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New Employment Laws

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

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

January 29, 2026

New Employment Laws

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

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

November 21, 2025

New Employment Laws

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

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

October 30, 2025

New Employment Laws

New Employee Break Requirements in Minnesota

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

August 26, 2025

New Employment Laws

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

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

July 23, 2025

New Employment Laws

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

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

May 9, 2025

New Employment Laws

Potential Implications of Using Artificial Intelligence to Drive Employment Practices

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

February 26, 2025

New Employment Laws

Preparing for Workplace ICE Raids

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

January 29, 2025

New Employment Laws

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

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

October 21, 2024

New Employment Laws

The Changing Landscape of Independent Contractor Status in Minnesota

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

July 3, 2024

New Employment Laws

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

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

June 25, 2024

New Employment Laws

Intellectual Property and the Proposed Ban On Non-competes

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

May 9, 2024

New Employment Laws

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

As many of you probably already know, the Federal Trade Commission (the “FTC’) issued a Final Rule outright banning employment-based noncompete agreements. The ban is expected to go into effect in August. The three key takeaways from the Final Rule are: Employers may no longer require or enforce employment-based noncompete agreements with any employees. This prohibition applies retrospectively, which means that even noncompete agreements (with the exception of those with “Senior Executives”) executed before the rule’s effective date will become invalidated by the rule. Employers will be required to provide notice to employees whose noncompete agreements are no longer enforceable. This news has made massive head waves. Employers’ inboxes are likely inundated with literature about what this Final Rule means for them. Who Can Avoid the Rule? The rule has extremely broad application; however, there are a select few noncompete agreements that will survive the FTC’s prohibition and those groups need not concern themselves with reading any further: Non-Profit Organizations: The FTC only governs for-profit businesses and thus this rule will not impact nonprofit organizations. Franchisors: While the FTC rule does apply to employees that work for franchisees, the rule does not apply to noncompete agreements executed between franchisors and franchisees. Sale of a Business: The FTC rule does not apply to noncompete agreements executed in connection with the sale of a business. Senior Executives: As noted above, the Final Rule excludes noncompete agreements with “Senior Executives” from its retrospective application. This means that pre-existing noncompete agreements with Senior Executives will stay intact. According to the rule, to qualify as a “senior executive,” an employee must make at least $151,164 annually and be in a “policy-making position.” However, following the effective date, employers cannot enter into any employment-based noncompete agreements with any employees, including Senior Executives. Not So Fast, FTC When the FTC announced its proposed rule, it was heavily scrutinized even by dissenting FTC Commissioners. At that time, FTC Commissioner Christine S. Wilson indicated she believed the rule was susceptible to legal challenges on several bases: (1) the FTC does not have the legal authority to make and enforce this rule; (2) this rule may be of such great significance that it may only be enacted by the legislature; and (3) if Congress did delegate legislative authority to create this rule to the FTC, such a delegation of authority would be unconstitutional. Now that the FTC has issued a Final Rule, it did not take long for these legal challenges to come. In fact, within just hours of the Final Rule being published, a Dallas-based tax services firm filed a lawsuit in the Northern District of Texas seeking