitted by the employee, and the accommodations which were considered.  An accommodation can be reasonable for one employee, but not reasonable for another employee because of the nature of their jobs and the location of their work areas. For more information regarding reasonable accommodations for religious exemptions please see: An Employer’s Guide to Addressing Requests for Religious Exemption From a Mandatory COVID-19 Vaccine Policy. Please reach out to Phyllis is you have any questions regarding your labor and employment issues.  Phyllis can be reached at pkarasov@larkinhoffman.com or 952-896-1569.

November 1, 2021

Collective Bargaining

The NLRB Gets Tougher on Penalties for Unfair Labor Practices

Several months ago, we settled an unfair labor practice charge filed by an employee against our client alleging retaliation for the employee’s protected concerted activity.  The employee had enlisted the support of other employees in challenging certain pay practices, and it was alleged that the charging party was terminated because of those efforts, rather than for his performance.  We were able to resolve the charge with a settlement agreement. The settlement agreement, consistent with the practice of the National Labor Relations Board (NLRB), included posting a notice informing employees that the employer will comply with the National Labor Relations Act (NLRA),  pay back-pay, and a provision in the agreement that our client denied violating the law.  The employee was not interested in reinstatement so that was not a condition of the settlement agreement, although normally it would be included in a termination case.  The NLRB has settled termination cases with these terms for at least 40 years, if not more. Today, that settlement may not have been possible.  On September 8, 2021, Jennifer A. Abruzzo, the NLRB’s General Counsel, issued a memorandum in which she discussed the NLRB’s revision and updating of the remedies available to victims of unfair labor practices.  On September 15, 2021, General Counsel Abruzzo issued a second memorandum, describing the types of remedies that regions should seek in settlement agreements.  Both memoranda signal a significant expansion of the types of remedies that Regional Offices will seek when they determine that a party has engaged in an unfair labor practice, or in a settlement agreement with the NLRB. General Counsel Abruzzo stated in the memoranda that the Board possesses broad discretionary authority to create remedies to fit the circumstances of every case.  She wrote that as part of the make-whole remedy to which victims are entitled, the Regional Office should seek an award of consequential damages to make employees whole for economic losses, apart from the loss of pay or benefits, either in the settlement agreement or after a determination that a party violated the NLRA.  Abruzzo provided examples of economic losses suffered as a direct and foreseeable result of an employer’s unfair labor practice for which the Regional Offices should seek a remedy in a settlement agreement or after a determination that a violation occurred.  Examples include: Compensation for health care expenses that an employee incurred as a result of the unlawful termination of health insurance. Compensation for credit card late fees. Compensation for the loss of a home or car that an employee suffered as a result of an unlawful discharge. Front pay when an employee is not interested in reinstatement. Incorporating default language into a settlement agreement. Requiring letters of apology. Sponsorship of work authorizations for undocumented employees who unlawfully terminated. In cases involving unlawful conduct committed during a union organizing campaign, where an employer engaged in unlawful conduct that interfered with the “laboratory conditions” necessary for a free and fair election, she suggested examples of remedies that Regional Offices could seek from the NLRB: Union access to the employer’s premises or bulletin boards. Reimbursement of the union’s organizational costs. Reading of the notice to employees and the explanation of rights to employees by a management official or by an NLRB agent. Training employees, including supervisors and managers, on employees’ rights under the NLRA. Hiring a qualified applicant of the union’s choice in the event a discharged discriminate is unable to return to work. In cases involving unlawful failures to bargain in good faith with a union or an employer, General Counsel Abruzzo stated that she was considering make-whole remedies that would: Compensate employees for the losses they incurred as a result of their employer’s refusal to bargain or failure to bargain in good faith. Dictate bargaining schedules and require bargaining not less than twice a week at least six hours per session until an agreement or bona fide impasse is reached. Reimburse collective bargaining expenses. Conclusion We already know that the current Democratic majority NLRB is far more pro-union and pro-employee than was the Republican majority NLRB under President Trump.  We had previously been put on notice that the NLRB will begin reversing many of the decisions made under President Trump regarding employee handbook provisions, using company email for union organizing, union access to private property, and other types of cases.  General Counsel Abruzzo’s September 8 and September 15, 2021 memoranda are further evidence of the significant changes which are occurring at the NLRB.  We expect to see much harsher remedies sought from employers in settlement agreements and when an employer is found to have engaged in an unfair labor practice.

October 25, 2021

Accommodations

An Employer’s Guide to Addressing Requests for Religious Exemption From a Mandatory COVID-19 Vaccine Policy

Employers mandating that employees be vaccinated against COVID-19 should know how to respond to an employee’s request for a religious exemption from the vaccination policy.  In this post, I discuss the process an employer can use to distinguish an employee’s personal opposition to a vaccination from a sincerely held religious belief that qualifies as a religious exemption and what options an employer has to protect its business. Sincerely Held Religious Belief When an employee requests a religious accommodation, the first question to ask is whether the employee has a sincerely held religious belief, practice or observance which prevents them from being vaccinated.  Title VII of the Civil Rights Act, states that sincerely held religious beliefs “include moral or ethical beliefs as to what is right and wrong which are sincerely held with the strength of traditional religious views.”  This vague statement means that employees who have a personal or philosophical disagreement with a vaccine are not entitled to a religious exemption. However, it is difficult to distinguish a personal or philosophical belief from a moral or ethical belief held with the strength of traditional religious views.  The religious belief does not have to be based on traditional religions and could derive from a religion or ethical or moral code with which the employer is unfamiliar. The U.S. Equal Employment Opportunity Commission (EEOC) has stated that employers should generally assume that an employee’s stated religious belief is sincerely held unless the employer has a good faith and objective basis for questioning the religious nature or the sincerity of the stated belief.  There is little guidance as to the definition of a “good faith and objective basis” for questioning a claim of religious belief. Documentation of a Request for Religious Exemption We recommend that employers require employees who claim they have a sincerely held religious belief and request an accommodation, to submit the request in writing explaining the basis for the sincerely held religious belief.  The employer is entitled to request information relating to the accommodation request and require a certification from the employee that the statements, documents and information provided to the employer are true and correct. An employer who has a good faith and objective basis for questioning the religious nature or the sincerity of the stated belief, can request documentation of the religious belief.  Examples of good faith and objective bases for questioning the validity of a claim for religious exemption include: when an employee has never requested an accommodation in the past for religious reasons; an employee has made statements to others that they distrust the vaccine; an employee quotes an online news article challenging the efficacy of the COVID-19 vaccine. These statements reflect personal opposition to the vaccine and are inconsistent with the claim that the vaccination is contrary to the employee’s religious belief.  The types of documents that an employer can request could include: Explanations from the employee about the nature and principles of the employee’s asserted beliefs and information about when, where and how they follow the practice or belief. Religious materials which describe the religious belief or practice. Written statements from others, such as religious leaders, with whom the employee has discussed his or her beliefs or who have observed the employee’s past behavior that evidences this religious belief. Each employee’s request for an exemption should be assessed on a case-by-case basis.  The individual reviewing the request for the religious exemption is entitled to consider whether the employee has engaged in any previous behavior or conduct that either deviates from or is consistent with the principles of his or her beliefs.  For example, perhaps the employee has made previous requests for accommodations for their religious beliefs.  The person reviewing the request is entitled to consider all previous statements made by that employee which may help to ascertain whether the employee’s objection is truly based on a sincerely based religious belief or, rather, is a personal or philosophical objection to the vaccine.  It is advisable for the same person to review and decide all requests for religious accommodation to ensure that these determinations are consistent and objective. An Interactive Process Should be Used to Determine if an Accommodation is Feasible If the religious exemption is granted, the employer should engage in an interactive process with the employee to determine whether the exemption from the COVID-19 vaccine requirement can be accommodated without creating a safety risk for other employees or the public.  Examples of possible accommodations include: Weekly COVID-19 testing; The employee is required to wear a mask at all times; Requiring the employee to maintain social distancing from co-workers and/or others; Move the employee to a more isolated work area where they will be more than six feet apart from co-workers; Reassign the employee to another available position which will allow the unvaccinated employee to work in a more isolated manner. Employers should discuss the possibility of these options with the employee if they are feasible; an employer is not required to give the employee the specific accommodation the employee has requested. Whether any accommodations are feasible depends upon the unvaccinated employee’s job duties; the physical set-up of the work place; whether the employee interfaces with the public; and other characteristics unique to the employer and to the unvaccinated employee’s job responsibilities.  There are situations where accommodations are not possible and, in that case, employers have the option to exclude employees who refuse to be vaccinated from the workplace.  In this situation, the employee could be terminated or placed on an unpaid leave of absence until the pandemic subsides.  Employers should not, however, exclude an employee from the workplace without consulting legal counsel. Accommodations Creating an Undue Hardship Employers can determine that the accommodation requested by an employee for religious reasons is an undue hardship for the employer.  The existence of “undue hardship” in the context of religious accommodation uses a lower standard than is used to determine “undue hardship” under the Americans With Disabilities Act (ADA).  An undue hardship in connection with a religious accommodation is one that would require more than a de minimis (minor) cost or burden to the organization or the business operations.  In contrast, the standard for undue hardship under the ADA is “significant difficulty or expense.”  Certainly, a safety risk or impact on the business operations or objectives can be considered in determining whether there is an undue hardship. Conclusion Religious objections to a mandatory vaccination policy can be very difficult to evaluate.  Employers should be alert to statements which employees make to other employees or to management concerning their personal views of the vaccination. These statements may evidence either a sincerely held religious belief, for which an accommodation may be appropriate, or a personal or philosophical objection to the vaccine, for which no accommodation is required. If you have questions about your vaccine policies or other workplace policies during this challenging time, I am available to help.  Please feel free to phone or email pkarasov@larkinhoffman.com with any questions you may have.

September 9, 2021

Labor Law

We Are on the Brink of Change – Labor Law Under President Biden’s Administration

During President Biden’s campaign, he described himself as a “union man.”  We are nearing the first 100 days of President Biden’s presidency, and his appointments to the NLRB and the U.S. Department of Labor (“DOL”) are consistent with that description.  He has been appointing pro-union representatives including current or former state and federal officials who are sympathetic with labor unions to both agencies.  The new Secretary of Labor, Marty Walsh, previously served as a construction trades union official before becoming the Mayor of Austin and before moving into his current position as Labor Secretary. The majority of the five-member National Labor Relations Board will flip to the Democrats when William Emmanuel’s term expires on August 27, 2021, and when President Biden fills the vacant open Board seat. The new General Counsel of the NLRB, Peter Sung Ohr, has already made decisions supportive of union positions.  Mr. Ohr is a prosecutor of unfair labor practice charges and significantly influences NLRB policy and enforcement.  Once the NLRB has a Democratic majority, in combination with the new General Counsel, it can be expected that many of the decisions made during the Trump administration giving employers more flexibility, will be reversed. A few examples of the expected outcomes as a result of reversals of decisions made by the Republican-dominated NLRB are: There will be limitations on an employer’s right to insist on confidentiality of witness statements and workplace investigations. Before the first collective bargaining agreement is signed, employers will be required to bargain over discretionary management decisions, such as discipline. Employers will be required to provide employee access to an employer’s electronic communications systems for communications regarding protected concerted activity, which would include union organizing. Permissible employee handbook policies will be diminished because of the view that the policies restrict an employee’s right to engage in protected concerted activity. Executive Orders President Biden has begun rescinding executive orders promulgated by President Trump and has frozen current rulemaking of the executive branch agencies which applies to both the DOL and the NLRB.  President Biden is expected to reinstate an executive order issued by President Obama that required the consideration of an employer’s labor law violation history as a criterion to be weighed when considering a party for a federal contract.  Under the executive order, employers seeking federal contracts were required to sign neutrality agreements in which they promised not to oppose union organizing. The PRO Act The Democrats are supporting a major amendment to the NLRA.  The Protecting the Right to Organize Act (the “PRO Act”) provides increased protections to labor union organizing activities and reduces the rights of employers to respond to union campaigns. The House of Representatives passed this legislation on March 9, 2021, and the bill will be voted on by the Senate sometime in the future.  A few examples of the comprehensive scope of the changes that would occur if the PRO Act is enacted are: Allowing intermittent strikes to be deemed s protected concerted activity. Currently, intermittent work stoppages are not considered to be protected concerted activity. Repeal of the provision allowing states to have “right to work” laws prohibiting employer and union agreements that make union membership mandatory. Making secondary boycotts lawful. Currently, boycotting a neutral employer because of its connection to a primary employer with whom the union has a dispute is illegal. Requiring employee access to an employer’s electronic communication systems for union organizing and other protected concerted activity. Prohibiting “captive audience” meetings in which employers discuss their position on a union campaign or unionization. Issuing fines for unfair labor practices with the possibility of a personal fine on management employees. Allowing for temporary injunctions while certain unfair labor practice charges are being litigated, such as termination cases. Establishing a private right of action for unfair labor practices. Requiring arbitration of the first contract under negotiation between an employer and a newly recognized union if no contract is agreed upon within 90 days of the commencement of negotiations. Establishing a cabinet-level team to promote union organizing and collective bargaining. Department of Labor The DOL has already published notices to rescind a number of proposed rules issued under President Trump such as the proposed rules defining independent contractor and joint employer.  The DOL has also withdrawn two opinion letters issued under President Trump regarding independent contractor classification of virtual workers and compensable time for truck drivers under the FLSA.  In light of the union affiliation of the new Secretary of Labor, it is very possible that the DOL will revisit two subjects favorable to labor unions. Under President Obama, the DOL attempted to revise the “Persuader Rule” to require that employers report fees paid to attorneys who advise employers in representation and decertification campaigns and other labor matters. These changes caused great concern to employers and their attorneys because of their impact on the attorney/client privilege. Labor unions are required to submit annual reports concerning their expenditures, including salaries paid to union officials. These financial reporting requirements may be reviewed and possibly eliminated. Conclusion Many well-established principles and statutory provisions (going back all the way to the 1930s) are subject to change under the current administration.  It is apparent that the NLRB has become very politicized and precedent has little value when the political party of the majority of the NLRB members dictates how cases are decided.  Similarly, the regulations and guidance promulgated by the Department of Labor are impacted by the political affiliation of the Secretary of Labor. Clearly, the pendulum is now swinging more towards the protection of employees and labor unions than the protection of employers.

