From time-to-time, I meet (read: they got in trouble or were about to) a new client from out of state that has an issue in Minnesota arise – not because of any willful or intentional wrongdoing, but just because they don’t realize some unique aspects of Minnesota law.  So, for those non-Minnesota based Minnesota employers, here’s my top 10 FYI’s for you:

  1. Any severance and release needs to have a 15 day rescission and waiver period under the Minnesota Human Rights Act (this is in addition to a 7 day period for ADEA claims). Accordingly, you’re unlikely to see a Minnesota settlement agreement that pays an employee before the 14 day rescission period runs (i.e. we pay on the 16th day).
  2. Employees who are terminated may ask for a copy of their personnel record/file – this is a defined term in Minnesota.  Employers have 7 business days to provide it.  See my earlier blog here.
  3. Terminated employees may also ask for a statement of reasons for their termination. Employers have 10 business days to provide. I blogged about this as well here – this is more than just a request – likely an attorney is in the background.
  4. Terminated employees who demand their final pay in writing are entitled to it within 24 hours of written demand.  Again – here’s my blog on that…typically I suggest just having the check ready to hand over at the termination meeting.
  5. We do not have a tip credit! ‘Nuff said. Oh, and don’t force shared tips either… not okay.
  6. Employers cannot deduct wages for property damage, lost or stolen property, etc. without written authorization from the employee after the fact.  True story.  Don’t do it. Here’s the law and yep, my blog post.
  7. Minnesota recognizes overtime after 48 hours (not 40).  Minnesota does not recognize the computer exemption. Smart computer people would need to fall under one of the other exemptions (administrative, executive or professional) in order to be paid a salary without overtime.
  8. Minnesota does not require paid meal or rest  breaks.  Employees do get “sufficient time to eat a meal” every 8 hours – which is presumably at least 20 minutes – generally 30 paid, and time to use the bathroom every 4 hours. Here are the rules on that.
  9. We have a Wage Theft Act requiring employers to provide a lot of information on a sheet of paper about the terms of employment – even at-will – which you don’t want to mess with; this includes requirements as to what needs to be on a paycheck stub. MNDOLI’s guidance on this may be an easier read than the statue.
  10. We have sick and safe leave.  Check local ordinances to be sure you are following those (i.e. Minneapolis, St. Paul, Duluth) if you have employees working there. This could include snow days, dontcha know!

I hope the above helps our non-domestic employers to navigate our waters a bit better. See what I did there?! Land of 10,000 lakes?

They say money makes the world go round…  As end-of-year reviews are coming up and it may be close to merit increase time, I wanted to send out a friendly remember that Minnesota’s state minimum wage rates increase January 1, 2022:

  • Large employers (over $500k) = $10.33
  • Small employers (under $500k) = $8.42
  • Training wage = $8.42

St. Paul’s minimum wage increases next occur July 1, 2022 ($15/hr for macro businesses >10,001 employees; $13.50 for large; $12 for small; and $10.75 for micro).

Minneapolis’ minimum wage increases next occur July 1, 2022 ($15 for large  businesses >100 employees; $13.50 for small)

On August 11, 2021, the Minnesota Supreme Court held that it is for a jury to decide. In Hagen v. Steven Scott Management, Inc., (yes, this is the same case I just wrote about for rent credits being wages), the plaintiff argued that all of her on-call time should be compensable because it was part of her “duties of employment”. The hours-worked rule (Minn. R. 5200.0120) generally provides that an employee who cannot use their time “effectively for the employee’s own purposes is working while on call”. However, Minnesota courts have not yet addressed the distinction (as in federal law) of, “being able to use one’s time effectively or not, while working on call”.

In this case, the employee had to carry an employer-provided cell phone, stay within a 20 minute radius of the apartment complex (her worksite), and could not drink alcohol.  Further, certain activities such as grocery shopping would be occasionally interrupted from tenants seeking assistance, and her family all lived 30-45 minutes away so she could not visit them. The Court held that whether the mere act of being on-call was considered a duty of her employment was complicated because her job description lists, “working on an on-call basis,” as an essential duty. Ultimately, the Court held that reasonable persons could reach a different conclusion as to whether her on-call restrictions allowed her to use her time effectively for her own purpose – and thus, a jury must decide.

