Real Estate & Construction Blog

Legislative and Judicial Updates

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

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 24, 2023

Legislative and Judicial Updates

Navigating the Legalization of Marijuana: Updating Drug and Alcohol Policies – Part Two

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 24, 2023

Construction

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

Construction

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

Update: On February 4, 2022, President Joe Biden signed an Executive Order requiring the use of PLAs on federal construction projects for which the total estimated cost is $35 million or more. 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

Construction

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

Construction

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

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

September 13, 2021

Construction

What to Do about Vaccinations: Employer Recommendations

On May 28, 2021, the Equal Employment Opportunity Commission (EEOC) updated its Technical Assistance Questions and Answers (Technical Assistance) about COVID-19 and Equal Employment Opportunity laws, including the Americans with Disabilities Act (ADA). In the Technical Assistance, the EEOC addressed many questions concerning the right of employers to screen for COVID-19 and/or for symptoms of COVID-19. Much of the Technical Assistance had been previously published but on May 28, the EEOC updated its answers to many of the questions. One question which had not been clearly answered by the EEOC until the Technical Assistance came out was whether an employer can require all employees physically entering the workplace to be vaccinated for COVID-19. This question was added in the May 28, 2021 version of the Technical Assistance. The EEOC stated that federal Equal Employment Opportunity (EEO) laws do not prevent an employer from requiring all employees physically entering the workplace to be vaccinated for COVID-19, subject to reasonable accommodation provisions. Attorneys have been advising clients for many months that it is permissible to enact a mandatory vaccination policy, and the May 28 Technical Assistance confirmed the lawfulness of such a policy. The purpose of this article is not to discuss reasonable accommodation although obviously, it is an important concern if an employer mandates that all employees must be vaccinated. A mandatory vaccination policy must allow for exceptions if an employee is suffering from a medical condition that prohibits the employee from being vaccinated, or if an employee has religious objections to being vaccinated. Rather, this article will discuss a few issues that we have seen with respect to vaccinations. In the updated Technical Assistance, the EEOC also stated that employers can encourage employees and their families to get vaccinated, without violating any discrimination laws. Again, employers have been offering such incentives for many months, but the updated Technical Assistance provides additional regulatory support for this position. It is also lawful for employers to provide educational information to employees to address concerns about vaccinations, and to raise awareness of the advantages of being vaccinated. Is it legal to ask employees for documentation that they received a COVID-19 vaccination? Normally, it is unlawful for an employer to make inquiries concerning an employee’s medical treatment or condition, unless such an inquiry is job-related and consistent with business necessity. However, the updated Technical Assistance makes it clear that when an employer asks employees whether they obtained a COVID-19 vaccine, the employer is not asking a question that is likely to disclose the existence of a disability. Thus, requesting documentation of vaccination is not a disability-related inquiry under the ADA. Employers should not forget that vaccination documentation is medical information about an employee and must be kept confidential. Can an employer publicize which employees have not been vaccinated? The Technical Assistance provides that information about an employee’s COVID-19 vaccination is confidential medical information under the ADA. Employers must keep this information confidential, as they would any other medical information. Employers cannot publicize who has and has not been vaccinated. What can an employer do if an employee refuses to be vaccinated? Employers are struggling with the proper way to handle an employee who refuses to be vaccinated and is not refusing because of a medical condition or a religious objection. Many companies, particularly those which interface with the public, want the public to know that employees have been vaccinated and it is safe to be in physical contact with their employees. Some companies, faced with the knowledge that a significant number of employees will refuse to be vaccinated, have offered incentives to motivate employees to be vaccinated, and education about the risks associated with COVID vs. the benefits of being vaccinated. Suggestions for dealing with employees who are not vaccinated: Implement alternative work situations for those employees who are not vaccinated. An example is to stagger employee schedules so that employees who work in close proximity are not in the office on the same days. Allow employees who are not vaccinated to continue to work from home. Continue to require social distancing. Require that all employees wear masks, or request that unvaccinated employees wear a mask. Just last week, a client called asking what to do with a minor rebellion he was encountering where many unvaccinated employees were refusing to wear masks. This employer requires that all employees wear masks. He asked what he could do? We told him that, assuming the employees are not refusing to wear a mask because of a medical condition or religious objection, the employer can terminate the employees for refusing to wear a mask. What if vaccinated employees feel uncomfortable being exposed to unvaccinated employees? The General Duty Clause of the Occupational Safety and Health Act requires that an employer provide employees with a work environment free of recognized hazards that are causing or likely to cause death or serious physical harm to employees. If an employer fails to take precautions to protect employees from the risk of exposure to an unvaccinated employee, they could be violating the General Duty Clause. Therefore, we recommend that employers continue to require that unvaccinated employees wear masks and that social distancing continue to be enforced. In addition, the employer should consider the alternatives discussed above. These actions will help demonstrate the concrete steps an employer has taken to protect workplace safety. What is an employer’s obligation to unvaccinated employees being harassed by other employees? If an employer does not mandate that all employees be vaccinated, the employer should make sure that unvaccinated workers are not harassed or made to feel isolated. It is permissible to offer incentives to employees who voluntarily receive a COVID-19 vaccination. The incentive should not be so substantial that it is deemed to be coercive. Employers should be cautious about conditioning access to training, career development activities, or other work-related events, on being vaccinated. Employers should enforce their policies concerning harassment, bullying, respect and civility when unvaccinated employees are harassed or mocked because they are unvaccinated. Conclusion As COVID case numbers are going down, and government agencies are reducing mask and social distancing requirements, employers are grappling with how to bring employees back to work, and what COVID health and safety rules will be applied to the workplace. Whether to require that employees be vaccinated is one of the challenging questions for all employers. The EEOC, the CDC, and state and local governments are loosening up the requirements and giving businesses more flexibility in what they can demand of their employees. In making these important decisions, employers must balance safety, employee preference, and the impact of mandating vaccinations.

June 4, 2021

Construction

Do You Need a Teleworking Policy?