April 30, 2021

Labor Law

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

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

April 19, 2021

Labor Law

Hold on to Your Hats! What to Expect Under President Biden’s Administration in Labor and Employment Law

Change in the political party of an administration can be expected to impact the development and interpretation of federal law and regulation.  This is particularly true in the transition between former President Trump’s administration and that of President Joseph R. Biden. President Biden has only been the President for two weeks, yet he has already made significant changes in the agencies that enforce federal labor and employment law.  Below are some of the changes already made and what you can expect. National Labor Relations Board The National Labor Relations Board (NLRB) is a five-person board appointed by the President with Senate consent, for 5-year terms.  At the present time, there are three Republican and one Democratic members of the NLRB.  President Biden has appointed the sole Democratic member, Lauren McFerran, as chair.  One position on the NLRB is vacant, and it is expected that President Biden will fill the fifth seat in the near future.  In August and September, the terms of two of the Republican members will expire, and President Biden will undoubtedly replace them with his own appointees.  Thus by September, the Democrats will have the majority on the NLRB. The General Counsel of the NLRB is responsible for determining what types of cases should be prosecuted by the regional offices.  The General Counsel often issues memoranda directing regional offices to issue Complaints based on specific factual situations and theories.  Often the General Counsel seeks cases to challenge existing precedents to secure changes in the law. Within hours of being sworn in as President, President Biden’s administration asked Peter Robb, the General Counsel under former President Trump, to resign from his position.  The General Counsel is appointed for a four-year term and President Biden asked Peter Robb to resign his position approximately 10 months earlier than his four-year term would have expired.  Previous Presidents have waited until the expiration of the General Counsel’s term before replacing them.  When Peter Robb refused to resign, he was immediately terminated.  The following day, the Biden administration terminated the Deputy General Counsel, Alice B. Stock, after she refused to resign.  President Biden has appointed Peter Sung Ohr to serve as Acting General Counsel.  Mr. Ohr is a career NLRB attorney, having begun his career with the NLRB in the Honolulu subregional office. It can be expected that once the majority of the NLRB is Democratic, combined with a new General Counsel, this newly comprised NLRB will be issuing decisions and promulgating rules which expand employee and labor union rights. Department of Labor (DOL) President Biden has appointed Marty Walsh as his Secretary of Labor.  Mr. Walsh served as the president of Laborers Union Local 223 and was publicly endorsed by AFL-CIO President Richard Trumka.  Employers should expect that because of Mr. Walsh’s priorities, the DOL will be issuing rules focused on promoting and protecting the interests of labor unions and employees, and restoring many of the gains realized by labor unions and employees under President Obama.  It can be expected that some of the initiatives issued by the Department of Labor under former President Trump will be rescinded.  For example, on January 6, 2021 the U.S. Department of Labor announced its Final Rule to provide guidance on classification of a worker as an independent contractor under the Fair Labor Standards Act.  The Final Rule is slated to take effect on March 8, 2021.  The Final Rule makes it easier to prove an individual is an independent contractor rather than an employee.  President Biden has indicated he will halt or delay all regulations which the Trump administration issued immediately prior to President Biden’s inauguration, including the independent contractor rule. Office of Federal Contracts Compliance Policy (OFCCP) On September 22, 2020, President Trump issued Executive Order 13950, which instructed government contracting agencies to add clauses to government contracts prohibiting the use of workplace training which includes any form of race or sex stereotyping.  President Trump’s Order prohibited federal contractors and subcontractors from providing certain workplace diversity training and programs, such as implicit bias training.  On January 20, 2021, President Biden issued Executive Order 13985, titled “Advancing Racial Equity and Support for Underserved Communities Through the Federal Government.”  Among other things, Executive Order 13985 revoked the Trump administration’s Executive Order 13950.  As part of the withdrawal of President Trump’s Executive Order 13950, the telephone hotline and email address that was established to collect complaints about contractors’ alleged non-compliance with Executive Order 13950 has been shut down and all complaints of alleged non-compliance received through the hotline or any other means have been administratively closed. Occupational Safety and Health Administration (OSHA) On January 21, 2021, President Biden issued an Executive Order on Protecting Worker Health and Safety which directs the Department of Labor to issue revised guidance for employers within two weeks.  The Executive Order also recommends that OSHA consider issuing emergency temporary standards for businesses to follow during the pandemic.  The Executive Order instructed OSHA to examine mask-wearing requirements to offer additional resources to help employers protect their employees and to partner with state and local governments.  On January 29, OSHA issued new guidance, entitled “Protecting Workers: Guidance on Mitigating and Preventing the Spread of COVID-19 in the Workplace“.  OSHA states this guidance is intended to inform employers and workers in most workplace settings outside of healthcare to identify and address risks of exposure to COVID-19.   OSHA had come under criticism under the Trump administration for failing to issue any new standards or regulations regarding COVID and directing businesses how to protect employees from the spread of COVID in the workplace. In addition, President Biden appointed James Frederick, a United Steelworkers Union official, to a top OSHA position.  It can be expected that under Mr. Frederick’s leadership, OSHA will be issuing more worker-friendly regulations and enforcement than previously. Federal Worker Protections President Trump issued several Executive Orders which limited the right of federal workers to collectively bargain, set time limits on negotiating collective bargaining agreements with federal labor unions, and removed civil service protection for certain federal employees.  President Biden has revoked all of these restrictions, signaling  his approach on employee rights and labor union protections. Conclusion New Executive Orders and federal agency appointments all point to the likelihood that we will see more worker-friendly and union supportive regulations and interpretations of existing law.  Under President Trump, many of the priorities of President Obama were weakened or reversed and we are now seeing a reversal of this reversal of priorities.  Employers should assume that federal labor and employment agencies will be issuing new regulations and rolling back agency directives and rules which leaned employer friendly.  Hold on to your hats!

February 2, 2021

Construction Industry

Did You Know There Is a New Independent Contractor Ordinance in the City of Minneapolis Effective January 1?

The City of Minneapolis determined that many freelance workers (independent contractors) need legal and economic protections since they are not covered by employment laws.  The City, therefore, enacted the Minneapolis Freelance Worker Protections Ordinance (the “Ordinance”).  This Ordinance, effective January 1, 2021, requires companies to enter into written agreements with most freelance workers. The Ordinance contains provisions applicable to a commercial hiring party, and other requirements applicable to an individual hiring party. Commercial Hiring Party A commercial hiring party means any person or entity regularly engaged in business or commercial activity, including a digital network-based entity, who retains a freelance worker to provide any service as part of that business or commercial activity.  A commercial hiring party that retains freelance workers to perform work in the City of Minneapolis must have a written contract with each worker if the worker will perform a minimum of: $600 worth of work within a one year period; or $200 of work within one week. The Ordinance applies to a commercial hiring party that retains a freelance worker not only when the worker provides services directly to that company.  It also applies to a freelance worker who provides services through a digital network to a third party. “Retains” means to enter into a contract through which the freelance worker provides services either to the hiring party or to a third party (such as a digital platform).  For example, if food is delivered in the City of Minneapolis via a digital network, the digital network must have a written agreement with the driver. The written agreement must be signed by the freelance worker and contain the following minimum elements: The name and address of the hiring party and the worker; An itemization of all material services to be provided by the worker; The compensation for the services, including the rate or rates and method of compensation; and The date on which the hiring party must pay the agreed-upon compensation or the mechanism by which the date will be determined. Where the parties are not able to specify the total compensation prior to performance, the written contract must describe the method by which the total compensation will be determined and identify which party is responsible for maintaining the information necessary to determine the compensation (such as tracking the number of hours worked, the applicable project or other method by which the freelance worker is paid). If the commercial hiring party is responsible for tracking the information necessary to determine the compensation, the commercial hiring party must provide the freelance worker with an earnings statement setting forth the total compensation being paid and a detailed calculation by which the amount was determined. When the independent contractor/freelance worker is responsible for keeping track of this information, they must provide the commercial hiring party with an invoice stating the total compensation amount and a detailed calculation by which the amount was determined. If the contract does not specify the date or mechanism for when payment becomes due, payment must be made no later than 30 days after the completion of services. Individual Hiring Party Individual hiring party means any person who retains a freelance worker to provide any service in the City of Minneapolis when the person is acting in a personal capacity and not as part of or on behalf of a business or commercial activity.  These provisions could apply to painters, handymen, cleaning persons, nannies, groundskeepers, and other freelancers who perform services for an individual. The Ordinance applies if the compensation is $600 or more, either by itself or when aggregated with all contracts for services between the same individual hiring party and freelance worker during the calendar year, for work performed in the City of Minneapolis. Individual hiring parties and freelance workers performing services in the City of Minneapolis are required to have a written contract only if the freelance worker requests a written contract. The freelance worker must present a proposed written contract to the individual hiring party before the work begins.  The written contract should include the same information described above for a commercial hiring party and both parties must sign the contract. The Ordinance does not obligate an individual hiring party to retain the services of a freelance worker who has proposed a written contract, nor does it require either party to enter into a contract if the parties are unable to agree upon the terms. Penalties The Minneapolis Department of Civil Rights investigates and enforces the Ordinance.  It is a violation of the Ordinance for a hiring party to fail or refuse to pay the agreed-upon compensation or require the freelance worker to accept as a condition of timely payment less compensation after the work has commenced.  If a hiring party is found to have violated the Ordinance, a freelance worker may be able to recover compensatory damages in the amount of the unpaid sum and liquidated damages up to double the compensatory damage award.  There are also additional civil fines, fines for repeat violations and the City’s Department of Civil Rights can seek reimbursement for investigation costs. If a commercial hiring party fails to create a written contract, it is subject to a fine of up to $250 for each violation, if the freelance worker can establish they requested a written contract and made the hiring party aware of the requirement that the contract be in writing. A freelance worker who passes only incidentally through the City in the performance of the contract is not covered by this Ordinance. No Effect on Contract Validity The Ordinance provides that it is a defense to any alleged violation under the Ordinance that the freelance worker has not completed the services contracted for, unless the failure to complete such services was caused by the hiring party’s failure to cooperate in good faith with the freelance worker.  The hiring party cannot withhold timely payments for completed services because of a dispute over whether other services had been completed. The Ordinance makes clear that the existence of a written contract that complies with the Ordinance is not be construed as evidence that an individual is properly classified as an independent contractor. Recommendation Any commercial hiring party which uses an independent contractor to perform any services in the City of Minneapolis should review their written contract to ensure that it contains the above-described elements.  If no contract exists, the company should immediately prepare such a contract. If you have any questions as to whether this Ordinance applies to a particular freelance worker or any other questions concerning the requirements of this new Ordinance, you can contact a Larkin Hoffman labor and employment law attorney. Tags

January 26, 2021

Labor Law

The Future of the FFCRA

After much hand wringing, negotiation and name-calling, Congress has passed its second COVID-19 stimulus package, which was signed by President Trump on Sunday, December 27, 2020. For months, clients have been asking whether the Families First Coronavirus Response Act (“FFCRA”) will be renewed or whether it will expire on December 31. We now have the answer. The FFCRA Mandatory Leave Requirements Expire on December 31, 2020 The mandated leave provision, for both emergency paid sick leave and expanded FMLA leave, expire on December 31. However, Congress left the door open for employers to voluntarily continue to provide FFCRA leave through March 31, 2021. Employers will receive the payroll tax credit for providing this leave through March 31. Employers should understand that these tax credits are capped for emergency paid sick leave at $511 per day and $5,110 in the aggregate (in some circumstances the cap is $200 per day and $2,000 in the aggregate) and the cap is at $200 per day and $10,000 in the aggregate for expanded FMLA. It appears that tax credits claimed for leave taken before December 31, 2020 continue to apply and therefore the credits taken for leave on or after January 1, 2021 through March 31, 2021 must take into account any credits already taken by December 31, 2020. If an employer chooses to voluntarily allow employees after December 31 to continue to take emergency paid sick leave and/or expanded FMLA leave, employers must ensure that the total amount of credits claimed for any one employee, taking into account leave taken in 2020 and 2021, does not exceed the applicable caps. Employees on Paid FFCRA Leave on December 31, 2020 An employer can demand that an employee who is on an FFCRA leave must return to work on January 1, 2021 since the requirement to provide that leave has expired. If the employer needs the employee to return to work after January 1, 2021 and the employee refuses, employers should consider any mandatory paid sick leave required by their city or county as well as ADA reasonable accommodation requirements before terminating the employee. However, we can expect that some employers will allow employees to complete their leave (through March 31), provided that the total tax credit does not exceed the permitted caps. For many employers, these developments may result in anguishing and difficult decisions regarding employees who are unable to return to work because they must care for family members who have COVID, whose child care or schools are closed, or who themselves are suffering from COVID and COVID-related symptoms. Side Note on Unemployment Compensation The economic stimulus package also includes an additional $300 per week in unemployment benefits through March 14, 2021. The legislation also continues to allow gig workers, independent contractors and self-employed workers to receive unemployment insurance benefits. If you have questions or would like assistance navigating workplace legal requirements during the pandemic, please reach out to our Labor and Employment attorneys for additional guidance.

December 28, 2020

General Matters

The COVID -19 Vaccine is Here! What’s Ahead?