So what does this mean in the real world? Minnesota courts are not blindly following federal law (District of Minnesota) in determining whether on-call time is compensable under the MFLSA (compared to the FLSA). Further, the Court has stated that a jury must decide when on-call time is compensable (i.e. can the employee use the time effectively for their own use or not). This is an issue for employers as a claim for unpaid on-call time will almost certainly survive a motion for summary judgment – taking such questions to trial. As you can imagine, this increases the cost to litigate. Thus, employers should be careful to draft job descriptions and on-call policies (if employees are not paid to wait) to make it clear how they are – or are not – restricted during an on-call shift. For example, consider response times, prohibitions of activities during that time, and what they are required to do or not do. The more restrictions, the more the employee can argue they are duties of employment and thus, compensable. Check your handbook policies, job descriptions, and offer letters for on-call language and ensure it is accurate and the employee is properly compensated depending on how effectively they can use their on-call time for personal matters.

Can an employer pay an employee in rent credits versus money? On August 11, 2021, the Minnesota Supreme Court held that rent credits are “wages” (not improper deductions) under the Minnesota Fair Labor Standards Act (MFLSA). In Hagen v. Steven Scott Management, Inc., the employee was an on-site property caretaker. She received rent credits as wages, and thus, was primarily compensated with rent credits towards her monthly rent.

The Court held that while the MFLSA definition of “wage” is limited, its provision, “subject to the allowances permitted by the commissioner” means that permissible wages are those which are listed in Minn. Stat. 177.28 and authorized by the Minnesota Department of Labor and Industry (MNDOLI).  Because the lodging allowance rule (Minn. Rule. 5200.0070) authorizes an employer to take a credit towards minimum wages for the cost of lodging if the employee accepts it as a condition of employment, the plaintiff’s rent credits qualified as wages under the MFLSA.

The takeaway? Employers who have on-site caretakers may “pay” an employer in rent credit in lieu of wages, so long as the lodging rule is followed (with an employment contract that makes it clear the employee will live on-site and they will be compensated in the form of rent credit).

I think I’m in movie mode; last week I was blogging Back to the Future, this week I’m channeling my inner Top Gun.  In any event, on to the less exciting legal mumbo jumbo.  With remote work and expanding businesses, many more employers have employees throughout the U.S., some of which may be military members as well. If you are one of those Minnesota businesses, you should be aware of a few court of appeals cases that have addressed an “issue of first impression” (meaning, the court has not opined on it before) this year regarding an employee’s rights, and an employer’s obligations, under the Uniformed Services Employment and Reemployment Act (USERRA). Specifically, the courts held that an employer’s paid time off policy (for example, 3 days for bereavement or 5 days for sick leave) created a right to comparable paid leave for short-term military duty. You read that right – because a policy provided time off for x, y, or z, that same time off must be provided for military leave. Similarly, if an employee on paid time off/vacation is allowed to continue to accrue profit sharing, an employee on military leave must also be allowed to accrue profit sharing.

On August 10, 2021, the 3rd Circuit Court of Appeals (covering PA, NJ, DE) joined the 7th Circuit Court of Appeals (covering WI, IL, IN), finding that an employer failed to properly compensate an employee while on short-term military leave.  See White v. United Airlines, Inc., 987 F.3d 616 (7th Cir. 2021); Travers v. Federal Express Corp., __F.4th__ (3rd Cir. Aug. 10, 2021). Interesting to note, each of the lower district courts got it wrong – in other words, they found in favor of the employer and were overturned.  There is also a case pending in the 9th Circuit Court of Appeals (AK, AZ, CA, HI, ID, MT, NV, OR, WA), Clarkson v. Alaska Airlines, Inc., regarding the same issue; it is anticipated that court will also find in the employee’s favor (overturning the district court) based on that court’s previous liberal leanings. Minnesota, as you may recall, is in the Eighth Circuit. However, with the 3rd, 7th, and likely 9th Circuits all agreeing (and the 3rd and 7th typically more conservative), I would expect the trend will be towards this interpretation of USERRA (in favor of requiring paid leave).

These cases center around USERRA’s requirement that employees on military leave be given the same “rights and benefits” as comparable, non-military leaves.  Specifically, they address whether an employer is required to provide paid leave for a military absence if the employer provides other paid leaves (i.e., jury duty, bereavement leave, sick leave, vacation time, city-required sick and safe time, and paid time off), and similar benefits (i.e., earning credit under profit sharing plans).  Collectively, they find that an employer’s paid leave policy(ies) (or other benefits) can be as generous as they want, however, they must be equal (comparable) for both military and non-military members.  The DOL looks to three factors to consider whether leaves are comparable – (1) the duration; (2) the purpose; and (3) the ability to choose when to take it.  The first factor being the most significant.