Before the COVID-19 pandemic, most employers were reluctant to allow employees to work from home on a continuous basis. Many companies prohibited all teleworking or allowed employees only to work remotely when recovering from an illness or when required as a reasonable accommodation. When COVID-19 hit, many employees began working remotely and it appears that working from home is now, for many employees, a permanent situation. I, myself, have seen the advantages of working from home although I miss the collegiality and professional dialogue with other attorneys in my firm. It has been estimated that about half of employed adults are currently working from home. Job applicants have indicated that they place a high value on the ability to work from home. Flexible scheduling is a significant perk that younger workers prefer, even more than a higher salary. Many employers developed written policies regarding teleworking once it became clear that employees would be working from home for some period of time. Other employers, thinking that remote working was a temporary situation, do not have written policies on teleworking but instead issue periodic directives, instructions, and procedures to employees who are working from home. Key Elements of a Teleworking Policy If an employer expects that all or a segment of its employees will continue to be working from home, even after the pandemic ends, it may be time to consider developing a teleworking policy. Although allowing employees to work from home may retain or attract employees, the ability to work outside the office can also create nightmares for an employer. Whether employees work full-time from home or partially work from home, it is important that employers and employees have the same expectations as to productivity, communications, and compliance with company policies. Below I have highlighted some key elements of a telecommuting policy: Specify what positions are eligible to work from home. Identify those persons responsible for making the decisions as to whether particular employees or positions can work remotely and how often the employees can work remotely (i.e. how many days per week). Identify the expectations and requirements for employees who will be working remotely.Are employees expected to participate in any meetings in the office? Do they have flexibility in their work hours? How often do they need to communicate with their supervisors? Employers may have concerns about the diligence and reliability of employees who work from home, so the expectations need to be clearly stated. It may be appropriate to remind employees that when they are participating in video meetings, such as Zoom or Teams meetings, they need to dress appropriately. How many of us have seen others in Zoom meetings wearing pajamas, sweatshirts or other clothing that they would never wear to an in-person meeting involving the same people as those in the Zoom meeting? Discuss expected communications protocols. Employees should be told when they are expected to be available for telephone conferences, video meetings and other group confabs. Should employees regularly check-in? Should employees inform their supervisors when they are ready to start their day at their computer? Will employees have to list the specific tasks they will complete or have completed during the day or during the week? Discuss the equipment which an employee will need for their work and who will provide it. The policy should describe what equipment and supplies the employer will be providing versus the employee, and if provided by the employee, whether the employer will be reimbursing the employee for these supplies and equipment. Explain what personal use an employee can make of equipment which is provided by the employer, such as a printer and scanner. Outline the accepted use of a personal device and if or when it is acceptable to download or access company files on a personal device. Security is a critical element of the arrangement for an employee to work from home. Firstly, if employees are accessing a company network or other confidential information, what procedures must they follow from their home office to ensure the security of company networks and communications. Will the company be providing a shredder or is it up to the employee to discard paper generated during the workday? What safeguards should the employees be setting up against potential hacks, breaches or theft? The policy should describe the need to password protect all devices used for work purposes. Expectations of work hours. Many employees working remotely have children at home because their daycare or schools are closed. How much flexibility will employees have to extend their work hours to accommodate taking care of their children, or assisting their children with schoolwork? Are there specific hours during which employees must be working? How do employees keep track of the hours they work? Consequences of abuse of the policy. The policy should state that employees can be disciplined for violation of the teleworking policy or any other company policy while working remotely. At some point, an employer may decide to withdraw an employee’s right to work remotely because that employee has been abusing the privilege of working from home. Workers Compensation and Remote Workers Employees who are injured while working at home may be covered by the employer’s workers compensation insurance. Over 10 years ago, the Minnesota Workers Compensation Court of Appeals considered the question of whether an employee’s injury while working at home was covered by the employer’s workers compensation insurance. The employee was taking a short break from his computer to get a cup of coffee. While he was walking down the stairs, he slipped and landed on his back on the steps. He suffered a fracture of his T9 vertebra and eventually required surgery. The employee filed a claim for workers compensation insurance alleging that his fall arose out of and in the course of his employment. The employer and insurer disputed the employee’s claim. The Workers Compensation Court of Appeals held that when he left his home office to go to the kitchen for a cup of coffee, the employee was no different from an employee who, while working at the office, goes to a kitchen for a cup of coffee. The court found that the injury arose out of the employee’s employment and therefore was covered by workers compensation insurance. To possibly control workers compensation liability for remote workers, an employer should consider establishing guidelines for a home office such as requiring a designated work area and provide training related to setting up a workstation and appropriate safety measures. When feasible, conduct periodic checks of employee home offices to identify and eliminate work area safety hazards. This suggestion may not make sense for many, if not most employers, but companies should understand that an injury because of hazardous conditions in an employee’s home may be covered by workers compensation insurance. Consider setting fixed work hours and meal and rest periods for telecommuters. This may help establish whether an injury was “in the course of employment.” Conclusion If an employer has a written teleworking policy, the employer should periodically discuss with supervisors and managers whether the teleworking policy is effective and whether it is addressing all issues that arise when employees are working from home. Employers should also check with the remote employees to discuss how isolated they may feel from the rest of the company, whether they feel they are working at their most effective and efficient level and what adjustments may be appropriate for their schedule and/or in the teleworking policy. Employers should consult with their attorneys to ensure that their teleworking policy complies with all state and federal requirements.

February 19, 2021

Legislative and Judicial Updates

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

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

February 5, 2021

Legislative and Judicial Updates

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

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

February 1, 2021

Construction

The Changing Landscape of Union Organizing and Worker Activism

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

January 11, 2021

Legislative and Judicial Updates

Conflicting Messages: An Executive Order vs. Affirmative Action

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

October 23, 2020

Planning and Development

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

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

October 1, 2020

Planning and Development

To Require Vaccines or Not: That is the Question

We are all waiting for a COVID-19 vaccine. When we have a vaccine, can an employer require that applicants and employees be vaccinated against COVID-19? Employers have a legitimate desire to keep their workplaces safe and to protect their employees from contracting COVID-19 in the workplace. Phyllis Karasov and Dan Ballintine discuss the practical and legal issues associated with an employer mandatory vaccination program. About the Larkin Hoffman Podcast Briefings The Larkin Hoffman Podcast Briefings series was developed to discuss issues affected by the COVID-19 crisis. Our attorneys address corporate, employment, real estate, construction, franchise, bankruptcy, insurance, litigation, and other matters in this series. Over the next few weeks, there will be several podcasts on developing matters. Larkin Hoffman is available to help. Please reach out for additional guidance

September 11, 2020

Legislative and Judicial Updates

New Developments in the Families First Coronavirus Response Act

Employers in real estate and construction with fewer than 500 employees are required to provide leave to employees who are unable to work because of the pandemic under the Families First Coronavirus Response Act (FFCRA). The U.S. Department of Labor (DOL) issued a Final Rule effective April 6, 2020 expanding on the requirements of the FFCRA that would go into effect. Following the publication of the Final Rule, the State of New York sued the DOL in federal district court arguing that several features of the Final Rule exceeded the agency’s authority under the statute. The U.S. District Court for the Southern District of New York, issued an order on August 3, vacating certain provisions of the Final Rule. The open question as a result of the decision is whether it applies only in the state of New York or if it applies nationwide In light of the court’s decision, employers should consider modifications to their leave policy with regard to the following: Is an employee eligible for FFCRA leave if the employer doesn’t have work available? The Final Rule excludes employees from FFCRA leave if their employers do not have work for them. The Court decided that requiring that work be available for an employee in order to take leave is inconsistent with the FFCRA. If this ruling is recognized nationwide, employees who are on a temporary layoff (furlough) or other leave of absence will be eligible for FFCRA leave, even if the employer doesn’t have work for them. Do employees need an employer’s consent for intermittent leave? The Final Rule permits “employees to take Paid Sick Leave or Expanded Family and Medical Leave intermittently only if [both] the Employer and employee agree,” but the court determined that to the extent an employee can telework, they may be able to take leave intermittently for illness-related reasons, since there is no public health risk of exposure to others in the workplace. Further, if the reason for the leave is to care for a child whose school or place of care is closed due to COVID-19, the employee can take leave intermittently without the employer’s consent. We recommend that employers consider allowing intermittent leave to employees for reasons that would not cause the spread of infection in the workplace. Can an employer require documentation before leave? The Final Rule requires that employees submit to their employer “priorto taking FFCRA leave” certain documentation indicating “their reason for the leave, the duration of the requested leave, and when relevant the authority for the isolation or quarantine order qualifying them for leave.” However, the FFCRA’s language does not suggest such a requirement. The Court found that the Final Rule’s documentation requirement is unsupported by the statute and struck it down. In light of this decision, we recommend employers consider revising policy to allow employees to submit documentation for a leave after they go on the leave rather than requiring that it be submitted prior to the leave. The Court did not specifically indicate that its order to vacate the portions of the Final Rule discussed above applies nationwide or if it is limited to New York. The DOL could voluntarily revise the Final Rule to address the issues raised by the court, appeal the decision to the U.S. Court of Appeals, or decide to announce the agency does not agree with the court’s ruling and refuse to follow it outside of New York. Until the DOL decides how to proceed, employers are left with the potential of being in violation of the FFCRA if they do not make the above-described changes to their implementation of the FFCRA. Therefore, until there is further clarification on the significance of the New York court decision, we recommend employers consider modifying their FFCRA leave policy in light of these developments and continue to monitor DOL announcements. If you have any questions regarding the above recommendations; or other employment-related issues, please reach out to Phyllis Karasov, pkarasov@larkinhoffman.com.