Now that the first COVID-19 vaccines are being delivered and administered and a second vaccine is close behind, employers are asking whether they can require that employees be vaccinated.  In September,  Dan Ballintine and I recorded a podcast on mandatory vaccines. On December 16, 2020, the EEOC issued guidance on the ADA and vaccines.  Although this guidance does not change the information that Dan and I provided in our podcast, I thought it would be helpful to highlight a few points the EEOC makes.  The EEOC addressed vaccinations in the publication “What You Should Know About COVID-19 and the ADA, the Rehabilitation Act and Other EEO Laws.”  Below you will find several highlights of the EEOC’s guidance. Question: Is asking or requiring an employee to show proof of receipt of a COVID-19 vaccination permissible under the ADA? Answer:  The general rule is that employers are not allowed to ask about an employee’s medical condition unless it is job-related and consistent with business necessity.  In its December 16 guidance, the EEOC said that asking or requiring an employee to show proof of receipt of a COVID-19 vaccination is not a disability-related inquiry and therefore it is a permissible question. Question:  If an employer requires vaccination when they are available, how should it respond to an employee who indicates that he or she is unable to receive a COVID-19 vaccination because of a medical condition? Answer:  Employers have the right to have qualification standards that include a requirement that an individual does not pose a direct threat to the health or safety of individuals in the workplace.  If a COVID-19 vaccination is required, the employer must show that an unvaccinated employee would pose a direct threat due to a significant risk of substantial harm to the health or safety of the individual or others that cannot be eliminated or reduced by reasonable accommodation. Therefore, employers dealing with an employee who refuses to take the COVID vaccine should conduct an individualized assessment of four factors in determining whether a direct threat exists: The duration of the risk The nature and severity of the potential harm The likelihood that the potential harm will occur The imminence of the potential harm A conclusion that the employee poses a direct threat would include a determination that an unvaccinated individual will expose others to the virus at the work site.  The EEOC guidance is clear that if an employer determines that an individual who cannot be vaccinated due to a medical condition poses a direct threat at the work site, the employer cannot exclude the employee from the workplace without undergoing the interactive process to determine if there is a reasonable accommodation that would eliminate or reduce this risk. If the employee poses a direct threat that cannot be reduced to an acceptable level, the employer can exclude the employee from entering the workplace.  This does not necessarily mean the employer may automatically terminate the employee.  Employers will need to determine if there are any other EEO laws that may be implicated. Question:  How should an employer respond to an employee who indicates that he or she is unable to receive a COVID-19 vaccination because of a sincerely held religious practice or belief? Answer:  Once an employer is on notice that an employee’s sincerely held belief, practice or observance prevents the employee from receiving the vaccination, the employer must provide a reasonable accommodation for the religious belief, practice or observance unless it would pose an undue hardship.  “Undue hardship” with respect to a sincerely held religious practice or belief is far different from undue hardship under the ADA.  Under Title VII, undue hardship means that the accommodation creates more than a minimal cost or burden on the employer.  If an employee requests a religious accommodation and an employer has an objective basis for questioning either the religious nature or the sincerity of a particular belief, practice or observance, the employer would be justified in requesting additional supporting information.  Assuming the employee has a sincerely held religious practice or belief, and there is no reasonable accommodation available, the employee can be excluded from the workplace. Conclusion Once there is sufficient COVID-19 vaccine available, employers can require that employees provide evidence of COVID-19 vaccination before they can enter the workplace.  The specific evidence an employer can require to demonstrate that the employee has been vaccinated is unclear at this time.  If an employee says that he or she cannot be vaccinated because of a sincerely held religious belief or practice or because of a disability, the employer will have to engage in the interactive process and decide if there are any reasonable accommodations that can be made to allow that employee to work.  Before terminating an employee for failing to be vaccinated, an employer should contact an attorney to ensure that there are no other laws that may be implicated.

December 21, 2020

Labor Law

Department of Labor Brings Some Clarity to the Families First Coronavirus Response Act

On August 14, we wrote a blog post that discussed the impact of a New York court case which invalidated several features of the Final Rule issued by the U.S. Department of Labor (DOL) to implement the Families First Coronavirus Response Act (FFCRA).  At that time, it was unclear whether the court’s decision applied throughout the nation, or solely in the state of New York. In response to the New York case, the DOL has revised several provisions in the Final Rule.  The DOL has revised the Final Rule in the following areas. Are all health care providers ineligible for FFCRA leave? The New York decision invalidated the definition of health care provider (health care providers are ineligible for FFCRA leave) because the definition was so broad it included employees not involved in patient care.  The DOL revised its definition to limit the exception to those employees who provide diagnostic services, preventive services, treatment services, or other services that are integrated with and necessary to the provision of health care.  All other employees employed by a health care employer are entitled to FFCRA leave. Can an employer require documentation before approving FFCRA leave? The Final Rule was also revised to clarify that the information the employee must provide the employer to support the need for leave must be provided to the employer as soon as practicable.  The DOL also provide that notice of FFCRA leave may not be required in advance, and may only be required after the first workday for which an employee takes paid sick leave.  After the first workday, the employer can require notice as soon as practicable under the facts and circumstances of the particular case.  If the reason is foreseeable, it will generally be practicable to provide notice prior to the need to take leave. With respect to the other provisions of the FFCRA which the New York court vacated, addressed below, the DOL elaborated on the rationale for the invalidated provision and stated that it does not intend to revise the provision. Is an employee eligible for FFCRA leave if the employer does not have work available? The New York court decided that employees who are on a temporary layoff or other leave of absence may be eligible for FFCRA leave, even if the employer does not have work available.  The DOL has reaffirmed in the Final Rule that paid sick leave and expanded family and medical leave may be taken only if the employee has work from which to take leave.  Among other reasons, the DOL wrote that removing the work availability requirement would not serve one of the FFCRA’ s purposes, to discourage employees who may be infected with COVID-19 from going to work.  If there is no work to perform, there would be no need to discourage ill employees from coming to work by providing paid leave. Must an employee obtain the employer’s consent for intermittent leave under the FFCRA? The DOL reaffirmed that, where intermittent FFCRA leave is permitted, an employee must obtain the employer’s consent to take intermittent sick leave or expanded family and medical leave.  Intermittent leave is not available if the leave is for medical reasons and returning to the workplace could spread the disease. However, intermittent sick leave and expanded family and medical leave due to the need to care for a child whose school or childcare is closed can be taken only with the consent of the employer.  This rule applies to telework as well.  The revised Final Rule states that when intermittent leave is not required for medical reasons, the employee’s need for leave must be balanced with the employer’s interest “in avoiding disruptions by requiring agreement by the employer for the employee to take intermittent leave.” It is important to note that the employer consent condition does not apply to employees who take FFCRA leave in full-day increments to care for their children whose schools are operating on a hybrid basis.  The DOL stated that when a school is not offering in-person classes the school is considered closed with respect to certain students on the days selected by the school.  Each day the school is closed is considered a separate reason for FFCRA leave and therefore, the FFCRA leave is not intermittent. This same rationale applies to longer and shorter alternating schedules, such as when a child attends in-person classes for half of a school day, and the employee takes FFCRA leave to care for the child during the half-days or weeks in which the child does not attend classes in person.  Leave for partial days because the child’s school is not open for the child’s class all day, but only for a partial day, is not intermittent because the school is considered to be closed when the classes are not in session. What Does the Final Rule Mean for Employers? A final question remains as to whether the New York case applies nationwide.  The DOL did not explicitly answer this question.  However, in Q&A #102 the DOL stated that it viewed the decision as applying nationwide.  In the revised Final Rule, the DOL provided detailed explanations for the two provisions it is retaining despite the New York court decision.  We recommend that employers continue to comply with these two provisions despite the New York court case.  Reliance on the revised Final Rule, published by the agency responsible for enforcing the FFCRA, should be a valid defense in the event of a claim.  Although a court could arguably dispute the DOL’s decision to reaffirm these two provisions, it seems unlikely that a court would penalize an employer for relying on the DOL’s revised Final Rule.

October 7, 2020

Labor Law

Recommendations in Light of New Ambiguity in the Families First Coronavirus Response Act

Effective April 1, 2020, Congress passed the Families First Coronavirus Response Act (FFCRA) obligating employers to provide Emergency Paid Sick Leave (EPSL) and Emergency Family Leave (EFL) to employees who are unable to work because of the pandemic.  The U.S. Department of Labor (DOL) issued a Final Rule effective April 6, 2020, expanding on the requirements of the FFCRA that would go into effect. Following the publication of the Final Rule, the State of New York sued the DOL in federal district court arguing that several features of the Final Rule exceeded the agency’s authority under the statute. The U.S. District Court for the Southern District of New York, issued an order on August 3, vacating certain provisions of the Final Rule. The open question as a result of the decision is whether it applies only in the state of New York or if it applies nationwide The Court’s decision has produced several ambiguities regarding enforcement of the FFCRA. Questions Arising from the Court Case Is an employee eligible for FFCRA leave if the employer doesn’t have work available? The Final Rule excludes employees from FFCRA leave if their employers do not have work for them.  The Court decided that requiring that work be available for an employee in order to take leave is inconsistent with the FFCRA and vacated this portion of the Final Rule.  Thus, employees who are on a temporary layoff (furlough) or other leave of absence may be eligible for FFCRA leave, even if the employer doesn’t have work for them. Are all health care providers ineligible for FFCRA leave? The FFCRA provides that employers can exclude “health care providers” from leave benefits.  The Final Rule broadly defined a “health care provider” to be “anyone employed at any doctor’s office, hospital, health care center, clinic, post-secondary educational institution offering health care instruction” and included retirement facilities, laboratory testing pharmacies or any other similar institution.  Thus, an English professor, librarian, or cafeteria manager at a university with a medical school would be considered “health care providers” and therefore ineligible to receive FFCRA leave.  The Court concluded that this expansive definition of health care provider is not supported by the statute and vacated it. Must an employee obtain the employer’s consent for intermittent leave? The Final Rule permits “employees to take Paid Sick Leave or Expanded Family and Medical Leave intermittently only if [both] the Employer and employee agree,” but only for a subset of the qualifying conditions.  The Court agreed that the conditions for which intermittent leave is entirely barred are conditions that correlate with a higher risk of viral infection.  However, the Final Rule provided no rationale for the blanket requirement of employer consent for all leaves, regardless of the risk of the spread of infection, and the Court found that the Rule is entirely unreasoned and vacated it.  Therefore, to the extent an employee can telework, they may be able to take leave intermittently for illness-related reasons since there is no public health risk of exposure to others in the workplace.  Further, if the reason for the leave is to care for a child whose school or place of care is closed due to COVID-19, the employee can take leave intermittently without the employer’s consent. Can an employer require documentation before leave? The Final Rule requires that employees submit to their employer “priorto taking FFCRA leave” certain documentation indicating “their reason for the leave, the duration of the requested leave, and when relevant the authority for the isolation or quarantine order qualifying them for leave.”  However, the FFCRA’s language does not suggest such a requirement.  The Court found that the Final Rule’s documentation requirement is unsupported by the FFCRA and struck it down. What Does This Court Decision Mean for Employers Outside of the State of New York? The DOL has not indicated whether they will challenge this ruling, and its scope is unclear.  The Court did not specifically indicate that its order to vacate the portions of the Final Rule discussed above applies nationwide or is limited to New York.  Nonetheless, until it becomes more certain whether the ruling has nationwide implications, we have put together a set of recommendations employers should consider. Employer Recommendations Consider revising policy to allow employees to submit documentation for leave after they go on the leave rather than requiring that it be submitted prior to the leave. Consider allowing intermittent leave for those employees requesting FFCRA leave for reasons that would not cause a spread of infection. If in the health care field, consider allowing employees who do not have a role in the provision of health care services to take FFCRA leave. Monitor DOL announcements regarding the DOL’s intent with respect to enforcement of those portions of the Final Rule which were vacated. We will be monitoring the situation and issue additional updates when it becomes clear whether this decision impacts employers outside the state of New York.  If you have any questions regarding the above recommendations; or other employment-related issues, please reach out to Phyllis Karasov, pkarasov@larkinhoffman.com.

August 14, 2020

Labor Law

Preparedness Plan Requirements Guidance for Construction Revised with Little Real Change

This post is co-written by Phyllis Karasov and Mike Schechter. On Wednesday, June 24, we wrote an article on the Minnesota Department of Labor and Industry’s guidance that requires a preparedness plan for the construction industry. The guidance was confusing and placed onerous responsibilities on contractors, owners and public entities, including ensuring that plans among owners, generals, subcontractors, and others align.  AGC of Minnesota and Housing First Minnesota have been advocating for meaningful clarification and change in the guidance on behalf of the construction industry. DLI updated its guidance on Thursday, June 25th. The effective date of Monday, June 29 has not changed.  Given the ongoing vagaries, late and continued updates, challenges to comply, and general confusion, AGC is working to delay this effective date to permit better dialogue with DLI, hopefully more workable guidance and communicate the guidance with the industry. As it stands now, the updated guidance does little to address the construction industry’s concerns.  The guidance lists most of its protocols as “required” with a few protocols described as “recommended.” Many additional mandates have been added.  The latest updated guidance also loosens the general contractor’s responsibility for compliance by subcontractors and others on the job site, although the general contractor is still responsible for ensuring that businesses performing work activities at the worksite have COVID-19 preparedness plans that meet the requirements of the guidance.  General contractors must also ensure diligent investigations are conducted at the worksite to evaluate and assess instances of exposure, whether actual or potential, involving workers who have COVID-19 or there is reason to believe may be COVID-19 positive. We recommend that construction contractors contact OSHA Consultation with their concerns and questions to elevate the significance of the challenges these requirements pose. OSHA Workplace Safety Consultation can be reached at OSHA.consultation@state.mn.us .  You can also contact Phyllis Karasov with questions or for assistance with the drafting of a Preparedness Plan. About the Authors Phyllis Karasov, Larkin Hoffman Phyllis Karasov is chair of the Larkin Hoffman labor and employment law practice group and advises businesses on labor and employment matters. Her clients come from a variety of sectors, including construction, manufacturing, higher education, K-12 private education, nonprofit and healthcare. She provides counsel in all areas of human resources, including hiring, handbooks, regulatory compliance, discrimination, sexual harassment, discipline and termination, Americans with Disabilities Act, OSHA rules and the Family and Medical Leave Act. As a former National Labor Relations Board attorney, Phyllis is often called upon to represent clients in labor union matters including arbitrations, collective bargaining agreements and union contracts.  Phyllis is also on the Board of Directors for the Associated General Contractors of Minnesota. Mike Schechter, Associated General Contractors of Minnesota Mike Schechter is the General Counsel and Director of Labor Relations for the Associated General Contractors of Minnesota.  AGC serves the construction industry to improve construction conditions, create jobs, promote safety, and benefit the communities.  It works with government, unions, community groups, and related businesses and associations.  You can learn more about Mike at https://www.linkedin.com/in/mikeschechter.

