Phyllis Karasov

Of Counsel

pkarasov@larkinhoffman.com
Office – 952.896.1569

Employment & Labor Blog

Four Months of Minnesota Paid Leave: Frequently Asked Questions

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

May 6, 2026

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

General Matters

Balancing Free Speech and Workplace Policy: Strategies for Employers

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

September 24, 2025

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

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

July 7, 2025

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

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

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

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

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

The Future of Employment Settlement Agreements

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

March 28, 2023

Labor Law

Employer Non-Competes Under Threat by FTC Proposal

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

January 23, 2023

Labor Law

Two Employment Bills Expected to Pass in Minnesota

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

January 17, 2023

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

General Matters

Can a Noncompete be Enforced in Wisconsin?

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

June 16, 2022

Collective Bargaining

Steps to Protect Your Non-Union Business Model

Union activity is on the rise and many labor experts believe the organizing efforts at companies such as Amazon and Starbucks are just a step in a growing nationwide movement.  Combine the events of the past couple of years with a shortage in the labor force, and workers everywhere are reevaluating and expecting more from their employers. Unions are using new tools to communicate with employees, and employers need to give more attention to employee concerns if they want to remain nonunion.  This recommendation applies to all employers of employees who are not currently represented by a union.  Employees leading recent union campaigns have said that they want a seat at the table, and feel their voices were not heard as their employers made changes in scheduling, work responsibilities, and safety protocols in light of the pandemic.   Employers of a workforce of any size, even if some employees are already represented by a union, need to consider whether their nonunion employees are vulnerable to a union campaign.  There are steps an employer can take to avoid employee interest in a labor union. Respond to employee concerns such as safety, personal work-life balance, and fair wages. Employers have had to adjust schedules due to the pandemic and employees have become more vocal that their personal needs seem to be secondary to the profit margins of their employers.  In this world of the Great Resignation and labor shortages, no employer can consider itself immune from employee interest in a union.  The term “living wage” has become a mantra. Employers should look at their pay structure and consider whether they should be increasing their pay, not only for retention, but also to show employees that they don’t need a union to get an increase in pay. In the face of union organizing, consider regular, direct communication with employees. In the cases of Amazon and Starbucks, they brought in outside consultants to design anti-union campaigns and to speak to employees about the reasons why they should vote against a union.  However, a concerted employee-to-employee grassroots effort proved more persuasive than were the hired outside consultants.  The consultants messaging was ineffective and came to represent the significant disparity between corporate profit and management pay. Employers should consider ways to increase employee engagement.  Taking care not to create an internal labor union, an employer can involve employees in decisions regarding benefits, scheduling, continuing education and company events.  Companies should consider programs that allow employee involvement in decisions affecting them. In recent union campaigns, employees have communicated with each other using social media, such as Twitter and Facebook, or text messaging.  Employers do not typically use this tool to communicate with employees and have relied on traditional techniques.  Social media is a powerful vehicle for employees and labor unions to communicate with each other.  Employers need to figure out how to engage with their employees.  Employees want a seat at the table, and transparent decision-making may go a long way in avoiding unionization.  Great communication is a critical tool. Make sure employees feel they are being listened to. One of the reasons behind forming an employee labor union is the belief that management is not listening to employees.  Employees who support the unions at Starbucks and Amazon said continuous changes in their schedules due to COVID-19 did not take into account the impact the changes had on personal lives.  Added to this was a sense that company management did not care about individual employees. Listen to your employees and consider additional benefits that discourage employees from seeking union representation.  Employees are asking for new and different benefits, such as pet insurance, bus cards, mental health days, or a health and wellness allowance.  Consider a health insurance plan supplement to include transgender-inclusive healthcare benefits.  Many employees want paid time off to volunteer or would like Fridays off during the summer. Employers should also consider offering flex time and work-from-home opportunities to show employees you are listening to their needs. Remain consistent with brand ideology. Many employers market on a progressive platform, such as being environmentally conscious, supportive of LGBTQ rights, or in support of Black Lives Matter.  In some cases, these progressive ideas attract workers who share their values.  When it is perceived that their employer is acting inconsistently with the social justice values publicized, they become restless and want more say regarding working conditions.  Even stores like REI, which say they put “purpose before profits”, are being organized.  Employees are conflating working conditions with social justice themes espoused by their employer.  Employers should take this into account when making employment policy decisions. Don’t ignore the power of social media. Employees and unions use social media to communicate with prospective members.  Twitter, Instagram, Facebook and text messaging are replacing the traditional communication tools.  Employees talk among themselves at work, which can be a compelling way to get the union message across to others.  Employers should be creative in how they communicate with their employees and be aware of the powerful tool that social media presents for the unions.  Employee meetings and written communications may not be enough to convey the employer’s messages regarding the reasons why employees should not vote for the union. Ensuring employees feel valued is a critical element in staying nonunion. The objective is to listen to employees and demonstrate that as their employer, you have their back. Make an effort to understand interests and needs and demonstrate that the company will listen as needs evolve. The General Counsel of the NLRB has announced that she will seek a ruling from the NLRB prohibiting mandatory employee meetings in which employees “are forced to listen to employer speech concerning the exercise of their statutory labor rights, especially during organizing campaigns. “Employers should increase their efforts to communicate with their employees before they become interested in a union.  One thing that is consistent in all businesses is that employees need to feel their opinions count and that their employer appreciates their contributions to the success of the company.