to block the rule. Shortly thereafter, the US Chamber of Commerce along with other business associations filed a lawsuit in the Eastern District of Texas in another attempt to block the rule. So, You’re Saying There’s a Chance The FTC’s rule will become law 120 days after it is published in the Federal Register, which is expected to occur within the coming days. But given the current legal challenges it is facing, there is a chance that the rule will not get that far. The best course of action for employers right now is to stay patient and stay vigilant. If none of the legal challenges are successful in putting the enforcement of this rule on pause, employers will want to start putting together a compliance plan together as we get closer to it becoming law. Wait - Aren’t Minnesota Employers in Compliance Already Because of State Law? Not quite. Last summer, Minnesota joined California, Oklahoma, and North Dakota in banning post-employment based noncompete agreements. While Minnesota’s law does share some similarities with the FTC’s Final Rule (exception for noncompete agreements associated with the sale of a business; not banning the use of non-disclosure, non-recruitment, and non-solicitation agreements), there is one key distinction: Minnesota’s law did not retroactively apply to invalidate noncompete agreements entered into before July 1, 2023; thus, the FTC’s Final Rule is more expansive in its prohibition. Because of the retroactive component, compliance with the FTC rule will require compliance efforts from Minnesota employers in addition to the efforts previously made to comply with the Minnesota law; specifically, Minnesota employers will be required to track down all their non-senior-executive workers currently subject to a noncompete agreement with the company in order to provide notice that the noncompete is no longer enforceable. What Would an FTC Rule Compliance Plan Look Like? While it may be best to sit still in the meantime, if/when it appears these legal challenges have failed to stall or stop the rule from going into effect, employers will want to establish a compliance plan with the following: Determine Who Is Exempt: Because the rule does not apply retrospectively to noncompete agreements with “Senior Executives,” employers will likely need to consult counsel to determine which existing noncompete agreements, if any, can remain in effect. Provide Notice to Impacted Workers: Employers will be required to notify workers subject to noncompete agreements rendered unenforceable that their restrictions are no longer in effect. An example of language to include in the notice is set forth below. Consider Alternative Protections: Employers will need to remove noncompete provisions from their agreements going forward and should consult with counsel to determine what alternative protections they might utilize to protect the goodwill of its business. Other protections include:Non-Disclosure/Confidentiality AgreementsThese are designed to protect the confidential information of the company such as intellectual property, financial data, customer lists, or other sensitive business information from being used outside the employee’s course of employment with the company. Non-SolicitationThese are utilized to prevent former employees from soliciting customers, suppliers, and even employees away from the company. Non-Solicitation clauses can prohibit a former employee from disrupting and interfering with the company’s customer relationships. Model Notice Language Incorporated into the Final Rule is the following recommended model language for informing a former employee that his or her noncompete is no longer enforceable: A new rule enforced by the Federal Trade Commission makes it unlawful for us to enforce a non-compete clause. As of [DATE EMPLOYER CHOOSES BUT NO LATER THAN EFFECTIVE DATE OF THE FINAL RULE], [EMPLOYER NAME] will not enforce any non-compete clause against you. This means that as of [DATE EMPLOYER CHOOSES BUT NO LATER THAN EFFECTIVE DATE OF THE FINAL RULE]: You may seek or accept a job with any company or any person—even if they compete with [EMPLOYER NAME]. You may run your own business—even if it competes with [EMPLOYER NAME]. You may compete with [EMPLOYER NAME] following your employment with [EMPLOYER NAME]. The FTC’s new rule does not affect any other terms or conditions of your employment. For more information about the rule, visit ftc.gov/noncompetes. Complete and accurate translations of the notice in certain languages other than English, including Spanish, Chinese, Arabic, Vietnamese, Tagalog, and Korean, are available at ftc.gov/noncompetes. Employers that utilize the model language will be presumed to have adequately complied with the rule’s notice requirement.