August 13, 2020

Construction

Required COVID-19 Preparedness Plan for the Construction Industry

This post is co-written by Phyllis Karasov and Mike Schechter. This post was updated on 6/29/20 In his recent Executive Order 20-74, Governor Walz ordered critical sector businesses to create and adopt a COVID-19 preparedness plan to make workplaces safe from the spread of the coronavirus, and his administration subsequently published guidance for specific industries that pose higher risks of transmission including construction. The guidance was initially published on June 15. In consultation with Larkin Hoffman, AGC of Minnesota and Housing First Minnesota have been advocating for meaningful clarification and change in this guidance on behalf of the construction industry. They have been in communication with the governor and his staff to clarify and address problems in the guidance and have rallied other associations to the conversation. DLI updated its guidance on Thursday, June 25. What the Guidance Says The construction industry guidance is problematic—vague, over-reaching, potentially impossible to comply with, and possibly prescriptive. The “Preparedness Plan Requirements Guidance – Construction” carries the “guidance” title but reads prescriptively, telling general contractors that they must: Develop and implement a written COVID-19 Preparedness Plan that addresses the COVID-19 protocols and practices set out in the guidance that are applicable to the general contractor’s overall responsibility for work activities at the worksite and the work activities of its workers at the worksite. General contractors must ensure their plan is posted and readily available at the worksite. Ensure all businesses that have workers performing work activities at the worksite, including employees, subcontractors and independent contractors, have a written COVID-19 Preparedness Plan that complies with the guidance. Ensure COVID-19 Preparedness Plan prepared by each business at the worksite can be effectively implemented at the worksite, address any worksite-specific hazards for transmission of COVID-19 and are in alignment with the general contractor’s and other business’s COVID-19 Preparedness Plans. Follow the guidance requirements for the component of the COVID-19 Preparedness Plan, “Ensure sick workers stay home,” and ensure all businesses at the worksite are immediately informed of the possible exposure of their workers to another worker who has COVID-19 symptoms or has tested positive for COVID-19 and are advised of actions they should take in response to that exposure. Ensure diligent investigations are conducted at the worksite to assess exposure, whether actual or potential, involving workers who are confirmed COVID-19 positive, or where the general contractor and/or business have reason to believe a worker may be COVID-19 positive, to ensure timely and appropriate action is taken to mitigate the potential spread of COVID-19 among other workers at the worksite or at other worksites where that worker is or was performing work. The responsibilities for general contractors do not minimize, mitigate, or substitute for the obligations of every business at the worksite, including subcontractors and independent contractors, to develop and implement their own written COVID-19 Preparedness Plan and to take appropriate steps to address exposures to workers who have tested positive for COVID-19. Other Protocols The guidance also refers to the guidance published by the Minnesota Department of Health, OSHA and the CDC regarding social distancing, worker hygiene, work site-building and ventilation, worksite cleaning and disinfection, drop-off, pick-up and delivery, communications and training, and other protections. There are specific protections for in-home services, such as requiring all occupants present within the residence to respond to a screening survey and verify no COVID-19 symptoms. Problems with the Guidance The guidance provides minimal information as to the specifics to be incorporated into the plan. This lack of detail creates further problems. The guidance gives conflicting directives as to whether a contractor should adopt one plan for office and field, consistent with past guidance, whether a plan must be crafted for each job site or whether all of the written plans prepared by the businesses that will engage in work at the worksite must be integrated into one plan. If the intent is to have one office and field plan, then contractors can improve their current practice and protocols with little additional disruption, risk and cost. If the guidance requires a plan per each job site, then the guidance is baffling.Crafting a detailed plan which covers probable and improbable site issues can expose a contractor to liability for minor lapses or the omission of an important protocol. Vertical plans may be inconsistent, either contradicting one another or providing details lacking in another document. On a large project, there could be dozens of plans that need to be reviewed and coordinated. A large company could be required to develop and implement hundreds of plans. The plans must be integrated with other safety plans. Companies likely will lack the experienced personnel to create, coordinate, review, train and post hundreds of site-specific plans. The administration has revised the guidance twice, most recently on the Friday before it took effect, and was unable to provide state training before it took effect. As questions and practical problems multiply, the administration has cited no cause for the restrictive guidance or hope how anyone can comply with it in confidence. Claims Arising from the Guidance The vagaries of the guidance and the DLI’s failure to include other enforcing agencies or public owners makes it difficult to predict the ripples that will result from the guidance. The first significant question is whether the guidance requires field or site-specific Plans. Questions abound as to how the guidance will be enforced and the kinds of claims, including work stoppage orders, that can be made by DLI, labor unions, employees and third parties. Immediate Action With the guidance effective on June 29, contractors should have already developed their Plans. The guidance requires that all workers must be properly trained on and adhere to the work site’s policies, protocols, and practices described in the guidance. This training applies to subcontractors, independent contractors, vendors, and delivery, part-time and seasonal personnel. Contractors should consider using a committee of employees and management to develop their Plans. Employees who work on the project will have real-time information concerning the management of traffic flow, bottlenecks, how gatherings can be limited to 10 or fewer people, and how to stagger shifts and restroom/lunch breaks. We recommend that construction contractors contact OSHA Consultation in writingwith their concerns and questions to elevate the significance of the challenges these requirements pose. Please keep a copy of your correspondence and alert AGC so we have a record of the response rate. OSHA Workplace Safety Consultation can be reached at OSHSA.consultation@state.mn.us. You can also contact Phyllis Karasov with questions or for assistance with the drafting of a Preparedness Plan. A copy of the updated guidance is available at: https://www.dli.mn.gov/sites/default/files/pdf/COVID_19_preparedness_plan_requirements_guidelines_construction.pdf About the Authors Phyllis Karasov, Larkin Hoffman Phyllis Karasov is chair of the Larkin Hoffman labor and employment law practice group and advises businesses on labor and employment matters. Her clients come from a variety of sectors, including construction, manufacturing, higher education, K-12 private education, nonprofit and healthcare. She provides counsel in all areas of human resources, including hiring, handbooks, regulatory compliance, discrimination, sexual harassment, discipline and termination, Americans with Disabilities Act, OSHA rules and the Family and Medical Leave Act. As a former National Labor Relations Board attorney, Phyllis is often called upon to represent clients in labor union matters including arbitrations, collective bargaining agreements and union contracts. Phyllis is also on the Board of Directors for the Associated General Contractors of Minnesota. Mike Schechter, Associated General Contractors of Minnesota Mike Schechter is the General Counsel and Director of Labor Relations for the Associated General Contractors of Minnesota. AGC serves the construction industry to improve construction conditions, create jobs, promote safety, and benefit the communities. It works with government, unions, community groups, and related businesses and associations. You can learn more about Mike at https://www.linkedin.com/in/mikeschechter.