June 26, 2020

Labor Law

Manufacturing Guidelines: New or the Same?

OSHA has been criticized for failing to promulgate a new standard for COVID-19.  The AFL-CIO sued OSHA in U.S. federal court, requesting a court to order OSHA to publish an emergency temporary standard covering COVID-19. Last week the D.C. Court of Appeals dismissed the lawsuit and the AFL-CIO has appealed. Meanwhile in Minnesota, the State has taken the matter into its own hands and published guidance describing what safety, sanitizing and health protocols must be adopted by employers.  Until June 29, businesses deemed by Governor Walz as Critical Sector businesses have been operating without specific mandates, other than the requirement that they comply with CDC, Minnesota Department of Health, and Minnesota Department of Labor and Industry (DOLI) guidance.  Now, effective June 29, DOLI will require that certain Critical Sector businesses comply with specific standards.  Among the affected industries are construction, manufacturing, convenience stores and agriculture. The guidance applies to businesses “engaged in the production of materials, food or wares whether by manual labor or machinery.”  Manufacturing includes but is not limited to “food production, computer and electronics, fabricated metal, machinery and medical devices.” What Does the Guidance Say? These new requirements, styled as “guidance,” are mandatory.  The guidance expressly states that manufacturing businesses mustaddress all the guidance requirements applicable to their workplaces in their COVID-19 Preparedness Plans.nManufacturers must ensure their plan is evaluated, monitored, executed and updated under the supervision of a designated plan administrator.  Businesses must post the plan at all the business’s workplaces in readily accessible locations so that the plan can be easily reviewed by all workers. A plan must apply to all workers performing work at the workplace or for the business, including subcontractors, independent contractors, associates, team members, vendors, delivery personnel, contract, temporary, part-time and seasonal workers.  All workers must be trained and required to adhere to the employer’s policies, protocols, and practices as described in the guidance. The guidance described protocols with which most manufacturing companies already comply.  Social distancing, ensuring that sick workers stay home, worker hygiene, workplace building and ventilation protocols, and workplace cleaning and disinfection protocols, are described in detail in the guidance. Immediate Actions We recommend that manufacturers immediately review the guidance and determine whether they need to adopt new requirements which are not currently in place.  In addition, manufacturing businesses should: Consider the establishment of a team comprised of employees and management to discuss the guidance and how the business can comply with the guidance. Employees may have views and input regarding compliance, and/or that will reduce the disruption which may result from the guidance. Designate a Plan Administrator to monitor and supervise the implementation of the employer’s plan Institute flexible workplace and leave policies – evaluate and adjust sick leave policies to reflect the need for isolation and quarantine and to create incentives for workers who are sick to stay home. Establish a process to identify contact between infected workers and other workers who may have been exposed. Designate an individual to maintain communication with and gather information from workers who may be ill, to ensure the privacy of workers is maintained. If not already in place, create contactless deliveries Cross-train employees to perform essential functions so the workplace can operate even if key employees are absent In addition to training employees about the elements of the plan, ensure that the necessary or required protocol and practices are communicated to temporary, seasonal and contract workers, and ensure protocols and practices are required by businesses providing temporary, part-time, seasonal and contract workers. If a labor union represents any of the employer’s employees, review the collective bargaining agreement and determine if the employer is required to negotiate or communicate with the union concerning the protocols and practices contained in the plan. Discipline employees who fail to comply with directives and instructions contained in the plan or any other employer-mandated rules. If an employer needs assistance in preparing a plan, Minnesota OSHA has a consulting division that is available for consultation consultation@state.mn.us. If your business needs any assistance in drafting and preparing a preparedness plan, please contact one of Larkin Hoffman’s labor and employment attorneys.

June 23, 2020

Labor Law

Required COVID-19 Preparedness Plan for the Construction Industry

This post is co-written by Phyllis Karasov and Mike Schechter In his recent Executive Order 20-74, Governor Walz’s ordered critical sector businesses to create and adopt a COVID-19 plan to make workplaces safe from the spread of the coronavirus, and his administration subsequently published guidance for specific industries that pose higher risks of transmission including construction.  The construction industry guidance is problematic—vague, over-reaching, potentially impossible to comply with, and possibly prescriptive. AGC of Minnesota, in consultation with Larkin Hoffman, has been working with the governor and his staff to clarify and address these problems and has rallied other associations to the conversation. What the Guidance Says The “Preparedness Plan Requirements Guidance – Construction” carries the “guidance” title but reads prescriptively, telling contractors that they must: Develop and implement a written COVID-19 Business Preparedness Plan. The plan needs to:Possibly be site-specific, meaning a contractor could have multiple plans; Encompass the obligations of owners, general and subcontractors and vendors; Be posted and available at each worksite; Address the hazards of COVID-19 transmission at the work site; and Ensure the work activities of one business do not interfere with or create additional risk to others. Take measures to ensure that sick workers stay home. These could include, among other things, evaluation and adjustment of sick leave policies to reflect the need for isolation or quarantine and to create incentives for workers who are sick to stay home. Ensure all at the worksite are immediately informed of their possible exposure to another worker who had COVID-19 symptoms or has tested positive for COVID-19 and are advised of actions they should take. Ensure diligent investigations are conducted at the worksite to assess exposure, whether actual or potential, involving workers who are confirmed COVID-19 symptoms or have tested positive, and/or the business has reason to believe a worker may be COVID-19 positive. These steps must provide timely and appropriate mitigating steps to prevent potential spread of COVID-19. Other Protocols The guidance also refers to the guidance published by the Minnesota Department of Health, OSHA and the CDC regarding social distancing, worker hygiene, work site-building and ventilation, worksite cleaning and disinfection, drop-off, pick-up and delivery, communications and training, and other protections.  There are specific protections for in-home services, such as requiring all occupants present within the residence to respond to a screening survey and verify no COVID-19 symptoms. Problems with the Guidance The guidance provides minimal information as to the specifics to be incorporated into the plan.  This lack of detail creates further problems. The guidance gives conflicting directives as to whether a contractor should adopt one plan for office and field, consistent with past guidance, whether a plan must be crafted for each job site or whether all of the written plans prepared by the businesses that will engage in work at the worksite must be integrated into one plan.  If the intent is to have one office and field plan, then contractors can improve their current practice and protocols with little additional disruption, risk and cost. If the guidance requires a plan per each job site, then the guidance is baffling.Crafting a detailed plan which covers probable and improbable site issues can expose a contractor to liability for minor lapses or the omission of an important protocol. Vertical plans may be inconsistent, either contradicting one another or providing details lacking in another document. On a large project, there could be dozens of plans that need to be reviewed and coordinated.  A large company could be required to develop and implement hundreds of plans. The plans must be integrated with other safety plans. Companies likely will lack the experienced personnel to create, coordinate, review, train and post hundreds of site-specific plans. Claims Arising from the Guidance The vagaries of the guidance and the DOLI’s failure to include other enforcing agencies or public owners makes it difficult to predict the ripples that will result from the guidance.  The first significant question is whether the guidance requires field or site-specific Plans.  Questions abound as to how the guidance will be enforced and the kinds of claims, including work stoppage orders, that can be made by DOLI, labor unions, employees and third parties. Immediate Action With guidance becoming effective June 29, contractors will have to immediately begin developing their Plans.  The guidance requires that all workers must be properly trained on and adhere to the work site’s policies, protocols, and practices described in the guidance.  This training applies to subcontractors, independent contractors, vendors, and delivery, part-time and seasonal personnel. Contractors should consider using a committee of employees and management to develop their Plans.  Employees who work on the project will have real-time information concerning the management of traffic flow, bottlenecks, how gatherings can be limited to 10 or fewer people, and how to stagger shifts and restroom/lunch breaks. Larkin Hoffman and AGC also recommend working with Minnesota OSHA to learn how to comply with the Guidance (OSHA.consultation@state.mn.us), subscribing to this blog and AGC’s updates.  Discussions with the State are ongoing and hopefully, there will be clarifications concerning the many unclear, uncertain and confusing provisions in the Guidance. About the Authors Phyllis Karasov, Larkin Hoffman Phyllis Karasov is chair of the Larkin Hoffman labor and employment law practice group and advises businesses on labor and employment matters. Her clients come from a variety of sectors, including construction, manufacturing, higher education, K-12 private education, nonprofit and healthcare. She provides counsel in all areas of human resources, including hiring, handbooks, regulatory compliance, discrimination, sexual harassment, discipline and termination, Americans with Disabilities Act, OSHA rules and the Family and Medical Leave Act. As a former National Labor Relations Board attorney, Phyllis is often called upon to represent clients in labor union matters including arbitrations, collective bargaining agreements and union contracts.  Phyllis is also on the Board of Directors for the Associated General Contractors of Minnesota. Mike Schechter, Associated General Contractors of Minnesota Mike Schechter is the General Counsel and Director of Labor Relations for the Associated General Contractors of Minnesota.  AGC serves the construction industry to improve construction conditions, create jobs, promote safety, and benefit the communities.  It works with government, unions, community groups, and related businesses and associations.  You can learn more about Mike at https://www.linkedin.com/in/mikeschechter.

June 23, 2020

Discrimination

Supreme Court Holds that Employers May Not Discriminate Against Workers on the Basis of LGBTQ Status

In October 2019, we published a blog post covering a series of three cases taken up by the U.S. Supreme Court that addressed the question of whether discrimination based upon sexual orientation and gender identity is illegal under Title VII of the 1964 Civil Rights Act (“Title VII”). Today, we follow up with this post to announce that the Supreme Court, by a vote of 6-3, ruled that Title VII’s prohibition on discrimination on the basis of sex includes discrimination based on gender identity or sexual orientation. Two of the cases (Bostock v. Clayton County, Georgia and Altitude Express, Inc. v. Zarda) involved gay male plaintiffs who claim they were fired due to their sexual orientation. The third case (R.G. & G.R. Harris Funeral Homes, Inc. v. EEOC) involved a female plaintiff who was fired after she disclosed her status as transgender and refused to wear a suit and tie. In each of the cases, an employer terminated a longtime employee for no reason other than his or her status as a gay or transgender individual. All three plaintiffs argued that such discrimination is illegal under Title VII because the law expressly prohibits discrimination on the basis of “sex.” The Court agreed. Writing on behalf of the Court, recently-appointed Justice Neil Gorsuch acknowledged that, when Congress enacted the Civil Rights Act, it likely was not contemplating that it would lead to the protection of LGBTQ individuals. However, in the years since the enactment of the Civil Rights Act, the Court has been called upon to determine other issues that also were not addressed by the drafters of the Act, such as whether it covers discrimination on the basis of motherhood or whether it bans sexual harassment of male employees. As Gorsuch noted, “the limits of the drafters’ imagination . . . supply no reason to ignore the law’s demands.” Until now, states have acted in a patchwork manner to extend protections based on sexual orientation and gender identity. For instance, it has been illegal in Minnesota to discriminate against an individual on the basis of either sexual orientation or gender identity. However, while Wisconsin was the first state to ban employment discrimination based on sexual orientation, the law did not extend to prohibit discrimination based on gender identity. Because fewer than half of the fifty states currently ban discrimination on sexual orientation and gender identity on a statewide level, this decision is considered a landmark victory for LGBTQ employees across the country.

June 16, 2020

Labor Law

Minnesota Supreme Court Holds Minneapolis Paid Sick and Safe Time Ordinance Applies to Employers Outside of Minneapolis

On June 10, 2020, the Minnesota Supreme Court issued a decision affirming the Court of Appeals and upholding the determination that the Minneapolis Paid Sick and Safe Time Ordinance (“Ordinance”) applies to employers outside of Minneapolis, finding that the Ordinance was not preempted by state law and did not violate the extraterritoriality doctrine. In 2016, the Minneapolis City Council passed the Sick and Safe Time Ordinance. The Ordinance allows employees who work in the geographic boundaries of the City of Minneapolis for at least 80 hours a year, to accrue one hour of sick and safe time for every 30 hours worked, up to a maximum of 48 hours in a calendar year. After its passing, a number of business entities lead by the Minnesota Chamber of Commerce sued the City of Minneapolis for a declaration that the Ordinance is invalid to the extent it purports to apply to employers with no offices or other physical location within the city limits. The district court upheld the validity of the Ordinance as it applied to employers within Minneapolis, but issued an injunction preventing the Ordinance from applying to employers outside of the city. For more details about the Ordinance and its procedural posture, please click here. In Minnesota Chamber of Commerce v. City of Minneapolis, the Minnesota Supreme Court first analyzed whether Minnesota state law preempted the Ordinance under two different theories: conflict preemption and field preemption.  The Court found that the state law, Minn. Stat. § 181.9413, governing employer-provided sick and safe time, and the Minneapolis Ordinance did not present an irreconcilable conflict between each other. Therefore, the Ordinance was not preempted under the theory of conflict preemption. The Court further found that the subject matter of the Ordinance, employer-provided sick and safe time, has not been “so fully covered by state law as to have become solely a matter of state concern,” nor was there any legislative intent that the state law was meant to preempt local action by occupying the field of sick and safe time. Additionally, the Chamber could not show that the local regulation would have unreasonably adverse effects upon the general population of the state. Therefore, the Court found that the state law does not occupy the field of employer-provided sick and safe time. The Supreme Court then considered the extraterritoriality doctrine, for only the third time in its history. The majority stated that a court must look to the purpose and effect of the regulation when facing a challenge to a local ordinance based on the extraterritoriality doctrine. The court ultimately found that the Ordinance’s purpose was to safeguard the public health and welfare of all persons working in the city of Minneapolis, regardless if their employer is located outside the city, and to regulate activity within the geographic limits of the city. For the foregoing reasons, the court found that the Ordinance was a valid exercise of municipal authority and did not violate the extraterritoriality doctrine. Justice Anderson, joined by Chief Justice Gildea, wrote a dissent arguing that the Ordinance violated the extraterritoriality doctrine due to its reach beyond the borders of Minneapolis. “[T]he Ordinance applies to businesses outside of Minneapolis and requires those businesses to perform activities outside of Minneapolis, and both the City and the court concede as much.” Justice Anderson warned that the majority created a new test by looking to the primary purpose and effect of the Ordinance, rather than the statutory authority as established in prior case law. He stated that the court’s application of this new test is alarming and ignores the broader, state-wide effects of the Ordinance. To read the full decision, please click here. Any business with employees who work in Minneapolis, whether or not the business has offices within the city, should be aware of and comply with the Ordinance.  Larkin Hoffman employment attorneys stand ready to assist businesses who are impacted by this ruling.