April 29, 2024

New Employment Laws

Minnesota Bans Inquiries into Applicants’ Pay History

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

April 22, 2024

Labor Law

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

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

April 17, 2024

Labor Law

NLRB Significantly Broadens Scope of Joint-Employer Standard

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

November 11, 2023

Drugs and Alcohol

Navigating the Legalization of Marijuana: Updating Drug and Alcohol Policies

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

August 23, 2023

Drugs and Alcohol

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

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

August 10, 2023

Labor Law

More Changes to Employment Laws by the Minnesota Legislature

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

June 8, 2023

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

New Employment Laws

Earned Sick and Safe Time is the Law Throughout Minnesota

Although several cities already have enacted sick and safe time ordinances, the Minnesota legislature has made earned sick and safe time (ESST) a state requirement. The statute becomes effective on January 1, 2024. All Minnesota employers must provide employees who perform services for at least 80 hours per year, 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, up to a maximum of 48 hours in a year. The bill defines an employer as any person who has one or more employees and includes both public entities and private businesses. Eligible Use of ESST An employee may use accrued ESST for: An employee’s:Mental or physical illness, injury, or other health condition; Need for medical diagnosis, care, or treatment of a mental or physical illness, injury, or health condition; or Need for preventive medical or health care. The care of a family member:Suffering from with a mental or physical illness, injury, or other health condition; Needing a medical diagnosis, care, or treatment of a mental or physical illness, injury, or other health condition; or Needing preventive medical or health care. An absence due to domestic abuse, sexual assault, or stalking of the employee or employee’s family member, provided the absence is to:Seek medical attention related to physical or psychological injury or disability caused by domestic abuse, sexual assault, or stalking; Obtain services from a victim services organization; Obtain psychological or other counseling; Seek relocation or take steps to secure an existing home due to domestic abuse, sexual assault, or stalking; or Seek legal advice or take legal action, including preparing for or participating in any civil or criminal legal proceeding related to or resulting from domestic abuse, sexual assault, or stalking. Closure of the employee’s place of business due to weather or other public emergency or an employee’s need to care for a family member whose school or place of care has been closed due to weather or other public emergency. The employee’s inability to work or telework because the employee is: (i) Prohibited from working by the employer due to health concerns related to the potential transmission of a communicable illness related to a public emergency; or (ii) Seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, a communicable disease related to a public emergency and such employee has been exposed to a communicable disease or the employee’s employer has requested a test or diagnosis; and When it has been determined by the health authorities having jurisdiction or by a health care professional that the presence of the employee or family member of the employee in the community would jeopardize the health of others because of the exposure of the employee or family member of the employee to a communicable disease, whether or not the employee or family member has actually contracted the communicable disease. Definition of Family Member “Family member” refers to: An employee’s:Child, foster child, adult child, legal ward, child for whom the employee is legal guardian, or child to whom the employee stands or stood in loco parentis; Spouse or registered domestic partner; Sibling, stepsibling, or foster sibling; Biological, adoptive, or foster parent, stepparent, or a person who stood in loco parentis when the employee was a minor child; Grandchild, foster grandchild, or step grandchild; Grandparent or step grandparent; A child of a sibling of the employee; A sibling of the parents of the employee; or A child-in-law or sibling in law. Any family members listed in clause (1) of a spouse or registered domestic partner. Any other individual related by blood or whose close association with the employee is the equivalent of a family relationship. Up to one individual annually designated by the employee. Carryover 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.  In lieu of permitting the carryover of accrued but unused ESST into th following year, an employer can provide an employee with ESST for the year that meets or exceeds the 48 hour minimum that is available for the employee’s immediate use at the beginning of the subsequent year as follows: 48 hours, if an employer pays an employee for accrued but unused ESST at the end of a year; or 80 hours, if an employer does not pay an employee for accrued but unused ESST at the end of a year. Notice of Intent to Use ESST An employer can require notice of the need for use of ESST.  If the need for use is foreseeable, an employer can require advance notice of the intention to use ESST but must not require more than seven (7) days advance notice.  If the need is unforeseeable, an employer may require an employee to give notice of the need for ESST as soon as practicable.  An employer that requires notice of the need to use ESST must have a written policy containing reasonable procedures for employees to provide notice of the need to use ESST. When an employee uses ESST for more than three (3) consecutive days, an employer may require reasonable documentation that the ESST is covered by the statute.  The type of document that can be requested varies, depending on the reason for using ESST. PTO Policy Can Replace ESST 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. Nothing in the statute is to be construed to limit the right of parties to a collective bargaining agreement to bargain and agree with respect to ESST policies or to diminish the employer’s obligation to comply with any contract, collective bargaining agreement, or any employment benefit program or plan that meets or exceeds, and does not otherwise conflict with, the minimum standards in the statute. Collective Bargaining Agreements The provisions of the statute may be waived by a collective bargaining agreement with a bona fide building and construction trades labor organization that represents the affected building and construction industry employees.  However, for such a waiver to be valid, it must explicitly reference the statute and clearly and unambiguously waive application of the statute to the employees. Other Local Paid Sick and Safe Time Ordinances The statute is not to be interpreted to preempt, limit, or otherwise affect the applicability of any other law, regulation, requirement, policy or standard that provided for a greater amount, accrual, or use by employees of paid sick and safe time or that extends other protections to employees.  As a result, employers continue to be covered by a local paid sick and safe time ordinance or regulation as well as the new ESST legislation. Acquired Business Employees of a business that has been acquired or merged retains any sick and safe time accrued during their employment if they are retained by the new employer. Other Requirements The Commissioner of Labor and Industry enforces this policy, and it will be effective on January 1, 2024.  The statute contains requirements for a posted notice, to be developed by the Minnesota Department of Labor and Industry, and information about accrued ESST which must be reflected on earning statements.  Employers who provide an employee handbook must include notice of employee rights and remedies under the statute. Conclusion This summary covers only a portion of the ESST statute.  Employers with questions should seek advice from a labor and employment law attorney at Larkin Hoffman.