June 23, 2020

Business Acquisitions

Employment Law Considerations in the Purchase of a Business

This is the last post in a four-part series discussing labor and employment law issues that should be considered when a company decides to buy another company. The previous post discussed issues that can arise when a union company acquires a nonunion business. This post will address employment law considerations that should be discussed in the due diligence phase of a proposed acquisition, regardless of whether either company is represented by a union. Employment Law Considerations in the Purchase of a Business Although union issues are often a critical factor in the purchase and sale of a business, there are other employment law issues to be considered. For example: Are the seller’s employees subject to restrictive covenants such as noncompetition agreements?In a stock purchase situation, it is likely these restrictive covenants will continue to apply if the buyer chooses to retain employees governed by these agreements. In the case of an asset purchase, the agreements need to be reviewed to determine whether the agreements expressly provide that the agreements can be assigned to others. Is the buyer in an asset purchase liable for pending discrimination charges?Generally, whether a buyer is liable for discrimination claims will depend on whether the buyer is a successor to the seller. If there are pending liabilities the purchase agreement should state whether the buyer or the seller is liable. Are there current or potential issues regarding the classification of workers as independent contractors? Are there wage and hour violations, immigration concerns, workplace safety issues or other workplace concerns? What are the seller’s vacation and sick pay policies? If the buyer intends to hire all or most of the seller’s employees, will the buyer allow employees to carry over accrued paid time off from the seller? Is the buyer obligated to reinstate an employee on a state or federal mandated leave of absence?In the case of a stock transaction, the buyer steps in the shoes of the seller and has the same obligation to reinstate an employee on a required leave. In an asset purchase, whether the buyer has an obligation to reinstate an employee at the expiration of a leave of absence will depend on whether the buyer is a successor to the seller. If the buyer hires all the seller’s employees, an employee on an FMLA leave would have to be re-instated unless the buyer can prove the employee’s position would have been eliminated whether or not the employee was on leave. If the buyer does intend to hire all the seller’s employees, or there will be a hiatus between the closing date and the buyer’s active operation of the business, is the seller required to give its employees a WARN Act notice of layoff?The federal Worker Adjustment and Retraining Notification Act (WARN Act) must be considered in designing an acquisition. The WARN Act requires employers to notify affected workers at least 60 days before a plant closing or a mass layoff that will last more than 6 months and affect 50 or more employees.Under the federal WARN Act, a covered employer is a business enterprise that employs: (i.) 100 or more employees, excluding part-time employees; or (ii.) 100 or more employees, including part-time employees, who in the aggregate work at least 4,000 hours per week, exclusive of overtime. Many states have some form of a WARN Act. In Minnesota, there is no notice requirement separate from the federal WARN Act, but employers are “encouraged” to give advance notice of the decision as early as possible to affected employees and their unions, the state commissioner of jobs and training, and the government of the locality where the facility is located. Parties to a sales transaction should work with their attorneys to determine if WARN Act notices must be provided in connection with a business acquisition. Buyers should be clear in the transaction documents that the seller is responsible for compliance with any applicable state and federal WARN laws. Does the seller have change in control or other agreements with key management employees such that the acquisition costs will be increased or the buyer’s ability to retain these key executives is compromised?In a stock transaction, it is likely that the buyer continues to be bound by such agreements. This is not necessarily the case in an asset purchase although the seller may request that the buyer provide similar severance benefits to seller’s key employees. Thus, it is important that a prospective buyer engage in due diligence to fully understand and, if possible, minimize risk in an acquisition transaction. The buyer should have a full understanding of the seller’s employment practices, existing or threatened employment obligations and union obligations. Where there are such existing or threatened obligations, the transactional documents should contain appropriate representations, warranties, covenants and indemnification provisions to clarify what the buyer’s understandings are and what the respective obligations are between the buyer and seller. In designing the transaction, the buyer should attempt to determine whether integration of the buyer and the seller’s facilities and employees is important, understanding the legal consequences of integration. It is helpful for the buyer to have a due diligence checklist to ensure that all of the appropriate questions are asked. Buying a business can be an integral part of the expansion and success of an existing company. However, whether or not such an acquisition is in the buyer’s best interests needs to take into account the seller’s labor and employment obligations, agreements and liabilities. Due diligence is critical to any acquisition and it is important that a labor and employment lawyer be involved in the planning and documentation of the transaction. Do you have further questions about business acquisitions? Phyllis Karasov is chair of Larkin Hoffman’s Labor and Employment Law Group. She, or another member of the team, is available to answer your questions. Phyllis Karasov, pkarasov@larkinhoffman.com, 952-896-1569.

June 5, 2020

Business Acquisitions

Business Acquisitions: Five Important Questions to Consider When a Union Company Buys a Non-Union Business

This is the third post in a four-part series discussing labor and employment law issues that should be considered when a company decides to buy another business. My last post addressed withdrawal liability when a company acquires the assets of a business which contributes to a multiemployer pension plan pursuant to a collective bargaining agreement. This article discusses labor law issues when a union company acquires a nonunion business. Five Important Questions to Consider When a Union Company Buys a Non-Union Business You would think that when a union company buys a non-union business, there should be no concern that the non-union business could be subject to the buyer’s existing collective bargaining agreement, or that the purchased business is subject to an obligation to recognize the union. Like most things in labor law, it is not quite as neat as you would like. 1. What Jurisdictions are Both Parties In? The first thing to ask when a union company is considering buying a non-union company is whether the non-union company is operating in the geographical jurisdiction of the current collective bargaining representative of the buyer. If the target company is outside the union’s jurisdiction, it is unlikely that there will be any obligation to bargain with the union which represents the buyer’s employees. 2. Companies are in the Same Jurisdiction, What Now? If the target company is in the union’s jurisdiction, the next step is to review the buyer’s collective bargaining agreement to see if there are any provisions that discuss application of the collective bargaining agreement to other businesses owned by the buyer. If so, the buyer should think about designing the transaction so that the buyer does not own the new company, but instead, different shareholders or companies will own the business to be purchased from the seller. 3. How Similar are the Businesses of the Buyer and Seller? Another factor to be considered is how similar the businesses are. For a manufacturer, is the product being manufactured by the seller, and the classifications of employees working for the seller, similar to those currently in the bargaining unit represented by a union? If the buyer is engaged in the manufacture of, for example, computer chips and the seller is engaged in the distribution of cellular phones, it would be difficult for the union representing the buyer to claim that they should also represent the employees formerly employed by the seller. On the other hand, if the target company and the buyer are engaged in similar businesses and employ employees in similar classifications, the buyer’s union may argue that the buyer’s union should also represent the employees employed by the target company in those similar classifications. If the products being manufactured or sold by the seller and the buyer are similar and the classifications of employees are similar, there is still a question as to whether there is an arm’s length relationship between the two entities. 4. Will There Be an Arm’s Length Relationship Between the Acquired Business and the Buyer After the Purchase? An arm’s length relationship occurs when two unrelated parties or strangers have no special obligation to the other party. If there is an arm’s length relationship between the buyer and the entity it purchased, the buyer’s union is less likely to have a claim for the target company’s employees. Thus, in planning how the buyer will manage the entity it is considering for purchase, the buyer should think about the degree to which the two entities will be connected. In determining whether there is an arm’s length relationship between the two entities, the NLRB considers four factors: The interrelationship of operations Common management Centralized control of labor relations; and Common ownership No one of these four criteria is controlling and all four need not be present to warrant a single employer finding. In various cases, the NLRB has stated that the first three criteria are more critical than common ownership, with emphasis on whether control of labor relations is centralized, as these tend to show operational integration. If the buyer plans to be involved in the management of the acquired company, written agreements between the two entities are helpful (for example, an agreement in which the buyer agrees to “manage” or provide management services to the target company); but these criteria will also be examined to determine if there is truly an arm’s length relationship. If there is no arm’s length relationship, then the NLRB could find that the buyer and the acquired company constitute a single employer, thereby opening the door to the union claiming that the collective bargaining agreement applies to both entities. 5. When is Accretion Appropriate? Another way in which the buyer’s union could attempt to apply the buyer’s collective bargaining agreement to the target company after the transaction is completed is through accretion. In accretion, the union would claim that some or all the target company’s employees should be accreted to the buyer’s existing operation. Whether it is appropriate to accrete a unit is subjective and depends on all the facts and circumstances. The factors which the NLRB discusses when considering accretion include: The degree of interchange among employees in the two companies; Geographic proximity; Integration of operations; Integration of machinery and product lines; Centralized administrative control Similarity of working conditions, skills and functions; Common control over labor relations; Collective bargaining history; and The number of employees at the facility proposed for accretion as compared with the existing operation. The critical question is whether the new facility is sufficiently integrated into the buyer’s existing operation to justify the application of the collective bargaining agreement. Therefore, when designing the transaction, it would be important that the purchased business use separate management and have an autonomous operation from the buyer’s existing facility. If these factors are not considered in structuring the acquisition, the buyer may be faced with a claim by its union that the seller’s employees should be added to the bargaining unit. Conclusion In planning an acquisition, a union-represented buyer should consider whether its union may have a basis to demand to add the target’s employees to its bargaining unit. The financial aspects of the transaction are not the only issues to consider.