June 11, 2020

Harassment

“Severe or Pervasive” Standard Still the Law of the Land for MHRA Sexual Harassment Claims

In the June 3, 2020 decision of Kenneh v. Homeward Bound, Inc., the Minnesota Supreme Court declined to abandon the severe or pervasive standard for sexual harassment claims arising under the Minnesota Human Rights Act (“MHRA”).  By U.S. Supreme Court caselaw under Title VII, a hostile work environment sexual harassment claim requires a plaintiff to prove that a “harasser’s” conduct is sufficiently “severe or pervasive” such that a reasonable person would find the conduct to be objectively hostile or abusive to create a hostile or abusive working environment.  Minnesota courts have relied on this standard when deciding cases of hostile environment sexual harassment under the MHRA. In the Kenneh case, however, the plaintiff and a large number of advocacy organizations filed “friend of the court” briefs arguing that the Minnesota Supreme Court should abandon the “severe or pervasive” standard for sexual harassment claims.  They argued that the Minnesota Supreme Court has read the severe or pervasive language into the MHRA based on the U.S. Supreme Court rulings in federal cases; the Minnesota statute does not include that standard.  In its ruling, the Minnesota Supreme Court declined to abandon the standard, since the Court is bound by precedent and the task of extending or eliminating existing law falls to the legislature.  In fact, the Minnesota Legislature has previously attempted to either clarify or eliminate the standard in at least the last two legislative sessions. For the “severe or pervasive” standard to remain useful in Minnesota, the KennehCourt found the standard must “evolve” to reflect changes in societal attitudes towards what is acceptable behavior in the workplace.  In particular, the Court held that to decide whether conduct is severe or pervasive, courts and juries – the fact finders – must consider the totality of the circumstances, including the frequency of the discriminatory conduct; its severity; whether it was physically threatening or humiliating or a mere offensive utterance; and whether it unreasonably interfered with an employee’s work performance.  It further found that if a reasonable person could find the alleged behavior objectively abusive or offensive, a claim was sufficiently severe or pervasive to survive summary judgment. The Minnesota Legislature and the Definition of Sexual Harassment In the 2019 session, the House overwhelmingly passed a bill which would explicitly remove the “severe or pervasive” requirement read into the law by the Minnesota Supreme Court.  The Senate, however, then introduced a completely opposite bill which would codify and preserve the standard.  To prove a sexual harassment claim, among other things, the conduct or communication must be shown to be sufficiently severe or pervasive so as to alter the terms or conditions of an individual’s employment.  The Senate bill would have provided clarity and the codification would have been consistent with existing law under both Title VII and the MHRA.  During the 2020 session, it is likely the legislature did not have time to address the issue because it had to deal with a myriad of other problems in connection with the COVID-19 crisis. What to Expect The 2020 November election may bring some surprises in the 2021 legislative session.  It was noteworthy that 14 separate law firms filed “friend of the court” briefs in Kenneh, arguing for one side or the other about the “severe or pervasive” standard, so there is strong interest abounding and we will all have to stay tuned for that.

June 8, 2020

Labor Law

Unemployment and a Returning Workforce: How the CARES Act Can Increase Unemployment Benefits

Many employers are recognizing the financial strain on their employees as they begin to plan for their businesses’ future in these unprecedented times. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) contains a number of provisions that make it easier to receive unemployment insurance benefits and increases the amount of unemployment benefits which laid off and underemployed employees can receive. The CARES Act also allows self-employed individuals, independent contractors, and employees who are not otherwise eligible, to receive unemployment benefits. Employment attorneys Phyllis Karasov and Alex Beeby discuss these changes and provide insight into the support which the Minnesota Department of Employment and Economic Development is giving laid-off employees, employees whose hours or wages are reduced, and self-employed individuals and independent contractors. The Larkin Hoffman Podcast Briefings The Larkin Hoffman Podcast Briefings series was developed to discuss issues affected by the COVID-19 crisis. Our attorneys  address corporate, employment, real estate, construction, franchise, bankruptcy, insurance, litigation, and other matters in this series. Over the next few weeks, there will be several podcasts on developing matters. Larkin Hoffman is available to help. Please reach out for additional guidance.

April 29, 2020

Labor Law

Employee Benefit Features in the Coronavirus Aid, Relief, and Economic Security Act

Larkin Hoffman employment law specialist Phyllis Karasov and employee benefits specialist Mary Komornicka discuss the new employee benefit features in the Coronavirus Aid, Relief, and Economic Security (CARES) Act in our latest COVID-19 Briefing series podcast. The CARES Act allows employers to make changes in its Section 401(K) and 403(b) plans to assist employees who are experiencing financial stress due to the current pandemic. The Act also provides for modifications to health insurance benefits and a waiver of the minimum distribution rules for retirement plans, through December 31, 2020.  Karasov and Komornicka will provide overall guidance on these provisions. The Larkin Hoffman Podcast Briefings The Larkin Hoffman Podcast Briefings series was developed to discuss issues affected by the COVID-19 crisis. Our attorneys will address corporate, employment, real estate, construction, franchise, bankruptcy, insurance, litigation, and other matters in this series. Over the next few weeks, there will be several podcasts on developing matters. Larkin Hoffman is available to help. Please reach out for additional guidance.

April 27, 2020

Labor Law

Is Your Workplace Following OSHA’s COVID-19 Guidelines?

As the agency responsible for enforcing workplace safety, the Occupational Safety and Health Administration (“OSHA”) has issued two pronouncements concerning COVID-19 and the workplace. COVID-19 Guidance for the Construction Workforce On April 21, 2020, OSHA published Guidance for the Construction Workforce which consists of tips to help reduce the risk of exposure to coronavirus in the construction industry. Most of the recommendations are what would be expected and are most likely being carried out by construction companies. Among other things, OSHA recommends that in-person meetings, including toolbox talks and safety meetings, should be as short as possible, with the number of workers in attendance limited and using social distancing practices. OSHA also recommends that employers clean and disinfect portable jobsite toilets regularly and that hand sanitizer dispensers should be filled regularly. If tools and equipment are shared, construction employers should provide and instruct workers to use alcohol-based wipes to clean tools before and after use.  If workers do not have immediate access to soap and water, employers should provide alcohol-based hand rubs containing at least 60% alcohol. Interim Enforcement Response Plan for Coronavirus 2019 On April 13, 2020, OSHA issued an Interim Enforcement Response Plan (“Interim Enforcement”) which provides instructions and guidance to area offices and safety and health officers for handling COVID-19 related complaints and severe illness reports.  The Interim Enforcement explains that OSHA investigators should use as much flexibility as possible in investigating possible violations and also ensuring that OSHA inspectors are not unduly exposed to coronavirus. Inspections The Area Director is to evaluate the risk level of exposure and prioritize resources to determine if an on-site inspection is necessary. When feasible, inspectors should use electronic means of communications, such as remote video surveillance, phone interviews, email and video conferences to investigate possible violations.  The Interim Enforcement also states that investigations and inspections in the healthcare industry have the highest priority. If there is an inspection, employers should expect that they will be asked to provide a written pandemic plan, infection control plan, protocols for use of personal protective equipment, records of employee infections or exposures, and training records relating to COVID-19. Recording of Injury/Illness Employers are responsible for recording cases of COVID-19 if all of the following requirements are met: The case is a confirmed case of COVID-19 as defined by the CDC; The case is work-related; and The case involves one or more of the recording criteria such as medical treatment and days away from work. Enforcement Discretion OSHA encourages its inspectors to determine if an employer is making a good faith effort to provide and ensure workers with the most appropriate respiratory and other personal protection equipment. Companies where fatalities and imminent danger exposures related to COVID-19 will be prioritized for inspections, with particular attention given to healthcare organizations and first responders. All other formal complaints alleging COVID-19 exposure, where employees are engaged in medium or lower exposure risk tasks, will not normally result in on-site inspections. Area offices will use non-formal procedures for investigating alleged hazards. In addition, OSHA is relaxing the requirement that an employer conduct an analysis of whether an employee’s COVID-19 diagnosis is work-related, unless objective evidence exists that a COVID-19 case is work-related. Conclusion Thus, employers should expect that OSHA may be focused more on compliance than citations.  The Interim Enforcement gives field offices flexibility and discretion to maximize OSHA’s impact in securing safe workplaces in this evolving environment.

April 24, 2020

Labor Law

Difficult Questions Facing Employers Under the Families First Coronavirus Relief Act

Larkin Hoffman employment law specialists Phyllis Karasov and Dan Ballintine answer some of the tough questions employers face under the new Families First Coronavirus Relief Act (“FFCRA”) in our latest COVID-19 Briefing series podcast. Under the FFCRA, employers with fewer than 500 employees must provide paid leave to employees who cannot work due to pandemic-related issues such as sickness and care of children whose schools have closed.  Congress passed the FFCRA quickly in the face of the pandemic, leaving many questions relating to implementation of the law unanswered.  Aided by the Department of Labor’s recently-issued temporary rule under the FFCRA, Karasov and Ballintine provide general guidance on some of the difficult questions their clients, and likely many other employers, face under this new law. About the Larkin Hoffman Podcast Briefings The Larkin Hoffman Podcast Briefings series was developed to discuss issues affected by the COVID-19 crisis. Our attorneys will address corporate, employment, real estate, construction, franchise, bankruptcy, insurance, litigation, and other matters in this series. Over the next few weeks, there will be several podcasts on developing matters. Larkin Hoffman is available to help. Please reach out for additional guidance.

April 20, 2020

Labor Law

COVID-19 Unemployment Compensation Updates

The unemployment compensation landscape is constantly evolving during this COVID-19 pandemic. The United States Department of Labor (“DOL”) and Minnesota’s Department of Employment and Economic Development (“DEED”) are frequently issuing new guidance and updates as they work to implement emergency orders and legislation and to try to respond to the mass layoffs stemming from COVID-19 shutdowns. While DEED’s unemployment website provides useful information, its call center is closed to customer service calls as the office focusses on processing the flood of applications and implementing the new policies. This article seeks to distill the current unemployment compensation landscape to address the most frequently asked questions we receive from employers considering layoffs and employees facing layoff. Who is eligible for unemployment compensation? Unemployment is typically available to any applicant who has lost at least 50% of their pay and is working less than 32 hours per week. Employers can also apply for a Shared Work Program that permits them to spread a reduction in hours over a group of employees, so that the employees only experience a 20% to 50% reduction in hours but remain eligible for unemployment compensation for those lost wages. Employees cannot count time for which they use PTO as lost hours or have the option to work remotely. The state and federal government is expanding access to unemployment in response to the pandemic. Governor Walz issued an executive order granting DEED flexibility from strict compliance with unemployment statutes. DEED is encouraging everyone experiencing a reduction in pay or hours to apply. We are trying to confirm reports that DEED might be approving applicants experiencing less than a 50% reduction in hours outside of the Shared Work Program. Typically, unemployment is not available any week where earnings are more than the weekly compensation amount (50% of normal wages). The governor’s order also extends unemployment to individuals whose reason for reduced hours result from quarantine, caring for others, or other, similar COVID-19 related reasons. The CARES Act extends access to independent contractors, self-employed people, and others who are not usually eligible for unemployment. We are not hearing of many problems with people enrolling and receiving their benefits. However, some employees may have difficulty proving their eligibility if they recently started working or recently received an overpayment of unemployment benefits for a prior period of unemployment. Those employees should still complete applications and benefits requests, so they are eligible for these payments when the issues are resolved. Benefits are not paid for any periods prior to the date of application, so applications should be completed immediately. How much do people receive on unemployment? The standard unemployment compensation payments replaces 50% of the lost wages up to a statutory cap (currently $740 per week). The CARES Act provides an additional, separate payment of $600 per week. On April 8, Minnesota became one of the first states to begin issuing these payments. According to the DOL, anyone eligible to receive at least one dollar in unemployment compensation is should receive the $600 payment for that week. Governor Walz’s order removed the standard waiting period before applicants begin receiving benefits. The CARES Act extended the time period that some workers can receive unemployment benefits. What are the financial implications for employers? Governor Walz’s order waives most of the employer penalties for COVID-19-related unemployment claims. However, the CARES Act does tie some strings to the forgiveness of Payroll Protection Program loans on the degree to which employers return their workforce to pre-pandemic levels within a certain amount of time. See our article about the Payroll Protection Program for more information. The CARES Act also provides some relief for employers, such as some non-profits, who “self-insure” or “reimburse” DEED for unemployment payments by covering 50% of this reimbursement. The Minnesota Council of Nonprofits is advocating for further relief, and DEED is still implementing these changes. We plan to provide further information in an upcoming article, but nonprofits and their employees are still eligible for all other benefits in this article. For more information about unemployment compensation, please see my prior, more comprehensive article about Unemployment Compensation and COVID-19. Here are some additional resources you might find useful in this situation: The governor’s executive order regarding unemployment relief The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) Information about the Shared Work Program The United States Department of Labor COVID-19 Unemployment Site Information about compassionate employee layoffs:A Guide to Being Compassionate During Layoffs, by Kenneth W. Freeman (Harvard Business Review) Learn What to Do When You have to Let Someone Go, by Lahle Wolfe (the balance careers) Compassionate Layoffs Are Done with Empathy and Care, by Susan M. Heathfield (the balance careers)