May 30, 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

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

Accommodations

Minnesota Employers Navigate Legalized THC Edibles

Minnesota employers who conduct pre-employment drug testing or drug testing of current employees are familiar with the protections for employees who are enrolled in the Department of Health Patient Registry Program for medical marijuana.  An employer cannot discriminate against a person enrolled on the Patient Registry in hiring, termination or any term or condition of employment based upon a positive drug test for cannabis components or metabolites unless the employee used, possessed or was impaired by medical cannabis on the premises of the place of employment or during the hours of employment.  This provision has been a challenge to apply because marijuana stays in the system for so long, and it can be difficult to ascertain if a person who fails a marijuana drug test is actually impaired at the time of the test. Now, Minnesota employers have another challenge in their effort to maintain a drug-free workplace with the Minnesota legislature’s legalization of certain forms of marijuana for recreational use.  Effective July 1, 2022, Minnesotans can lawfully purchase and consume edible and drinkable products containing hemp derived THC.  THC is an element of cannabis which is considered a hallucinogenic substance. The Minnesota statute excludes from its list of controlled substances hemp products that contain no more than 0.3 percent of any form of THC.  The Minnesota law goes further and allows Minnesotans to purchase edible and drinkable products that contain no more than 5 milligrams of THC per serving and no more than 50 milligrams per package. This Minnesota law does not affect drug testing conducted pursuant to federal law, such as for truck drivers covered by the U.S. Department of Transportation drug and alcohol testing regulations. The THC statute does not discuss protections for employees or applicants who test positive for marijuana because they have consumed a THC product.  An applicant or an employee can now explain a positive result for marijuana as arising from the lawful use of THC products, which creates a conundrum for employers.  Can they require that the employee undergo the procedures described in the Minnesota Drug and Alcohol Testing in the Workplace Act because of testing positive for marijuana?  Or should they disregard the positive test result?  An employer must consider whether the individual who has tested positive for marijuana because of consuming THC holds a position where being under the influence of marijuana could be a safety concern.  Marijuana can remain in a user’s body for up to four weeks after the marijuana is consumed, so the individual may not actually be working under the influence of a hallucinogenic drug because it could have been consumed several weeks before the drug test. In addition, Minnesota’s Lawful Consumable Products Act poses another problem.  This statute protects the consumption of a lawful consumable product during an employee’s non-work time.  The statute defines a “lawful consumable product” as a product whose use or enjoyment is lawful, and specifically includes food, alcoholic or non-alcoholic beverages, and tobacco.  It is unclear if THC edibles fall under this statute, and if they do, it would protect an employee who receives a positive marijuana test because of the consumption of THC. In 2015, the Colorado Supreme Court held that employers could enforce their zero tolerance policies against employees who are allowed to use medical cannabis under state law, even if the employee uses the marijuana during nonwork hours.  The Colorado Supreme Court stated that to be protected under the lawful consumable product statute in that state, the use must be “lawful” under both state and federal law.  Therefore, since marijuana is illegal under federal law, a Colorado employee testing positive for medical marijuana can be disciplined, including termination, for failing a drug test.  The Minnesota THC statute makes no reference to the lawful consumable products statute so it is unknown how that statute would be interpreted by a court with respect to THC edibles. What Should Minnesota Employers Do in Light of These Ambiguities? Many employers are considering waiving a positive marijuana test, or not testing for marijuana at all, because so many applicants and employees are failing drug tests.  These employers are trying to assess the risk in allowing an employee who tests positive for marijuana to be hired or to retain their employment.  Employers can still prohibit employees from coming to work impaired by marijuana, and for using marijuana in the workplace, but impairment can be difficult to identify.  Whether employers should take action against an employee who tests positive for marijuana because the employee has consumed a THC edible, depends on the duties and responsibilities of the employee.  Additionally, supervisors and managers will have to be trained to recognize whether an employee is coming to work under the influence of marijuana.  They must be able to recognize impairment since a positive marijuana test does not necessarily mean that an individual is impaired at the time the test was taken. Employers will also have to evaluate the risk and safety of allowing an applicant or employee to continue to work when they have failed a marijuana test.  Some employers may decide to test only those employees in safety sensitive positions. Hopefully, the testing laboratories will refine their testing procedures so that it is easier to determine whether a positive drug test derives from lawful THC.  For now, employers can take adverse action against an employee who fails a drug test because of consuming lawful THC (subject to the requirements of the Minnesota Drug and Alcohol Testing in the Workplace Act, such as the requirement that before disciplining an employee, the employee must be offered an opportunity to be assessed by a chemical dependency counselor and comply with the counselor’s recommendations).  It may take the courts some time to determine whether THC edibles are a lawful consumable product protected by the Lawful Consumable Product Act. Employers should consult with their legal counsel to discuss whether to cease testing for marijuana.  At present, there is uncertainty as to the impact of the new THC statute on an employer’s right to maintain a zero-tolerance policy for drugs, including marijuana.  I recommend employers keep a close eye on this issue as new information develops. Phyllis Karasov is an attorney who 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.