May 26, 2020

Business Acquisitions

Pension Plan Withdrawal Liability in a Business Acquisition

This post, written in partnership with Mary Komornicka, is the second post in a four-part series discussing labor and employment law issues that should be considered when a company decides to buy another business. The last post discussed a buyer’s acquisition of a union business. Withdrawal Liability Whether an acquisition transaction involves the purchase of assets or stock, the buyer should be aware of multi-employer pension withdrawal liability. The concept of withdrawal liability is that where a pension plan is not fully funded, each employer is responsible for a share of the unfunded liability, which must be paid in the event the employer withdraws from the plan. An employer who terminates participation in a multi-employer pension plan, or substantially reduces its contributions to the plan, has either completely or partially withdrawn from the plan. In 2006, Congress passed the Pension Protection Act of 2006 (“PPA”), which among other things, created three status groups for multiemployer pension funds: funds which meet the funding standards, endangered or seriously endangered funds, and critical funds. A fund’s actuary must certify the plan’s status within 90 days of the start of each plan year. A buyer considering the acquisition of a union business should ask the seller to request from the multiemployer pension plan for the information necessary to compute withdrawal liability and an estimate of potential withdrawal liability. Whether a multiemployer pension plan has sufficient funds to pay the benefits to all participants as promised in the pension plan will impact the extent of withdrawal liability. Typical events that can result in withdrawal liability are the sale of a business, downsizing a business, or going non-union. There are different rules for certain industries, such as the building and construction industry, the entertainment industry, trucking, and the retail food industry. These rules can alter the circumstances in which a business is deemed to have withdrawal liability. In a stock purchase, the buyer steps into the shoes of the seller and assumes the collective bargaining agreement of the seller. The buyer would want to know whether a union collective bargaining agreement requires contributions to a multi-employer pension plan and, if so, whether that multi-employer pension plan is underfunded. The buyer would want to be aware of the potential for being responsible for withdrawal liability in the event it decides in the future to no longer operate as a union business (if the employer is in the building and construction industry) or if the employees vote to decertify the union. If the acquisition is an asset purchase,things get more complicated. Whether the buyer is liable for the seller’s withdrawal liability depends on a number of factors. Sale of Assets and Multiemployer Pension Plan Withdrawal Liability In general, a complete or partial withdrawal will not occur when an employer sells the assets of its business if certain conditions are met: The sale must be a “bona fide, arm’s length sale of assets to an unrelated party.” The buyer must have an obligation to contribute to the plan for substantially the same number of contribution base units as did the seller The buyer must post a bond for a five-year period. The amount of the bond is based on the seller’s average annual contributions over a specified period. The purchase agreement must contain a provision which makes the seller secondarily liable if the buyer withdraws during the five plan years following the sale and does not pay its withdrawal liability. If a business is a member of a control group, it is possible that entities under common control may be jointly liable for the company’s withdrawal liability if the company fails to pay its withdrawal liability. The MPPAA contains complex definitions of the control group. If a buyer or seller is a member of a control group, and the buyer does not intend to continue to make contributions to the seller’s multiemployer pension plan, they should consult legal counsel to determine whether other members of the control group may also be liable for the contractor’s withdrawal liability. The size of the withdrawal liability in a multi-employer plan can be a surprise to the buyer and needs to be carefully considered in the negotiation of any deal. Even a well-funded plan may have a withdrawal liability due to the long-term funding structure of these plans, thus no assumptions should be made. Stay tuned for the next post which discusses a union company buying a non-union business.

May 15, 2020

Business Acquisitions

Buying a Union Business?

This is the first post in a four-part series discussing labor and employment law issues that should be considered when a company decides to buy another business. The series will discuss transactions where the buyer is a union business and transactions when the seller is a union business. This first article focuses on the acquisition of a business whose employees are represented by a labor union. A buyer’s failure to ask appropriate questions or consider legal risks when deciding whether to buy a company can result in legal issues and unanticipated complications after the acquisition is completed. Stock Purchase vs. Asset Purchase Acquisitions can be structured as either an asset purchase or a stock purchase. A stock purchase is a transfer of the ownership of the business entity, and the entity continues to own the same assets and have the same liabilities. An asset purchase is an acquisition of individual assets and an assumption of agreed-upon liabilities. The seller may or may not continue in operation after some or all of its assets are sold. Before a company decides to buy a union business, it is prudent to review all collective bargaining agreements to which the seller is a signatory. When the sale is a stock purchase, the collective bargaining agreement continues in effect. Essentially, the buyer steps into the shoes of the seller and assumes the seller’s obligations in the collective bargaining agreement. The buyer should be familiar with the wages, hours and working conditions specified in the collective bargaining agreement(s) so the buyer is familiar with the obligations it is assuming. In an asset purchase, whether or not the buyer has an obligation to negotiate with the collective bargaining representative of the seller’s employees depends on the circumstances. If the buyer in an asset purchase intends to employ all of the seller’s employees, including management, it is probable that the buyer will have an obligation to negotiate with the union which represented the seller’s employees. The buyer is not necessarily required to adopt the seller’s collective bargaining agreement which is already in place but most likely will have the obligation to negotiate a new collective bargaining agreement with the seller’s collective bargaining representative. Regardless of the type of transaction, in its review of existing collective bargaining agreements, the buyer should pay attention to any obligations to contribute to a multiemployer pension plan. It is common that multiemployer pension plans are underfunded, and if a contributing employer stops making contributions to the multiemployer pension plan, the employer may be assessed withdrawal liability. Withdrawal liability will be discussed in a future post, but it is mentioned here to alert prospective buyers of a union company that withdrawal liability can be a factor in evaluating potential acquisitions. In an Asset Purchase is the Buyer a Successor? One of the determinants as to whether a buyer is obligated to recognize the seller’s union as the collective bargaining representative of employees is the degree to which the buyer has hired the seller’s employees and continues to operate the business as the seller did. Is there substantial continuity of business at the new business? If the buyer hires none or a small minority of the seller’s employees there could be an argument that the buyer has no obligation to recognize the union because the buyer is not a successor to the seller. There are a number of factors that are taken into account in determining whether a buyer in an asset purchase is a successor, including: what percentage of the seller’s employees are hired by the buyer; whether the wages, benefits and working conditions are different from those of the seller; whether the equipment and products manufactured by the buyer are the same as those of the seller; whether management has changed; and the amount of integration between the seller’s other employees and the employees hired to work in the purchased facility. “Perfectly Clear” Successor vs. “Not a Perfectly Clear” Successor If a purchaser intends to dispute the application of the seller’s collective bargaining agreement, the manner in which it hires the new employees could be important. A buyer’s relationship with the union is controlled by whether the buyer is a “perfectly clear” or “not a perfectly clear” successor to the seller’s unionized company. To ensure that a buyer is not a “perfectly clear” successor, the buyer should tell employees that it does not intend to adopt the existing collective bargaining agreement and that any offer of employment will include wages, benefits and other terms and conditions that will be different from those contained in the collective bargaining agreement. Thus, if the buyer needs to reduce expenses and change the operations and administration of the purchased entity in order to make the purchase worthwhile, the buyer needs to structure the transaction, as much as possible, to enhance a result that either does not require the buyer to recognize the union at all, or at least allows the buyer to have the right to negotiate an entirely new collective bargaining agreement. If the buyer is a successor, in most circumstances, it is advisable to negotiate a new collective bargaining agreement rather than assume the seller’s contract. It is much easier to negotiate a new collective bargaining agreement at the time of purchase, rather than try to change an existing collective bargaining agreement in future negotiations. The buyer should assess whether the existing contract’s non-economic provisions will adversely impact the buyer’s operations. Conclusion The decisions regarding whether the buyer intends to recognize the union as the collective bargaining representative or dispute that the union represents the seller’s employees should be made early in the planning process so that the buyer does not unintentionally say or do things which can result in the buyer having to recognize a union as the collective bargaining representative of the new employer, or be required to follow the terms and conditions of the seller’s collective bargaining agreement. Stay tuned for my next post which will discuss withdrawal liability when the seller contributes to a multiemployer pension plan.