April 10, 2020

Labor Law

DOL Issues Temporary Rule Addressing Health Care Coverage, Intermittent Leave, and Returning to Work

Millions of small businesses have been awaiting further guidance on the Family First Coronavirus Response Act (“FFCRA”), which applies to private businesses with fewer than 500 employees. On April 6, 2020, the U.S. Department of Labor published its temporary rule issuing regulations pursuant to the FFCRA.  This article will discuss the U.S. Department of Labor’s guidance on continuation of health care coverage for employees using paid sick leave under the Emergency Paid Sick Leave Act (“EPSLA”) or expanded family and medical leave under the Emergency Family and Medical Leave Expansion Act (“EFMLEA”), under what circumstances an employee is eligible to take intermittent leave, and what the requirements are for an employee’s return to work. Continuation of Health Care Coverage for Employees on FFCRA Leave An employee taking paid sick leave or expanded family and medical leave under the FFCRA is entitled to continued coverage under the employer’s group health plan on the same terms as if the employee did not take leave.  Employers must continue to maintain the same group health plan benefits provided to the employee and any family members covered under the plan as was available prior to taking leave, and the employee remains responsible for paying the same portion of the plan premium that the employee paid prior to taking leave. Intermittent Leave There is no requirement that employers must permit employees to take FFCRA-based leave on an intermittent basis; rather, employees may take paid sick leave or expanded family and medical leave intermittently if the employer and employee agree.  It is preferable that this understanding be memorialized in a written agreement, but the rule states that “a clear and mutual understanding between the parties is sufficient.” Teleworking An employee who is teleworking may take intermittent leave for any qualifying reason in any agreed increment of time so long as there is an agreement between the employee and his or her employer.  There are few constraints on an employee’s use of intermittent leave while teleworking because there are no risks that the employee is introducing COVID-19 into the employer’s remaining workforce at the job site. Workers at the Job Site However, if the employee is still working from the employer’s regular job site, there are certain circumstances that would limit the ability to use leave intermittently notwithstanding an agreement between the employer and employee.  Namely, an employee still reporting to the job site may only take intermittent leave in circumstances where there is a minimal risk that the employee will spread COVID-19 to other employees at the job site. For instance, an employee may take intermittent leave to take care of a child whose school or place of care is closed because the absence of confirmed or suspected COVID-19 poses no greater risk of spread to the job site.  But if an employee begins taking leave for any qualifying reason other than lack of child care (i.e. direct COVID-19 illness or caring for a family member with COVID-19), the employee must continue taking leave each day until the employee either uses the full amount of paid sick leave or no longer has a qualifying reason for taking paid sick leave because, under these circumstances, there is an unacceptably high risk that the employee might spread COVID-19 to other employees at the job site. Reminder: Expanded family and medical leave does not increase the amount of allowable FMLA leave.  If an employee has already taken regular FMLA leave, the maximum twelve weeks of EFMLEA leave is reduced by the amount of FMLA leave entitlement taken in that year.  However, if the employee has exhausted the twelve workweeks of FMLA or EFMLEA leave, he or she may still take paid sick leave under the EPSLA for a COVID-19 qualifying reason.  Likewise, an employee’s use of paid sick leave under the EPSLA does not prevent the employee from taking expanded family and medical leave under the EFMLEA. Employees Returning to Work after FFCRA Leave Like with other FMLA leave, an employee is entitled to be restored to the same or an equivalent position after taking paid sick leave or expanded family and medical leave under FFCRA.  However, an employee is not protected from employment actions, such as layoffs, that would have affected the employee regardless of whether the leave was taken.  For example, an employer may demonstrate that it had to close the job site for legitimate business reasons. In addition, an employer may refuse to return an employee who took FFCRA leave to his or her same position if the employee is a highly compensated “key” employee as defined by the FMLA (i.e. a salaried FMLA-eligible employee who is among the highest paid 10 percent of all employees employed by the employer within 75 miles of the employee’s job site) and if the restoration of the employee will cause “substantial and grievous economic injury to the operations of the employer.” Employers with Fewer than 25 Employees The return-to-work provisions under the FFCRA do not apply to an employer who has fewer than 25 employees if all four of the following conditions are met: The employee took leave to care for a child whose school or place of care was closed; The employee’s position no longer exists due to economic or operating conditions that affect employment and are caused by COVID-19 related reasons during the period of the employee’s leave; The employer made reasonable efforts to restore the employee to the same or an equivalent position; and If the employer’s reasonable efforts to restore the employee fail, the employer makes reasonable efforts to contact the employee if an equivalent position becomes available for one year beginning either on the date the leave related to COVID-19 reasons concludes or the date twelve weeks after the employee’s leave began, whichever is earlier.

April 7, 2020

Labor Law

Families First Coronavirus Response Act (“FFCRA”) Model Notice, New Effective Date and Amnesty

The U.S. Department of Labor (“DOL”) has published the model notice which employers must post as required by the Families First Coronavirus Response Act (“FFCRA”).  The notice must be posted in conspicuous places on the premises of the employer where notices to employees are customarily posted.   An employer can satisfy this requirement by emailing or direct mailing this notice to employees, or posting this notice on an employee information internal or external website.  An employer is not required to post the notice in multiple languages, but the DOL will be publishing the notice in the near future in several additional languages.  The requirements in the notice apply only to current employees.  Employers can order notices free of charge from the DOL’s Wage and Hour Division, or download and print the notice here. Most importantly, the DOL has decided that the effective date of the FFCRA is April 1, 2020, not April 2, which, as stated in the FFCRA, is 15 days from the enactment of the Act.  Employers must begin complying with FFCRA on April 1, 2020. Also, in a memo to field staff that was shared with the public on Thursday, the DOL stated that it will not bring enforcement actions against any public or private employer for violations of the FFCRA occurring within 30 days of the enactment of the FFCRA ( meaning April 17, 2020), provided the employer has made reasonable, good faith efforts to comply with the FFCRA. The Field Assistance Bulletin states that an employer who is found to have violated the FFCRA acts “reasonably” and in “good faith” when all of the following facts are present: The employer remedies any violations, including by making all affected employees whole as soon as practicable. The violations were not “willful” (the employer “either knew or showed reckless disregard for the matter of whether its conduct was prohibited”) The DOL receives a written commitment from the employer to comply with the Act in the future. The Field Assistance Bulletin also explains that for purposes of the non-enforcement policy, employers who are eligible for tax credits but who have insufficient cash flow should make payment of sick leave or family leave wages as soon as possible, but no later than 7 calendar days after the employer has withdrawn an amount equal to the required paid sick leave and expanded family and medical leave wages from the employer’s federal payroll tax deposit its, or, to the extent such deposits are not sufficient, has received a refund of the credit amount from the IRS to cover the required wages.

March 27, 2020

Best Practices

Department of Labor Guidance on the Families First Coronavirus Response Act

On March 26, 2020,  the U.S. Department of Labor (DOL) published its first guidance on the Families First Coronavirus Response Act (“FFCRA” or “Act”). The publications included a fact sheet for employees, a fact sheet for employers and a question and answers document. The documents begin to address the numerous questions that businesses have concerning the application of the Act to their business, how to determine coverage, ways to seek an exemption and circumstances under which a small business might do so, and other miscellaneous items concerning wages and hours. The DOL promises that more information will be forthcoming before the effective date of implementation of the Act which now appears to be April 1, 2020. Although there is a provision in the Act for seeking exemption and DOL Q&A mentions exemptions for small businesses it merely states that to elect the exemption businesses should document why their business with fewer than 50 employees meets the criteria set forth by the DOL, which criteria will be addressed in more detail in forthcoming regulations. The DOL also admonishes businesses not to send materials to the Department when seeking a small business exemption for paid sick leave and expanded family and medical leave. Both the Sick Leave and the extended FMLA provide the Secretary of Labor with authority to exempt small businesses with fewer than 50 employees when the requirements would “jeopardize the viability of the business.” It is hoped that the DOL will provide guidance soon on how it will administer such exemptions. At the present time, there is no guidance to tell business what should be included, what criteria would count, and where to apply. March 26, 2020 is also the deadline for the DOL to produce and publish a notice including what is required to be provided to employees. We expect a poster with language to be forthcoming.

March 26, 2020

Best Practices

The New Reality – Employees Working From Home

This article is co-written by: Phyllis Karasov, Larkin Hoffman Larry Morgan, Orion HR Group, LLC In light of the coronavirus, the majority of employers are allowing, if not mandating, that employees work from home (WFH). What should employers be thinking about when arranging for employees to telecommute? Determine which positions lend themselves to WFH. Obviously, some positions require face to face interaction or production with hands-on work, such as manufacturing. The employer should consider whether there are alternative options, such as conference calls and videoconferencing, to allow work to proceed despite employees WFH. Determine which employees are capable of working from their homes. Many employees are not technologically savvy and have limited ability to work independently with little or no supervision. Employees must have an area in their home in which they can reliably and work every day. Build a formal checklist to establish clear and objective standards regarding employee and supervisor attributes to make it successful. Determine what infrastructure is needed for employees to WFH. If an employee does not have the internet at home, the employer may be able to provide a hot spot. If necessary, the employer can provide a computer, shredder and/or a printer/scanner/copier. Any secure platforms the employer uses must be installed on the employee’s home computer. The employer’s IT department should work with employees to ensure home computers are protected from hacking, virus malware, etc. All employee work should be stored on the employer’s server. Establish the rules for WFH, such as: Employees must record their hours If children will be at home, with the employee’s assistance, determine when the employee will be available to work Build regular schedules and options for the employee to use paid time off for family activities as appropriate Establish set times for phone meetings or virtual meetings. If necessary, software to allow for virtual meetings will have to be installed on the employee’s home computer or laptop. Employees are allowed only to work from home, not from a public space or someone else’s home. Employees must WFH in an area in which there are no distractions, with formal work hours so they can be contacted. Reminders of the obligation to maintain confidentiality, procedures to ensure business data is properly stored on the employer’s server, and how to handle trash if there is no available shredder. It should be made clear that this is a temporary situation. Employees may get comfortable working from home and want to retain WFH when it becomes safe to return to work. 5) Discuss and publish expectations. When reports and updates are required deadlines should be established. Individuals should be designated with whom employees can communicate when there are issues (and their cell phone numbers). Work product deliverable expectations and deadlines should be clear. WFH can result in additional expenses for the employee. Copy paper, increased internet usage, printer ink and other items can become expensive. The employer should be clear as to what they will pay for, and whether it will be direct payment or reimbursement to the employee. Depending on the item, there may be taxable income issues. Written documents describing the terms and conditions of WFH should provide the employer with the ability to decide that WFH is not effective, whether because of the work or because of the employee or the employee’s family situation. To avoid isolation, the employer should consider having regular virtual meetings so that employees still feel part of the team and continue to feel connected. If anything, over-communicate with employees so they remain connected with the employer and team members, have firm expectations of their own work, ongoing feedback as well as the employer’s business and future forecasts. Employees are naturally nervous about the stability of their work situation and it is helpful for employees to be told how their company is doing in this challenging economy.

March 19, 2020

Labor Law

Unemployment Compensation and COVID-19

The COVID-19 pandemic is causing an ever-changing, difficult situation for many people. Employers are being forced to make difficult decisions affecting the lives of employees—people about whom they care deeply. As government officials attempt to respond to and mitigate the pandemic, many of you are having to dramatically cut or eliminate employee hours or even entire workforces. An emergency order shut down restaurants, bars, theaters, gyms, entertainment facilities, and more. Other industries have also stopped all non-essential services. This article provides some information and resources regarding unemployment benefits under these circumstances to assist you in making these difficult decisions. Unemployment is a governmental safety net designed to help relieve the pain of dramatic cuts in employee hours. It is particularly suited to supporting employees who see their hours or pay impacted by the pandemic. In addition, on Monday, March 16, 2020, Minnesota Governor Walz issued an executive order that loosens the rules of unemployment for this situation—including removing some of the penalties otherwise facing employers. Generally speaking, employees whose hours are substantially reduced or who are laid off should be eligible for unemployment benefits and should be encouraged to apply for unemployment. Unemployment does not entirely replace the employee’s pay, but it helps ease the pain. Here is a bullet-list of some of the key, additional temporary relief provided by the governor’s order: • The normal non-payable week before benefits set in is waived. • While people on unemployment are expected to look for replacement work, o They are not required to look for work that puts their health at risk (i.e. searching that contradicts social distancing, etc.); and o If the layoff or change in hours is temporary, continuing to communicate with the employer meets the requirement. • Individuals required to leave for quarantine, care for others, etc. can still qualify. • Employers are not penalized in the calculations for future unemployment tax rate as a result of pandemic-caused unemployment benefits. • The usual five-week benefit limitation for employers is waived. If you only need to temporarily reduce hours, you might also want to consider applying for the Shared Work Program available through Minnesota’s Office of Unemployment. The employer pays employees to work between 50% and 80% of their normal hours, and the employees receive partial unemployment benefits for the remaining hours, up to the maximum allowed. This program provides a mixed solution. The employer still pays for employees to work up to 50% of their normal hours, and the employees receive partial unemployment for the remaining hours. You may also permit employees to use their paid-time-off. They would not be eligible for unemployment while their PTO replaces their regular hours. These conversations are among the most difficult employers face. Remember that people most remember how they were treated. Treating your employees with dignity, fairness, and respect will go a long way to supporting their transition. You can also help relieve some of the anxiety by explaining the situation and their options—encourage them to apply for unemployment and provide resources. Being laid off is personal to the employee, show that it is personal to you too by communicating it individually, being there for the employee, and addressing their specific needs. Of course, always make sure any layoffs or hour-reductions comply with the legal requirements—that they do not discriminate, that you provide the legally required information and paychecks, etc. Again, this is a continuously changing situation, with new emergency orders and relief packages being proposed and enacted. This post should provide some basic information, but you should make sure that you have the most up-to-date information specific to your situation as you make your decisions. Here are some resources you might find useful in this situation: •   The governor’s executive order regarding unemployment relief •   The Minnesota Office of Unemployment’s Covid-19 site for employees •   The Minnesota Office of Unemployment’s Covid-19 site for employers •   Information about the Shared Work Program •   Information about compassionate employee layoffs: o   A Guide to Being Compassionate During Layoffs, by Kenneth W. Freeman (Harvard Business Review) o  Learn What to Do When You have to Let Someone Go, by Lahle Wolfe (the balance careers) o   Compassionate Layoffs Are Done with Empathy and Care, by Susan M. Heathfield (the balance careers)