September 1, 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

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

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

General Matters

The American Rescue Plan Act Subsidizes 100% of COBRA Premiums

On March 11, 2021, President Joseph R. Biden signed the American Rescue Plan Act of 2021 (“ARP”).  Among other provisions, the ARP makes COBRA coverage more affordable by subsidizing 100% of the COBRA premiums during the period beginning April 1, 2021, until September 30, 2021, for an employee or dependent who is a COBRA “qualified beneficiary” due to an involuntary termination of employment or an involuntary reduction in hours. This subsidy will not count towards an individual’s gross income. Eligibility The COBRA subsidy is only available to individuals: (1) who are involuntarily terminated or had their hours reduced; and (2) who are enrolled in COBRA coverage (or will elect such COBRA coverage) on or after April 1, 2021, and before the subsidy ends on September 30, 2021. The ARP simply suspends the eligible individual’s obligation to make COBRA premium payments for up to 6 months. Extension of Election Period – Second Opportunity to Elect COBRA The ARP also provides a second opportunity to elect COBRA coverage for certain qualified individuals through the extended election period. An individual who fits the eligibility criteria and who did not initially elect COBRA coverage or discontinued COBRA coverage before April 1 but would otherwise be within his or her 18-month COBRA coverage period between April 1 and September 30, 2021, can elect COBRA coverage from April 1 until 60 days after the plan administrator of the applicable group health plan notifies such individual of the extended election period. COBRA coverage for any COBRA election by these individuals during the extended election period will commence on and after April 1. An individual electing COBRA during the extended election period may maintain the coverage only until the expiration of the COBRA coverage period (which is most often 18 months) he or she would have had if they had elected COBRA when first eligible. For example, an individual first eligible for COBRA on January 1, 2021, who did not elect COBRA until April 1, 2021, will be eligible for COBRA through June 30, 2022. Plan Enrollment Option Employers may allow eligible individuals to switch the coverage option that the individual initially elected at the time of their COBRA qualifying event. With some exceptions, an individual who is currently enrolled in COBRA continuation coverage has up to 90 days after the receipt of notice of the plan enrollment option to enroll in a different coverage option with that employer, provided that (1) the premium of such different coverage is not more expensive than the premium for the coverage in which the individual was enrolled at the time of such termination or reduction of hours, and (2) the different coverage is also offered to similarly situated active employees at the time the assistance eligible individual elects to enroll. If the individual elects the different coverage and such employer permits it, the COBRA subsidies shall apply towards the different coverage. Again, employers are not required by the ARP to make such plan enrollment options available. Reimbursement If an eligible individual makes a COBRA premium payment, “the person to whom such payment is payable” (including a multiemployer plan, employer, and insurer) will reimburse the individual for the amount of the premium paid not later than 60 days after the date on which the individual made the premium payment. Limitation on Subsidy The subsidy terminates if the individual becomes eligible to enroll in any other group health plan or Medicare program. Individuals who fail to notify their employer or health plan that they are no longer eligible for the subsidy may face a financial penalty equal to the greater of $250 or 110% of the premium subsidy after termination of eligibility under the ARP. The subsidy does not extend beyond the period of COBRA continuation coverage itself (which is most often 18 months) so if an individual’s COBRA coverage is set to expire, even if that is in the middle of the subsidy period, the ARP does not require the coverage to be extended through the end of September. For example, if an employee and dependents lost benefits as of March 1, 2020, 18 months of COBRA eligibility would expire at the end of August 2021 and premiums would be subsidized only for 5 months, namely, April through August 2021. Tax Credit The multiemployer plan, employer, or insurer must provide COBRA subsidies to eligible individuals and pay or incur the COBRA premium cost. The ARP provides that the above-mentioned entities can recover the cost of the COBRA premiums that are subsidized by claiming a credit against its quarterly payroll tax liability. If the amount of the credit exceeds the employment taxes due for any calendar quarter, such excess will be treated as an overpayment that would be refundable. The credit, including the refundable portion, may be advanced under rules that will be set out by the Treasury Department. The amount of these credits will constitute the gross income of any entities allowed a credit under the ARP. Notices to Individuals The ARP includes specific notification requirements for employers to amend existing COBRA notice forms or send an additional written notice describing the availability of premium subsidies (along with other specific requirements) to all eligible individuals. The ARP also requires the plan administrator to provide to each individual no more than 45 days but no less than 15 days before the expiration of the subsidy, a written notice that includes clear language regarding the premium subsidies, the expiration date, and how such individual may be eligible for coverage without any premium subsidies through COBRA coverage or a group health plan. The Departments of Treasury, Labor and Health and Human Services are directed to issue regulations and guidance, including model notices for these notification purposes within 30 to 45 days of enactment. What an Employer Should Do Now All multiemployer plans, employers, or insurers subject to the ARP should have a compliance plan in place while awaiting further guidance and model notices from federal agencies. Employers may wish to consult their plan administrators to confirm they will be performing the notification obligations. This article does not encapsulate all of the details required by the ARP, and additional or different regulations and guidance may be issued by federal agencies. For further information please contact Phyllis Karasov at pkarasov@larkinhoffman.com.