May 8, 2020

Construction

Re-Opening A Business the Right Way: Tips to Avoid Pitfalls

Dan Ballintine and Phyllis Karasovdiscuss the matters employers need to consider when re-opening businesses after the Covid-19 shutdowns. Recalling only some employees, screening employees before they enter the workplace and dealing with employees who refuse to return to work are among the issues discussed. About the Larkin Hoffman Podcast Briefings The Larkin Hoffman Podcast Briefings series was developed to discuss issues affected by the COVID-19 crisis. Our attorneys address corporate, employment, real estate, construction, franchise, bankruptcy, insurance, litigation, and other matters in this series. Over the next few weeks, there will be several podcasts on developing matters. Larkin Hoffman is available to help. Please reach out for additional guidance

May 8, 2020

Construction

Understanding Employment Developments During COVID-19

Are you struggling to stay on top of the latest labor and employment legislation surrounding COVID-19? Questions about unemployment, health, or retirement benefits available under the Families First Coronavirus Relief Act (“FFCRA”) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act? Given the rapidly changing nature of our times, our Labor and Employment practice group has been recording podcasts to help businesses and individuals understand some of the latest developments surrounding COVID-19. The podcasts inform clients about important legal developments that affect their business and enable employers to stay current with the constantly evolving legal issues related to COVID-19. In the podcasts below I have partnered with a number of our labor and employment attorneys to discuss features in both the FFCRA and the CARES Act. The podcasts provide valuable insight keeping you up to date with the latest changes in the law. The CARES Act May Increase Unemployment Benefits – April 29, 2020 Phyllis Karasov and Alex Beeby The CARES Act contains a number of provisions that make it easier to receive unemployment insurance benefits and increases the amount of unemployment benefits laid off and underemployed employees can receive. The Act also allows self-employed individuals, independent contractors and employees who are not otherwise eligible, to receive unemployment benefits. Alex and I discuss these changes and provide insight into the support the Minnesota Department of Employment and Economic Development is giving these individuals. Employee Benefit Features in the CARES Act – April 27, 2020 Phyllis Karasov and Mary Komornicka The CARES Act allows employers to make changes in its Section 401(K) and 403(b) plans to assist employees who are experiencing financial stress due to the current pandemic. The Act also provides for modifications to health insurance benefits and a waiver of the minimum distribution rules for retirement plans, through December 31, 2020. In this podcast, Mary and I provide some clarification around these features. Questions Employers are facing Under the Families First Coronavirus Relief Act – April 20, 2020 Phyllis Karasov and Dan Ballintine Under the Families First Coronavirus Relief Act (“FFCRA”), employers with fewer than 500 employees must provide paid leave to employees who cannot work due to pandemic-related issues such as sickness and care of children whose schools have closed. In our first podcast, Dan and I provide guidance under the new law. About the Larkin Hoffman Podcast Briefings The Larkin Hoffman Podcast Briefings series was developed to discuss issues affected by the COVID-19 crisis. Our attorneys will address corporate, employment, real estate, construction, franchise, bankruptcy, insurance, litigation, and other matters in this series. Over the next few weeks, there will be several podcasts on developing matters. Larkin Hoffman is available to help. Please reach out for additional guidance.

May 1, 2020

Construction

Is Your Construction Site Following OSHA’s COVID-19 Guidelines?

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

April 24, 2020

Planning and Development

What the Paycheck Protection Program Offers Nonprofit Organizations and Small Businesses

The Coronavirus Aid Relief and Economic Security Act (the “CARES Act”) provides important public funding to small businesses. The following are some of the highlights of the Paycheck Protection Program (the “Program”) which is part of the CARES Act. This Program is an expansion of the Small Business Administration (“SBA”) 7(a) loan program. The available pool for these loans is $349 billion. Loans will be made on a first-come, first-serve basis, so businesses should apply as soon as possible. The information below is based on the Interim Final Rule promulgated by the SBA on April 2, 2020. Who Can Borrow? Businesses and nonprofits that employ fewer than 500-employees can borrow from the government under the Program. For businesses in the accommodations and food service sector (NAICS code beginning with 72) the 500-employee limit applies to each location. Full-time and part-time employees are counted. Sole proprietors, independent contractors and other self-employed individuals are also eligible borrowers. Eligible nonprofit organizations must be exempt under Section 501(c)(3) of the Internal Revenue Code or a “veteran organization” under Section 501(c)(19). How Much Can an Eligible Business Borrow? A small business can borrow up to 2.5 times its average monthly payroll costs over the last 12 months (up to $10 million). So, for example, if an employer’s average monthly payroll in the last 12 months was $100,000, the employer can borrow up to $250,000 under the Program. Payroll costs cannot include compensation exceeding $100,000 annualized for any employee, federal employment taxes imposed or withheld between February 15, 2020 and June 30, 2020, and qualified sick and family leave wages paid pursuant to the Families First Coronavirus Response Act. Thus, it is unclear how the allowable loan amount will be calculated when payroll taxes and sick and family leave wages, which are to be subtracted from the allowable amount of the loan, will not be known until after June 30, 2020. Loan Forgiveness Borrowers under the Program can apply for forgiveness of their loans. The amount that can be forgiven will depend, in part, on the total amount of payroll costs, payments of interest on mortgage obligations incurred before February 15, 2020, rent payments on leases dated before February 15, 2020, and utility payments under service agreements dated before February 15, 2020, over the 8-week period following the date of the loan. No more than 25% of the loan amount forgiven may be attributable to non-payroll costs. Reduction of Loan Forgiveness The CARES Act describes two potential situations that would reduce the amount of the loan to be forgiven. Reduction of loan forgiveness is not addressed in the Interim Rule other than to say that the SBA will issue additional guidance on loan forgiveness. The two situations described in the CARES Act that would reduce the amount forgiven are: If there is a reduction of FTEs during the 8-week period compared to the lower of prior periods February 15, 2019 through June 30, 2019 or January 1, 2020 through February 29, 2020. The average number of FTE employees is determined by the average number of FTEs for each pay period within the month. If the amount of any reduction in total salary or wages of any employee employed during the 8-week period is in excess of 25% of the total salary or wage of such employee during the most recent quarter ending before the 8-week period. Unless otherwise stated in the expected guidance on loan forgiveness, to demonstrate they qualify for loan forgiveness, borrowers will be required to submit documentation, such as payroll tax filings, unemployment insurance filings, canceled checks or mortgage interest payments. If Borrowers Lay Off Employees, They are Still Eligible for Loan Forgiveness Under the CARES Act, Borrowers that have laid off or reduced salaries of employees between February 15, 2020 and the date which is 30 days after the enactment of the CARES Act, will not be subject to a reduction in the loan amount forgiven to the extent the borrower has resurrected its FTE level or eliminated the compensation reductions by June 30, 2020. This may change when the SBA issues its promised guidance on loan forgiveness. Loan Terms The interest rate for these loans is 1% and collateral and guarantee requirements do not apply. The portion of a loan that is not forgiven must be repaid within 2 years of the disbursement of the loan proceeds. Interest is deferred for 6 months following the disbursement of the loan, with discretion to extend deferment for one year. Eligibility for Loan A borrower must certify that they were in operation on February 15, 2020 and had employees for whom it paid salaries and payroll taxes or paid independent contractors, that the uncertainty of current economic conditions makes the loan request necessary to support ongoing operations; the funds will be used to retain workers and maintain payroll, or make the mortgage, lease or utility payments; that the business does not have an application pending for a loan for the same purpose or amounts applied for; and other matters. Where to Apply for the Loan Loans can be obtained from SBA lenders, community development organizations and micro-lending institutions. Emergency Economic Injury Disaster Loan Program (“EIDL”) Nonprofit corporations and other small businesses are also eligible to apply for an EIDL. An employer cannot receive loans under both the EIDL Program and the Paycheck Protection Program and any amounts advanced would be reduced for any amount of a Paycheck Protection Program loan that is forgiven. An EIDL does not require personal guarantees or certification that the business has been in operation for at least a year or a demonstration that the business was unable to obtain credit elsewhere. Applicants for an EIDL can request an advance of up to $10,000 from the SBA. The SBA must provide such advance within 3 days. If the borrower is ultimately not approved for an EIDL, the advance does not have to be repaid. The advances can be used for approved purposes including providing sick leave due to the COVID-19 crisis, maintaining payroll, making rent or mortgage payments, meeting certain increased costs and repaying prior debt obligations. Click here for detailed information on the EIDL program.