March 18, 2020

Discrimination

Do you know who your employees are? The NLRB clarifies its joint-employer standard

You probably think that your employees are limited to the people listed on your payroll. But under the joint-employer standard, one business’s employees can be imputed as another business’s employees for the purpose of employment laws and regulations. Earlier this week, the National Labor Relations Board (“NLRB”) announced its final rule for determining joint-employer status under the National Labor Relations Act (“NLRA”). The new rule provides welcome clarity for businesses involved with employees represented by labor unions. Under the NLRA, if two businesses are joint employers, both must bargain with the union representing the jointly-employed employees. They face joint liability for each other’s unfair labor practices as well as the threat of disruption from labor disputes. The NLRB’s new rule returns to the traditional standard for determining joint-employer status that guided the analysis for decades prior to the disruptive 2015 decision in Browning-Ferris. Browning-Ferris relaxed the standard for establishing a joint-employer relationship. Under Browning-Ferris, a business could become a joint-employer even if it did not exercise direct and immediate control over essential terms of employment. A joint-employer relationship could arise even if a business’s involvement with employment-related decisions was indirect, limited and routine, or contractually reserved but never exercised. The NLRB’s new rule provides that a joint employer must possess and actually exercise substantial direct and immediate control over essential terms and conditions of employment. Substantial direct and immediate control requires a regular or continuous consequential effect, as opposed to a sporadic, isolated, or de minimis effect. Essential terms and conditions of employment are: • Hiring • Firing • Discipline • Supervision • Direction • Wages • Benefits • Hours of work. The rule provides businesses with greater certainty in structuring their business relationships, particularly ones that utilize staffing agencies or other contract labor. It also provides unions with clarity about who they must negotiate with regarding the terms and conditions of their members’ employment. Employers should not assume, however, that a joint-employer relationship can never arise. Indirect control can still be a relevant factor in determining whether direct control is substantial, even if indirect control is insufficient by itself to establish a joint-employer relationship. Businesses must continue to exercise care and consult with their attorneys about how to avoid inadvertently establishing substantial direct control over others’ employees. By adopting the rule, the NLRB joins the Department of Labor who issued a similar rule earlier this year for determining joint-employer status under federal wage and hour laws. The Equal Employment Opportunity Commissions (“EEOC”) is also expected to follow suit later this year for determining joint-employer status under federal anti-discrimination laws.

March 3, 2020

General Matters

Employment Law Implications of Coronavirus

  Updated 3/16/2020 An employer’s response to the coronavirus pandemic can change from day-to-day, depending on guidance and recommendations issued by the CDC, state departments of health, OSHA and the World Health Organization. The questions employers are asking are changing depending on the day, as are the answers! Can employers question their employees about their recent travel for personal reasons? Questioning employees about their travel could, to some employees, imply invasion of privacy and the fear of potential discrimination. Many employers are asking employees to voluntarily inform their employer of their personal travel plans so the employer can decide whether the employees should be quarantined at home upon their return. An employer can inform employees that they are monitoring the coronavirus and making work-related travel decisions based on the coronavirus. They can provide employees with information about the countries that have experienced cases of coronavirus. If feasible, one person should be designated as a contact person for employees who have questions about coronavirus, have concerns about other employees and their symptoms, or fear that they may have been exposed to coronavirus. Employees should be given reassurance that these contacts will be kept confidential and will be shared with others only on a need to know basis or if required by any government agency. Can employers ask employees about their health? The Americans with Disabilities Act (ADA) prohibits an employer from making a medical inquiry or requiring medical examinations of employees, except in very specific circumstances. In general, the ADA prohibits employers from requiring medical examinations unless they are job-related and consistent with business necessity, such as if the employee poses a direct threat to others. However, because coronavirus has been declared as a pandemic, employers can ask ill employees about their symptoms, and assess whether they will allow the employee to remain in the workplace. They can take the temperature of an employee, because fever is a known symptom of coronavirus. Can employers require employees to take unpaid time off if they are ill or they have been exposed to coronavirus? If an employee has exhausted their paid time off, or they do not want to use their paid time off while home, employers face a difficult problem. It can be expensive to offer employees paid time off because the employer has requested that they not come to the workplace. If paid time off is not offered, or the employee is required to use their paid time off, they may not voluntarily report symptoms or self-quarantine themselves at home. There is no legal requirement that an employer provide paid time off to employees asked or required to remain at home and they cannot work remotely, unless otherwise required by an applicable collective bargaining agreement. Nonexempt employees do not have to be paid for hours not worked. Employers should be cautious with exempt employees. The Fair Labor Standards Act does not allow an employer to make deductions from salary for partial days not worked in a week. A deduction is permitted for absences which are covered by paid sick time or other paid time off. If an exempt employee is absent all week they do not have to be paid for that week. Can employers require employees to take unpaid time off if they are ill or they have been exposed to coronavirus? If an employee has exhausted their paid time off, or they do not want to use their paid time off while home, employers face a difficult problem. It can be expensive to offer employees paid time off because the employer has requested that they not come to the workplace. If paid time off is not offered, or the employee is required to use their paid time off, they may not voluntarily report symptoms or self-quarantine themselves at home. There is no legal requirement that an employer provide paid time off to employees asked or required to remain at home and they cannot work remotely, unless otherwise required by an applicable collective bargaining agreement. Nonexempt employees do not have to be paid for hours not worked. Employers should be cautious with exempt employees. The Fair Labor Standards Act does not allow an employer make deductions from salary for days not worked in a week during which the employee provided more than de minimis work. A deduction is permitted for absences which are covered by paid sick time or other paid time off. If an exempt employee is absent all week they do not have to be paid for that week. What issues should an employer consider when employees are working from home? Because the CDC is recommending social distancing to reduce the spread of coronavirus, many, if not most, employers are allowing employees to work from home when they can. Employers should assess each position and determine if some or all functions can be performed at home. Employers should survey employees to determine their technology capabilities at home, and what resources or equipment the employer is willing to provide to enable the employees to work at home. Employees should be told that they may be asked to perform duties not normally in their job descriptions so that work is carried out as efficiently as possible. The employer should also be clear that working remotely is a temporary measure and employees will be expected to return to the workplace when it is determined safe to do so. Nonexempt employees should record and report their hours worked so that they can be properly paid.

February 27, 2020

Labor Law

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

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

February 12, 2020

Best Practices

Online Ad Targeting Presents Risks for Employers and Landlords Alike

Last fall ProPublica revealed that the U.S. Equal Employment Opportunity Commission has cited employers for discriminatory targeting of job ads on Facebook.  The ads in question excluded women and older workers through use of the micro-targeting tools provided by Facebook’s advertising platform.  Early in 2019, a similar practice came under fire by the Department of Housing and Urban Development in the context of housing ads and just this past December, Facebook began expanding its efforts to prevent advertisers from discriminating and announced that it will include housing ads in its searchable public database Ad Library.  The move is seen as an effort to fend off criticism that its ads could be used to target audiences based on certain characteristics. For those unfamiliar with online advertising, many platforms, including Facebook, allow ad buyers to select groups of users to be shown the ads.  This practice is perfectly appropriate when used for many goods and services, such as targeting certain video game advertisements at younger users.  However, where it is used to prevent a protected class from becoming aware of job openings or available housing, it runs the risk of being classified as illegal discrimination. Employers may have considered the ad targeting to be an efficient way to use limited marketing funds to reach out to those most likely to apply.  Unfortunately, government regulatory agencies do not see it that way, and cost-savings are unlikely to be viewed as a legitimate defense to allegations of intentional or unintentional discrimination. For its part, Facebook reports that it has made changes to its platform to limit the ability of users to target advertisements for certain products in ways that might run afoul of anti-discrimination laws.  Facebook removed the ability to target by age, gender, or zip code for housing, employment, and credit offers. While Facebook has some of the most accurate and granular demographic details about its users, it is not the only company to offer similar advertising targeting functions.  Any company advertising for a product or service, particularly those in highly regulated areas such as employment or housing, should take care to ensure that it is not inadvertently creating a discrimination claim when it decides how it will target the users who will be shown ads.

February 5, 2020

Best Practices

Wellness Fees, Service Charges, and Automatic Gratuities, Oh! My!

If you have eaten out recently, you may have seen an additional charge at the bottom of your bill that says something like “health care 3%” or “3.9% mandate compliance surcharge.” As restaurant and other service-industry employers face growing employee costs further eroding already razor-thin margins, many increasingly add extra charges to their bills to help cover these costs. The CityPages recently published an article looking into the precarious restaurant situation and the use of service fees to try to ease the pain. However, mandatory service charges also face push back—with one restaurant group facing a lawsuit over their inclusion of a 3 percent wellness fee added to their bills. While most media attention has focused on such service charges in the restaurant industry, the service-charge rules apply to any service-oriented employers considering adding a service charge to their bills (For example, hotels often add a “resort fee” to their bills.). So, are these charges legal? As with most things when it comes to the law, the answer depends upon the situation. A service charge or fee is a mandatory charge that is added to a customer’s bill in addition to the basic charge for products and services. Employers are not required to add service fees to their bills. Properly done, employers can legally charge customers a service fee. Improperly done, additional charges can be considered employee gratuities (a/k/a “tips”) under Minnesota law but income to the employer under tax law. As discussed in my prior post about the Dos and Don’ts of Tipping, Minnesota has strict laws about tipping policies. If you are an employer that is considering adding a service charge to customer bills, you will want to make sure your policies comply with these laws. Under Minnesota law, any mandatory additional charge is considered a gratuity to the employee by default. There are two exceptions: A mandatory charge is not considered a gratuity if it would be completely unreasonable under the circumstances for the customer to interpret the charge as “payment for personal services rendered.” For example, it would be unreasonable for a customer to think the charge is a gratuity if an employee directly tells the customer that the charge “is not a gratuity.” However, relying on this type of exception is highly risky because it depends upon the facts of each situation and can easily be disputed. A mandatory charge is also not considered a gratuity if “clear and conspicuous notice” is provided to customers. The rules defining this standard are very particular about what type of notice is “clear and conspicuous.” However, the notice includes printing a statement that the charge “is not a gratuity” clearly in at least 9-point font on the menu or bill. This is the most common approach used by restaurants in the Twin Cities. The use of service fees varies widely and is often rather ambiguous. If you decide to implement a service charge, you should also make sure that the service charge accurately reflects its purpose. For example, saying that a service charge is “mandatory” under state law is not accurate when the state does not require businesses to add the service charge. Similarly, a charge listed as a “wellness fee” should be used for wellness purposes. Some employers charge a “wellness fee” to cover only mandatory healthcare costs, such as insurance and sick and safe time pay. Other employers have found cost-effective plans that also enable the employer to provide basic health and wellness services to all of their employees. Improperly identifying the purpose of the charge could invite challenges from customers or employees—some employers segregate these funds for the identified use. Another way to minimize customer complaints and other potential challenges to the charges is to fully train your staff on the purpose, use, and reason for the charges. If your staff is on-board and excited about the benefits, they can turn any customer questions into an opportunity for increased loyalty and appreciation. For example, employees explaining how they directly benefit from a wellness fee makes it personal. Some employers will even agree to drop the service charge if a customer still does not want to pay the charge. Some employers do charge obligatory gratuities—particularly for large parties. The IRS considers obligatory gratuities to be service charges—not tips—and taxes them as part of your gross income. As explained above, however, Minnesota labor law considers these to be tips. Accordingly, you must distribute mandatory gratuities to the appropriate service employees while also treating them as business income and wages for tax purposes. The increased use of service fees has generated significant discussion among customers and service-industry groups. Some opponents say they would rather see increased prices with postings explaining the increase or touting the benefits the increases provide. Others support the service fees and believe that the fees ensure that the money will be used for the stated purpose. Whichever approach you decide to take, you will want to make sure that you understand the potentially strict legal implications under Minnesota and local law. Additional Resources: Minnesota Statute § 177.23, Subd. 9: Definition of Gratuities Minnesota Administrative Rule 5200.0080: Gratuities/Tips Credits IRS Revenue Rule 2012-13: Regarding Tips versus Service Charges