March 18, 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

Discrimination

Conflicting Messages: An Executive Order vs. Affirmative Action

The EEOC has encouraged employers to voluntarily modify employment practices and systems which create barriers to equal employment opportunity, without waiting for litigation or formal government action.  The EEOC has said that the principle of nondiscrimination in employment because of race, color, religion, sex or national origin and the principle that each employer should take voluntary action to correct the effects of past discrimination and to prevent present and future discrimination are mutually consistent and interdependent methods of addressing social and economic conditions which were the reasons why Title VII was originally enacted. EEOC regulations enacted in 2012 stated that “… persons subject to Title VII must be allowed flexibility in modifying employment systems and practices to comport with the purposes of Title VII.  Correspondingly, Title VII must be construed to permit such voluntary action, and those taking such action should be afforded the protections against Title VII liability which the [EEOC] is authorized to provide…”  Employers, in carrying out their commitments not to discriminate on the basis of race, color, religion, sex or national origin often provide training to employees and supervisors and hold supervisors and managers accountable for complying with EEO policies.  If the employer has an affirmative action plan, training is an important component of the plan to further ensure that those persons responsible for hiring, promoting and disciplining employees are aware of the employer’s commitment to create increased job opportunities for minorities and women. Since September 24, 1965, the federal government has required that federal contractors adopt non-discriminatory practices in hiring and employment and affirmative action plans.  If a company wants to do business with the federal government, they must have an affirmative action plan.  Many federal contractors offer training as part of their commitment to non-discrimination and affirmative action.  On September 22, 2020, President Trump issued an Executive Order that has thrown a monkey wrench into the training programs federal contractors implement to advance non-discrimination and affirmative action.  Executive Order 13950 bars federal contractors from conducting “divisive” racial sensitivity training.  The Executive Order states that many people are “pushing” an ideology that is rooted in the “pernicious and false belief that America is an irredeemably racist and sexist country.” The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) issued guidance on Wednesday, October 7, 2020, to clarify President Trump’s September 22 Executive Order.  The guidance states that unconscious or implicit bias training is prohibited to the extent it teaches or implies that an individual, by virtue of his or her race, sex, and/or national origin, is racist, sexist, oppressive, or biased, whether consciously or unconsciously.  The guidance also states that training is not prohibited if it is designed to inform workers, or foster discussion, about pre-conceptions, opinions, or stereotypes that people – regardless of their race or sex – may have regarding people who are different, which could influence a worker’s conduct or speech and be perceived by others as offensive.  President Trump’s Executive Order makes training based on implicit bias illegal – federal contractors must immediately cease training which is deemed to be divisive racial sensitivity training.  Labor Secretary Eugene Scalia stated that “particular types of training…that are highly offensive, such as seminars where people are told that they are racist because, for example, they are White, or that people being color blind should regard one another as equal is wrong and offensive.” The OFCCP has created a hotline for complaints about training.  Companies that offer training which is inconsistent with the Executive Order can have their federal contracts canceled, terminated or suspended, in whole or in part.  Examples of workplace training explained in the guidance that are off-limits include a Treasury Department seminar encouraging employees to avoid color blind narratives, as well as materials from the Argonne National Laboratories discussing systemic racism. As part of the government’s effort to end training now deemed to be unlawful, the OFCCP issued a Request for Information on October 21st asking for comments, information and materials from the public relating to workplace trainings that involve race or sex-stereotyping or scapegoating.  