April 3, 2020

Planning and Development

The New Reality – Employees Working From Home

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

March 20, 2020

Construction

Coronavirus Guidance For Employers

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

March 12, 2020

Construction

The NLRB Changes Its Mind

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

January 22, 2020

Construction

The New Labor PRO Act Won’t Help Contractors

Whether a business’s employees are represented by a union or not, all builders should be concerned about the pending Protecting the Right to Organize Act (“PRO Act”) being considered by Congress. If enacted, the PRO Act will alter fundamental principles of labor law and significantly prejudice the rights of employers. Supporters of the PRO Act claim that this legislation is needed to increase employee wages and create an environment in which unions can negotiate better collective bargaining agreements. Here are a few examples of the changes which would result if the PRO Act is enacted. Employees’ Rights to Unionize and to Negotiate Contracts are Strengthened The proposed bill removes the NLRA’s prohibitions on employees engaging in secondary boycotts. This change means that unions can sponsor protests and pickets against any employer, even if the employer does not have a dispute with the union. Requires an employer to mediate and arbitrate the initial collective bargaining agreement following an election if the union and the employer are unable to reach an agreement within one year of the certification of the union. This requirement means an arbitrator would decide on the terms of the contract. Prohibits companies from permanently replacing striking workers. Prevents an employer from requiring employees to attend meetings in which the employer plans to persuade employees to vote against the union in a representation election. During an election campaign, the NLRB could issue an order that requires an employer to bargain with the union if the NLRB decides that the employer has made it impossible to conduct a fair election. Punish Violations of Workers’ Rights Outside of the NLRB Currently, the NLRB is the sole and exclusive forum in which an employee or labor union can file unfair labor practice charge against an employer. This bill would allow employees and unions to file private actions against an employer and seek damages. Allows the NLRB to levy civil penalties for violations of the NLRA, including compensatory damages and penalties on officers and directors, when the employer is found to violate the NLRA. The bill allows the NLRB to go to court and obtain an injunction to immediately reinstate a terminated employee while the investigation is ongoing if the NLRB believes the employer has terminated the employee for engaging in union activities. What Does this Mean for Contractors? This bill, if passed by Congress, will make it very difficult for employers to meet with employees and talk to them about why they should not vote for the union. It gives the NLRB significant power to penalize employers that the NLRB deems to have violated the law, including requiring an employer to reinstate a terminated employee while the investigation is pending. Employers who are concerned about this pending legislation should write their representatives and senators to make their concerns and objections to this bill known. This law would turn well-settled precedent upside down and poses a great danger to all employers, whether a union currently represents their employees or not.

November 20, 2019

Construction

Minneapolis Piles Notice Requirements on State’s New Wage Theft Laws

The Minnesota Legislature passed sweeping new amendments to statutes which create criminal penalties for the failure to pay wages and impose requirements for employers (including contractors) to document the terms of employment with their employees. The new amendments took effect July 1, 2019. Then, on August 8, Minneapolis passed an ordinance, essentially piggybacking on the new law, requiring employers (including contractors) to provide new notices to employees effective January 1, 2020. The ordinance applies not only to employers with brick and mortar locations within the City’s limits, but also employers outside the City with employees who work at least 80 hours each year inside its limits. Let’s take a closer look at these new laws and what actions an employer needs to take. State Changes Wage Theft Effective August 1, 2019, Minnesota law makes clear that prison time can be imposed for wage theft. “Wage theft” is defined as occurring “when an employer with intent to defraud” fails to pay an employee all wages, salary, gratuities, earnings, or commissions at the employee’s rate or rates of pay or at the rate or rates required by law, or makes or attempts to make it appear in any manner that the wages paid to an employee were greater than the amount actually paid to the employee. Wage theft is now punishable by imprisonment of up to twenty years and a fine of $100,000 for wage theft in excess of $35,000, ten years and a fine of $20,000 for wage theft exceeding $5,000, and five years and a penalty of $10,000 for wage theft exceeding $1,000. Earnings Statement As part of the new legislation, effective July 1, 2019, employers are required to provide employees, at the end of each payroll period, an earnings statement which includes the following information (newly added requirements are italicized): the name of the employee; the hourly rate or rates of pay and basis thereof, including whether the employee is paid by hour, shift, day, week, salary, piece, commission or other method; allowances, if any, claimed pursuant to permitted meals and lodging; the total number of hours worked by the employee unless exempt from minimum wage and overtime; the total amount of gross pay earned by the employee during the period; a list of the deductions made from the employee’s pay, the net amount of pay after all deductions are made, the date on which the pay period ends, the legal name of the employer and the operating name of the employer if different from the legal name, the physical address of the employer’s main office or principal place of business, and a mailing address if different, and the telephone number of the employer. Information at Commencement of Employment Employers must also provide new employees at the start of employment with the following written information: the rate or rates of pay and basis thereof, including whether the employee is paid by the hour, shift, day, week, salary, piece, commission or other method, and the specific application of any additional rates; allowances, if any, claimed pursuant to permitted meals and lodging; paid vacation, sick time or other paid time off accruals and terms of use; the employee’s employment status and whether the employee is exempt from minimum wage and overtime, and on what basis; a list of deductions that may be made from the employee’s pay; the number of days in the pay period, the regularly scheduled pay date, and the pay day on which the employee will receive the first payment of wages earned; the legal name of the employer and the operating name of the employer if different from the legal name; the physical address of the employer’s main office or principal place of business, and a mailing address if different; and the telephone number of the employer. Employers must also keep a copy of this notice signed by each employee acknowledging receipt of the notice. They must also provide the employee any written changes to the information contained in the notice prior to the date the changes take effect. The notice must be provided to each employee in English, and include text provided by the Commissioner of the Minnesota Department of Labor & Industry that informs employees they may request that the notice be provided in a language other than English. If requested, employers must provide the notice in the language requested by the employee, but the Commissioner must assist employers with translation of the notice in the languages requested by their employees. List of Personnel Policies As of July 1, 2019, employers (including contractors) must maintain a list of the personnel policies provided the employee, including the date the policies were given to the employee and a brief description of the policies as well as a copy of the notice provided to each employee, including any written changes to the notice. It is possible that providing a list of the table of contents of an employee handbook may suffice with respect to policies contained within the handbook. Employers must keep these records readily available for inspection by the Commissioner within 72 hours of a demand. Failure to keep the proper records allows the Commissioner, in a wage dispute, to make his or her own determination of any wages that are due based on available evidence. A $5,000 fine for “each repeated failure” may be levied. The new legislation also imposes criminal penalties upon employers who hinder or delay the Commissioner in the performance of his or her duties. The New Minneapolis Ordinance Under the new Minneapolis ordinance, employers (including contractors) are required to provide a written notice at the time of hiring, and prior to the commencement of work, which includes the following information (which is new and additional to what is required under the State wage theft law): the date on which employment will start; the employer’s policy regarding tips, and state that tip sharing is voluntary under Minnesota law (if the employee will be in a position to receive tips); the employer’s overtime policy applicable to the employee’s position and the rate of pay that will apply to straight time and overtime; and details about the employee’s rights under the Minneapolis Sick and Safe Ordinance (our previous article regarding the Minneapolis Sick and Safe Ordinance is attached here ). The notice regarding the Minneapolis Sick and Safe Ordinance must provide how sick and safe leave is accrued, the first date when the employee will be entitled to use any accrued time under the ordinance, and the beginning and end dates of the employer’s year for purposes of sick and safe time accrual. Unlike the State’s wage theft notice requirement, the Minneapolis ordinance explicitly allows the notice to simply reference the employer’s handbook or other policies, which contain the required information, as opposed to repeating that information, in full, in the notice. But like the Minnesota wage theft notice, the Minneapolis ordinance requires employees to sign the pre-hire notice in order to acknowledge its receipt (electronic signatures are acceptable). Any changes to the information contained in that pre-hire notice will require an additional written notice to the employee prior to the date the changes take effect (which does not need to be signed). The Minneapolis ordinance also requires that any employee who is employed prior to January 1, 2020, be provided the equivalent of the full, pre-hire notice. The State wage theft law, to the contrary, allows employers to wait to provide the information required in the pre-hire notice to employees who were employed prior to its July 1, 2019, effective date until their terms of employment change. The Minneapolis ordinance requires that the notice be provided to all existing employees, who were hired prior to January 1, 2020, no later than the end of the first full payroll period in 2020 (i.e. employers are not allowed to wait until a change is made in their terms of employment to provide the information required in the pre-hire notice). The new Minneapolis ordinance also requires that earning statements be provided to employees every payroll period which include the amount of accrued sick and safe time available to the employee. What Should Employers and Contractors Do Now? The State’s Wage Theft Law has been enacted, so employers need to be in compliance now. The Minneapolis ordinance doesn’t take effect until the beginning of the year. We recommend that employers hold off on preparations to comply with the Minneapolis ordinance until closer to January 1. A case is currently pending before the Minnesota Supreme Court which could affect the applicability of the Minneapolis Sick and Safe Ordinance to employers physically located outside the City. In addition, the City may issue guidance on the new ordinance in the future which could be of assistance. The Minneapolis ordinance provides an array of penalties that may be imposed on employers who fail to comply. Civil fines up to $2,000, liquidated damages and other remedies are available. Please contact one of your employment lawyers at Larkin Hoffman for any questions or assistance in complying with the new Minneapolis ordinance.