January 24, 2020

Labor Law

The NLRB Changes Its Mind

In December 2018, President Trump made his third appointment to the NLRB, giving the Republicans a majority on the five-person Board. 2019 has seen a number of Board decisions in which the Board reversed or narrowed its decisions made by a Board which was controlled by Democratic appointees. Union Election Rules In 2014, the NLRB announced what is often called the “quickie election” rule. This rule significantly tilted the NLRB’s election process in favor of unions. It created an accelerated election process and made it harder for employers to present arguments against union representation. On December 13, 2019, the NLRB issued a final rule amending the 2014 election rule. These amendments will go into effect on April 16, 2020. The new rule gives parties 14 business days’ notice of the pre-election hearing, as opposed to the eight calendar days under the old rule. This allows employers an opportunity to properly investigate election issues and to prepare for a possible pre-election hearing. It provides employers eight business days after it receives notice of a hearing to compile briefs and layout arguments in its statements of position. Previously, the employer was required to file and serve its statements of position one day before the opening of the pre-election hearing, which was usually seven calendar days after service of the notice of hearing. NLRB officials will also have more leeway to extend these deadlines under the new rule. Petitioners are required to respond to employers’ statements of position at least three business days before the pre-election hearing, with their position on the issues raised by the employer. Previously, petitioners were only required to respond orally to employers’ statements of position at the start of the pre-election hearing. Under that practice, the employer had almost no advance notice of potential union arguments to an employer. This amendment places equal obligations on both employers and unions. Hearings will be held prior to the election regarding disputes concerning unit scope and voter eligibility, which was not allowed under the 2014 rule. Post-hearing briefs may now be filed within five business days of the hearing. This is a complete turnaround from the 2014 rule, which removed the right of parties to file post-hearing briefs unless the party received special permission from the Reginal Director. The new rule directs regional NLRB officials to set elections no fewer than 20 business days after the direction of election, unless the parties agree to a shorter time. Under the 2014 rule, elections could be held in as few as 13 days from the filing of the petition. Use of Employer’s Email System In 2014, the NLRB issued Purple Communications, which held that an employee who was given access to their employer’s email system may use their work email, during non-working time, to engage in protected communications, i.e., communications about labor unions, wages, or other workplace issues. On December 17, 2019, the NLRB issued Caesars Entertainment, which overruled Purple Communications and restored an employer’s right to restrict employee use of its email system during nonworking time for non-work-related purposes if it does so in a nondiscriminatory manner. The decision, however, creates an exception for circumstances where the use of employer-provided email is the only reasonable means for employees to communicate with one another. The Board stated that such cases should be rare given that in modern workplaces employees have access to smartphones, social media, and personal email accounts. The scope of this exception was not defined by the Board but will be “fleshed out on a case-by-case basis.” Confidentiality in Employer Investigations In 2015, the NLRB issued Banner Health, which required employers to prove on a case-by-case basis that the integrity of an investigation would be compromised without confidentiality. In other words, an employer may restrict discussions regarding workplace investigations only where the employer shows that it has a legitimate business justification and it outweighs employees’ Section 7 rights—rights to unionize or engage in other protected activities to improve their work environment as employees. On December 17, 2019, the NLRB issued Apogee Retail LLC, which overruled Banner Health and held that work rules requiring confidentiality during a workplace investigation are presumptively lawful. In Apogee Retail, the NLRB applied the test for facially neutral workplace rules established in Boeing Co., a case that was issued in December of 2017. The Board held that investigative confidentiality rules are presumptively lawful when they apply to open investigations. But, if the rule is not limited to the duration of the investigation, the rule requires a determination of whether there is a legitimate employer justification for the restriction that outweighs any impact on employees’ Section 7 rights. What Will the Future Bring? In 2020, we can expect that the NLRB will continue to revise if not reverse other decisions made during the Obama administration. Never before has precedent had so little value, with the political affiliations of the majority of the Board affecting the Board’s decisions. Generally, Board precedent has lasted for 10, 20 or 30 years or more, but we are now seeing that political affiliation is affecting precedential value. The General Counsel for the NLRB is also looking for specific factual situations in which to argue a position that deviates from previous cases in order to create new law or to return to holdings that were the law prior to President Obama’s administration.

January 13, 2020

General Matters

It’s Complicated – Understanding the Impact of Non-Discretionary Bonuses on Overtime Pay

The Fair Labor Standards Act (“FLSA”) defines certain employees as exempt and others as nonexempt.  Nonexempt employees are generally entitled to receive overtime pay at a rate of at least one and one-half times the employee’s regular rate of pay.  Overtime is often easy to calculate on straight weekly earnings, but what happens when employees earns a bonus on top of their regular rate of pay?  The answer is that it depends. Discretionary vs. Nondiscretionary Bonuses Bonuses can be considered discretionary or nondiscretionary.  Bonuses are discretionary if the employee has no expectation of payment, the employer retains freedom to decide the amount and timing of payment, and the bonus is not tied to meeting specific goals.  These types of bonuses are not reflected in overtime rate calculations.  Nondiscretionary bonuses, on the other hand, are those that are provided to employees in an effort to encourage them to work more efficiently, rapidly or those that encourage employees to remain with the employer.  Nondiscretionary bonuses can include such things as hiring bonuses, attendance bonuses, production bonuses, retention bonuses, profitability bonuses, or bonuses tied to quality and accuracy of work.  These types of bonuses are the kind that must be considered part of a nonexempt employee’s total wages for the purposes of calculating overtime. Overtime Rate and Nondiscretionary Bonus The FLSA requires that overtime pay be calculated on an employee’s regular rate of pay, and any nondiscretionary bonuses an employee earns must be factored into the employee’s regular rate of pay.  This is relatively easy to calculate when bonuses are earned and paid during the pay period, but recalculating the regular rate of pay becomes much more difficult when bonuses are earned over a series of pay periods, such as quarterly or annually. Because certain bonuses are not earned until well after the pay period, it is permissible for an employer to disregard the bonus when initially computing the regular rate (and overtime) of pay, but once the bonus becomes known and is paid, the employer is required to retroactively recalculate the regular rate of pay for each workweek in which the bonus was earned in order to pay additional overtime compensation on the bonus.  So how exactly is this done? As explained by the Department of Labor, if an employee receives a productivity bonus of $2,000 after six months, the employer is required to calculate any additional overtime earnings the employee is due for each week the employee worked overtime hours.  Overtime is not being calculated retroactively for all wages paid—the employee already received overtime pay on his or her base wage—it is calculated on the additional wages, i.e. the bonus, and only one half of the increase in the regular rate of pay is due for each overtime hour worked. For purposes of this example, suppose that the employee worked 50 hours (10 hours of overtime) in the 9th week of the bonus period.  The calculations would be done as follows: Step 1:  $2,000 ÷ 26 weeks (6 months in bonus period) = $76.92 Step 2:  $76.92 ÷ 50 hours (total hours worked in week nine) = $1.54 (increase in the regular rate) Step 3:  $1.54 x ½ = $.77 (increase in the additional overtime premium rate) Step 4:  $.77 x 10 hours of overtime = $7.70 (increase in overtime earnings) Employers engaging in these calculations must do the same calculation for each week of the bonus period in which the employee worked overtime hours.  This can undoubtedly feel like a daunting process for an employer, so it is important to keep records of hours worked on a week-by-week basis.

January 6, 2020

Labor Law

Tick Tock: A New Year’s Resolution for All Employers with Employees Who Work in Minneapolis

With the coming New Year, it is a perfect time for Minnesota employers to ensure that they are complying with the new laws and ordinances that affect employment in the state. This post is intended to highlight a few areas that deserve particular focus as 2019 comes to a close. Minneapolis Wage Theft Prevention Ordinance We have written extensively about the Minneapolis Wage Theft Ordinance, and the requirements it imposes on employers. See one such post here. In brief, the ordinance requires employers to provide all employees with specific information about the terms of employment, including: the start date of employment, the employer’s policy on tips, the employer’s overtime policy, and notice of the employee’s rights under the Minneapolis Sick and Safe Ordinance. The ordinance takes effect on January 1, 2020, and requires notices to be provided to all new employees at the time of hire, and for all current employees by the end of the first payroll period in 2020. Before the end of the year, make sure that your business has provided the required disclosures, or has a plan to do so in the first few weeks of January. State-Wide Wage Theft and Disclosure Requirements Employers who are not located in Minneapolis would also be wise to review their documentation, as the 2019 Minnesota Wage Theft Prevention Act imposes similar record keeping and disclosure requirements as the Minneapolis ordinance. A previous post on this topic can be found here. The state law took effect as of July 1, 2019. It requires employers to provide additional information on pay stubs, and imposes criminal penalties on individuals who engage in wage theft from employees. Other Recent Changes Other relatively recent changes that would be wise to review include: Sick and Safe Time Ordinances in Minneapolis, St. Paul, and Duluth Minimum wage increases in Minneapolis and St. Paul This is not a comprehensive list, and employment laws change quickly and subtly, with potentially significant consequences for noncompliance. If it has been more than a few years since you last spoke with an employment attorney about your business practices, doing so should be at the top of your list of New Year’s resolutions.

December 12, 2019

Labor Law

Employers Be(a)ware!

Minnesota Attorney General Keith Ellison is leading the fight with 18 States’ Attorney Generals (AGs) to ask the federal government to ban employers from utilizing non-competition provisions with most employees. According to Ellison and the other AGs, such provisions constitute an “abusive practice,” especially with respect to “low wage” employees. In their opinion, such provisions take advantage of workers, hurt the economy by holding back innovation, and hinder fair competition with other businesses. The AGs’ request was made through a November 15 letter to the Federal Trade Commission (FTC) Commissioner. The feds have agreed to get in the act. The FTC just announced that it will hold a workshop to begin examining and evaluating the consumer protection and antitrust effects of non-competes on the market, job mobility, wage growth and innovation. In spite of the sensationalist language and approach taken by the AGs in their letter, it seems to be a stretch for the FTC to put prohibitions on non-competes nationally. The interest on the federal level is a recent development. The FTC Act does empower the Commission “to prevent unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce.” Currently and historically, however, state laws have controlled the enforceability of non-compete agreements, some with statutory restrictions and some with case law. Such agreements are legal in most states and about 20% of Americans are bound by them. California, for example, has almost completely prohibited the use and enforcement of employee non-compete agreements and, in fact, prohibits employers from even attempting to negotiate or impose them on employees. Oregon law voids non-competes for lower wage employees. Colorado prohibits non-competes for certain health care workers, and Hawaii prohibits them for tech workers. In Minnesota there is no statutory limitation, but courts construe agreements strictly and only enforce those that have reasonable restrictions in scope, duration, and geographical reach. Attorney General Ellison and the other States’ AGs have applied pressure on the FTC because its rulemaking authority may offer the quickest, most comprehensive regulatory path to protecting workers from what they refer to as “exploitative contracts.” Their letter quotes a September 18, 2019 letter from the FTC Commissioner, in which he stated that: [A] rulemaking proceeding that defines when a non-compete is unlawful is far superior than case by case adjudication. The proceeding would allow a broad array of stakeholders, not just a plaintiff and a defendant, to contribute to the development of the law. The proposed, but yet unscheduled, upcoming workshop the FTC just announced is the first step toward a potential ban on non-competes through the rulemaking process. Make no mistake: non-competes are an incredibly useful, and often vital tool for employers. Such agreements can be instrumental in protecting their businesses. A rule restricting, limiting or prohibiting non-competes for some or all employees, on a national basis, would be a disaster and an attack on business interests. Accordingly, this situation should be carefully watched, and business leaders should actively participate in the process through trade associations, chambers of commerce or other groups which may educate and exert pressure to counter the efforts of the States’ AGs and the unions that have joined forces with them. It seems unlikely in this political climate, especially with the Trump administration in place, that the FTC would adopt the Ellison letter’s recommendations. Despite the zealous advocacy of the AGs, the positions they espoused are generally contrary to the way courts have analyzed and enforced non-competes in the past. Nevertheless, it bears watching. Not to be left out, even Congress is considering taking action. In October the Senate introduced the 2019 Workforce Mobility Act, a bill banning all non-compete agreements across the country, with exceptions only for the sale of a business or the dissolution of a partnership. The proposed Act is an extreme approach to non-compete reform but it is gaining some traction in the Senate. Last week the Senate Committee on Small Business and Entrepreneurship held a hearing with testimony from academia, business, and an individual testifying about the negative consequences to him of a non-compete agreement. The Committee did not invite any testimony from any non-compete proponents. The federalization of this issue coupled with the AG efforts and the FTC rulemaking initiative shows that a partial or total ban on non-compete agreements is a distinct possibility and could have unimaginable far reaching repercussions for business in America. We will continue to update readers on all developments. Tags

December 3, 2019

Best Practices

Do’s and Don’ts of Tipping

What is the deal with tipping in Minnesota? Although there are many legal considerations which must be taken into account when running a service business where customers tip your employees, there is one cardinal sin that comes up the most in service-industry conversations and can get businesses in big trouble: tip-sharing. There are many cautionary tales, but perhaps one of the most infamous recent examples is the $2.5 million Surly agreed to pay last year to settle a tip-sharing lawsuit. To be clear up front: tips are your employees’ money. Minnesota law prohibits mandatory tip sharing  (requiring employees to share their tips with other employees). This is different from the laws of some other states, and Minnesota’s law can catch multi-state businesses by surprise. Because tip-sharing is such a cultural norm in the service industry, it can be difficult for employers to foster a collegial culture while avoiding misunderstandings about tipping policies. Here’s the key: the fact that any tip sharing is voluntary must be clearly communicated to employees and documented in writing. Anyone who is training new employees needs to be aware of the importance of this. Make sure that any questions about “how much do you usually tip out the _____?” are first answered with something like, “Your tips are yours, and you can do whatever you want with them.” The trainer could then say something like, “I usually do ___,” or “people typically do ____.” The trainer should make sure to finish by clarifying, “but you decide what you want to do.” There are limited exceptions to this rule, for example, in the catering industry and in service-counter establishments, like coffee shops. If you operate one of these kinds of businesses, make sure you understand how the tipping laws apply in your particular circumstance. Again, tipping policies can be a minefield. Minnesota has strict laws about tipping policies. Employers need to be particularly careful regarding issues like automatic gratuities or participating in the tipping-out process. You will also want to make sure your method of handling credit-card tips both complies with the law and is clearly communicated to your applicants and employees, so there are no surprises. There are also tax implications regarding tipping that you will want to make sure you are handling correctly. I hope to address these issues in future articles. Additional Resources: Minnesota Department of Labor: Tips, Tip Credit Minnesota Statute § 177.24: Payment of Minimum Wages Minnesota Administrative Rule 5200.0080: Gratuities/Tips Credits

November 14, 2019

Firm Highlights

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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
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Health Care Attorney Angela Mamaril Joins Larkin Hoffman
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Larkin Hoffman Attorneys Named 2026 Super Lawyers and Rising Stars
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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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Craig Hardie Joins Habitat for Humanity of Minnesota Board of Directors
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Can Employees Be Prohibited From Recording Workplace Conversations?
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Four Months of Minnesota Paid Leave: Frequently Asked Questions
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Why All Employers Should Understand Protected Concerted Activity
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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