The Request for Information is directed to contractors and their employees, and asks for copies of any “training, workshop, or similar programming having to do with diversity and inclusion as well as information about the duration, frequency and expense of such activities.” Confusion and Uncertainty Executive Order 13950 has created great confusion among employers as to what types of training are and are not permissible.  The description of what training is acceptable vs. what training is unlawful is blurry at best.  Although many employers are not federal contractors, we can expect that the principles described in the Executive Order will trickle down to non-federal contractors and employers will begin to modify their messaging and training regarding systemic racism.  The U.S. Chamber of Commerce has indicated that they have heard from many companies who are suspending all diversity and inclusion training.  It can be expected that since the OFCCP is asking employees to report to the OFCCP about training which the employees deem to be inappropriate, many employers are going to be reluctant to offer any training at all.  To add to the confusion, the U.S. Department of Labor’s OFCCP has started at least two investigations of major American companies to determine whether there is a violation of previous executive orders. In early October, the OFCCP opened a probe into whether Wells Fargo’s plan to double its Black leadership conflicts with the bank’s anti-discrimination obligations.  Wells Fargo’s CEO, Charlie Sharf announced in June that Wells Fargo intended to increase diversity in the top ranks. The OFCCP has stated that this objective “appear[s] to imply that employment action is being taken based on race.”  Interestingly, Wells Fargo recently settled an OFCCP claim of hiring discrimination in 34,000 instances and agreed to pay $7.8 million to resolve these allegations.  In that case, the OFCCP found that there were significant disparities against Black applicants in the company’s hiring process.  As part of the settlement, Wells Fargo is to track the race of applicants and the race of those employees hired to help to monitor racial discrimination.  One would think that the goal to double the number of minorities in leadership would be consistent with the settlement of the claim of past hiring bias but apparently, it is not. A similar investigation is also ongoing at Microsoft, which announced a goal of doubling its Black leadership.  It is unknown how many other companies have received similar letters from the OFCCP.  Many major employers have made public statements in light of the George Floyd protests pledging to increase diversity and inclusion initiatives. Our government is sending out mixed messages concerning the goal of increasing diversity in America’s workforce and designing a more inclusive work environment.  While many employers are attempting to create systems to enhance and encourage the hiring and promotion of minorities and women, the government seems to be pushing back these efforts.  Affirmative action, diversity and inclusion cannot be accomplished without the training of employees and supervisors.  Employees need to understand that racism and sex discrimination can be systemic and can occur without specific individual intent.  The government has indicated that, at least for federal contractors, efforts to educate employees on systemic racism is illegal.  Without education, there will be more challenges in achieving diversity and inclusion in corporate America. Meanwhile, federal contractors must immediately review their training programs and determine if their training programs are inconsistent with Executive Order 13950.  Federal contractors must evaluate how much legal risk they are willing to accept by announcing goals and objectives in increasing diversity and addressing race-based discrimination in their company.

October 23, 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

General Matters

To Require Vaccines or Not: That is the Question

We are all waiting for a COVID-19 vaccine. When we have a vaccine, can an employer require that applicants and employees be vaccinated against COVID-19? Employers have a legitimate desire to keep their workplaces safe and to protect their employees from contracting COVID-19 in the workplace. Phyllis Karasov and Dan Ballintine discuss the practical and legal issues associated with an employer mandatory vaccination program. 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 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

September 11, 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

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

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

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

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

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

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

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

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