August 14, 2019

Construction

Death of Scabby the Rat?

Employers have long disliked labor unions’ use of inflatable rats, large balloon cats, mock funerals and other types of dramatic protests mounted when a labor union wants to exert pressure on a company to cease doing business with the employer with whom the union has a dispute. The National Labor Relations Act (NLRA) expressly prohibits picketing a neutral employer in an effort to persuade that neutral employer to cease doing business with the employer with whom the union has its actual dispute (“primary employer”). For example, there are numerous situations where a union has stationed an inflatable rat in front of an employer, such as, for example, a hospital, implying that the hospital is unsafe, when the real purpose is to persuade the hospital to cease doing business with the primary employer. These kinds of activities, which do not include picketing, have been construed by the National Labor Relations Board (NLRB) to be constitutionally protected freedom of speech. The NLRA expressly prohibits picketing which is for the purpose of pressuring a neutral employer to stop doing business with an employer. The NLRB has found union activity at a neutral’s premises to be unlawful which is not picketing but may send a “signal” to a neutral’s employees that they should withhold their services. The NLRB appears to be shifting its position on these kinds of cases. Shift in NLRB’s Position? In December 2018, the NLRB’s Office of the General Counsel issued an Advice Memorandum authorizing the issuance of a complaint against the IBEW Local 134 in Chicago, Illinois, and requesting that the NLRB reconsider its decisions in three previous cases. In those cases the NLRB held that the following union activity was lawful because it did not involve picketing and did not involve coercive behavior: in Brandon Medical Center, a union’s setting up of a large inflatable rat on a truck approximately 100 feet from a neutral hospital’s front door; in Eliason & Knuth, a union’s posting of agents holding large stationary banners proclaiming “labor dispute” and “shame on [the employer]” in front of neutral businesses; and in New Star, a union erected banners at 19 different neutral employers’ premises claiming labor disputes with the neutrals and proclaiming “shame” on them for doing business with the employer with which the union actually had a dispute. In the December Advice Memorandum, the NLRB’s General Counsel stated that a complaint should be issued against IBEW Local 134 because of its erection of a stationary banner that misleadingly proclaimed a labor dispute with a neutral employer, Summit Construction, as well as its use of a large inflatable cat clutching a construction worker by the neck. The General Counsel wrote that the union’s placement of a large frightening cat and misleading banner at a construction site was intended as a signal to neutral employees not to enter or work at the job site. For three out of the four days the union displayed the banner and the inflatable cat, the union knew that the employer with which it had the dispute was not even present at the construction site. NLRB Unsuccessful in Obtaining Injunction On July 1, the NLRB attempted to implement the General Counsel’s new interpretation by seeking a ruling from a Brooklyn District Court judge to enjoin Laborers Union Local 79 from using an inflatable cockroach and a large inflatable rat known as “Scabby the Rat” in a protest directed at shaming stores from using a builder with which the Laborers Union Local 79 has a dispute. The judge denied the injunction. However, it appears that the NLRB’s General Counsel is hoping that the Republican majority NLRB will be more sympathetic to his position in other cases which eventually will be in front of the NLRB. An Issue to Keep an Eye On Former NLRB Chairman Wilma Liebman predicted that there is a “95%, if not better, chance that this Board will reverse the precedent as the General Counsel asks.” Construction contractors in particular should be aware that a union’s inflammatory use of inflatable rats, cartoon displays, “Shame” banners, and other dramatic protests may in the future be found to be illegal. The death of Scabby the Rat may be coming.

July 30, 2019

Search

Phyllis Karasov

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

Navigating the Legalization of Marijuana: Updating Drug and Alcohol Policies – Part Two

Project Labor Agreements are Now Required for Large Federal Construction Projects

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

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

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

What to Do about Vaccinations: Employer Recommendations

Do You Need a Teleworking Policy?

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

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

The Changing Landscape of Union Organizing and Worker Activism

Conflicting Messages: An Executive Order vs. Affirmative Action

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

To Require Vaccines or Not: That is the Question

New Developments in the Families First Coronavirus Response Act

Required COVID-19 Preparedness Plan for the Construction Industry

Employment Law Considerations in the Purchase of a Business

Business Acquisitions: Five Important Questions to Consider When a Union Company Buys a Non-Union Business

Pension Plan Withdrawal Liability in a Business Acquisition

Buying a Union Business?

Re-Opening A Business the Right Way: Tips to Avoid Pitfalls

Understanding Employment Developments During COVID-19

Is Your Construction Site Following OSHA’s COVID-19 Guidelines?

What the Paycheck Protection Program Offers Nonprofit Organizations and Small Businesses

The New Reality – Employees Working From Home

Coronavirus Guidance For Employers

The NLRB Changes Its Mind

The New Labor PRO Act Won’t Help Contractors

Minneapolis Piles Notice Requirements on State’s New Wage Theft Laws

Death of Scabby the Rat?

Firm Highlights