May 9, 2022

Collective Bargaining

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

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

April 25, 2022

Best Practices

Unlimited PTO Policies: Avoid the Risks

In light of current labor shortages, employers are paying higher wages and contemplating different benefits and working conditions that employees are now demanding.  One such benefit is an unlimited paid time off (PTO) policy.  An unlimited PTO policy allows employees to take as much paid time off as they desire as long as they complete their work and meet all applicable deadlines.  Most policies require supervisory approval of paid time off and reserve the employer’s right to deny a request for PTO because of business needs and deadlines. Typically, an unlimited PTO policy is made available to exempt employees and not nonexempt employees. There are unique issues that employers must consider in developing their unlimited PTO policies.  For the reasons explained below, I will refer to these policies as unlimited absence policies. Family and Medical Leave and ADA Reasonable Accommodation Leave Without including restrictions on unlimited absence policies, employers may find that they must pay for lengthy absences due to family and medical reasons.  To avoid such situations, there are a number of provisions an employer can include in their unlimited absence policy. Don’t call the policy an unlimited PTO policy. Label it as an unlimited vacation policy.  This title clarifies that unlimited paid time off is not for absences due to medical or family medical reasons but rather, is for vacations. Limit the number of consecutive days for which an employee can be absent in a specified period such as within a week or a month. If unlimited PTO can only be used for absences of, say, up to ten consecutive working days, an employee cannot use PTO for a reason that qualifies for a leave required by the Family and Medical Leave Act (FMLA). The same issue exists for a leave of absence which is a reasonable accommodation under the Americans with Disabilities Act (ADA). If unlimited PTO is allowed for any absence, then a leave of absence which is a reasonable accommodation will also be entitled to be fully paid. Continue to have separate FMLA, workers’ compensation, and ADA leave policies and clearly state in the unlimited absence policy that unlimited PTO applies to absences for reasons other than mandated FMLA leave or leave granted as a reasonable accommodation. In addition to the above, unlimited absence policies should include a number of elements.  Informing employees that they are responsible for completing their work and that the unlimited absence policy does not excuse them from meeting applicable deadlines and carrying out their normal job responsibilities is an important caveat.  Employees should be required to follow established procedures for taking time off, including requiring approval from a supervisor. Paid Sick Time Employers should keep track of the amount of time that employees are taking off for medical reasons vs. for vacations. This is important as an increasing number of cities and states enact paid sick and safe time laws.  If employees work in locales that require paid sick and safe time, the employer should ascertain if by implementing a PTO policy they are entirely exempt from all requirements of the paid sick and safe time requirements.  In some jurisdictions, employers who offer paid time off rather than vacation/sick leave policies are still required to keep track of the amount of paid sick and safe time that employees are taking. Payment for Unused PTO at Separation. An unlimited absence policy should also make it very clear that paid time off does not accrue and that unused paid time off is not paid at termination.  Employers should consult with legal counsel to determine whether there are any applicable laws regarding payment of unused paid time off at termination.  For example, the Illinois Department of Labor’s FAQs state that if an employer has a vacation policy that allows employees to take vacation subject to business needs, the employer must at termination pay a “monetary equivalent equal to the amount of vacation pay to which the employee would otherwise have been allowed to take during that year but had not taken.”  Thus in Illinois, if an employer can demonstrate the average amount of vacation time an employee takes in any given year because the employer has been tracking such vacation, the employer will be in a better position to determine how much-unused vacation is due to an employee at separation.  Legal counsel can advise employers about specific city or state policies that may apply to their employees. Conclusion Unlimited absence policies are becoming more and more popular however when designing a program, employers need to consider mandated family and medical leave laws, paid sick and safe time requirements, leaves of absence that are a reasonable accommodation under the ADA, and state laws regarding the obligation to pay for unused vacation at separation.  If the policies are not crafted carefully, employers may find they are required to pay for a lengthy leave of absence.

April 18, 2022

Collective Bargaining

Project Labor Agreements are Now Required for Large Federal Construction Projects

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

February 8, 2022

Collective Bargaining

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

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

February 2, 2022

Best Practices

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

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

December 27, 2021

Labor Law

Mandatory COVID-19 Vaccinations and Testing Issued by Federal OSHA

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

November 5, 2021

Accommodations

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

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

November 1, 2021

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