This means, if you have an unlimited PTO policy, presumably, a military member could take unlimited paid military leave. However, the employee must demonstrate the leaves are comparable in duration. For example, a 3-day jury duty paid leave is not comparable to a 20-day military leave; however, unlimited time off is unlimited time off. If you allow salary continuation for one group, you must allow salary continuation for the other (military) group.  Basically, a military member cannot be at a disadvantage because of a military leave than an employee who took leave for another (non-military) reason. In short, you should be sure to treat one group the same as the other, and thus, provide the same paid time off for a USERRA qualifying event as you would for other leaves of absence.

I get that USERRA is triggered very infrequently for some employers, and more so for those that actively seek to hire reserve or guard members. However, if you’d like to read up on it, you can find USERRA guidance from the DOL here. Just something to keep in mind when you’re work on your paid leave plans in your handbook. Remember…no points for second place. You don’t want to find yourself on the wrong side of a wage and hour issue.

Last, but certainly not least, thank you to all who have served, continue to serve, and are family of service members. I recognize the timing of this blog is not ideal, but the 3rd circuit opinion just came outlast week, so I felt it was important for employers to understand the rights and obligations related to USERRA as this law is quickly evolving. I feel the need…the need for speed!

Duluth employers take note – the Earned Sick and Safe Time (ESST) Ordinance has been amended, and the revisions take effect August 19, 2021. What’s new, you ask? Here’s the good stuff:

  • ESST may be used for “Lost work hours due to closure of employee’s place of employment for public health reasons” (read: COVID).
  • All new employees must be given a copy of the ESST policy (or the substantially equivalent paid leave policy that encompasses ESST leave).
  • The ESST policy must be included in the Employee Handbook (if you have a handbook – which you should!).
  • If there is a violation found, employers may be ordered to notify employees in writing.
  • Appeals of findings are via the city’s administrative hearing process.

That’s all folks!

On August 5, the U.S. Department of Labor (DOL) announced it has settled yet another matter whereby a Golden Valley, MN home healthcare business paid only straight time to its employees regardless of how many hours they worked. In this case it was related to skilled nursing, private duty, personal aide and therapy services. In this case, the employer had to pay $241,582 in back wages AND $241,582 as liquidated damages. In other words, twice as much as it would have had to pay had it paid overtime correctly to begin with. For those of you unaware, this is the dreaded “double damages” we talk about in the wage and hour world. The employer has to pay what it is owed and then the same amount as a penalty.

Remember, this is something I blogged about recently here. I have worked with several of these businesses and cannot stress enough how important an internal pay practice audit can be. I would highly encourage all home healthcare agencies to review your pay practices (remember just because “everyone else” is doing it doesn’t make it okay!) with an attorney and determine whether changes need to be made (and how to implement them and/or address any errors in past pay practices) – BEFORE the DOL comes knocking.

Great Scott! In another Department of Labor (DOL) reversal of its own rulemaking during the Trump Administration, the Final Rule, Joint Employer Status Under the Fair Labor Standards Act, which had gone into effect (and I wrote about here) March 16, 2020, has been rescinded. Effective September 28, 2021 [UPDATE: October 5, 2021], employers need to forget everything the DOL previously said in 2020 about joint employment, and go back in time (see what I did there?) to prior guidance when deciding when an employee may have a joint employer.

This is important if two companies share employees. However, employers should have a good faith defense that they relied on then-DOL regulations in determining joint employment status. However, if that is the case, employers should show that once the rescission takes effect (September 28, 2021 October 5, 2021), they will go back to (or start if new situation), treating the employee as a joint employee for purposes of minimum wage and overtime under the Fair Labor Standards Act. For example, if you own two businesses and employees work at both locations (even if their job is different at each), generally you need to add their hours and make sure that they receive overtime for all hours worked at both locations.

If you’re a federal contractor, you’ve probably seen the headlines – on July 22, 2021, the U.S. Department of Labor (DOL) issued a Notice of Proposed Rulemaking outlining how it wants to enforce Executive Order 14026, Increasing the Minimum Wage for Federal Contractors. But what exactly does this mean? President Biden tasked the DOL with creating regulations to increase minimum wage to $15/hr. for federal contractors beginning January 30, 2022, and to increase for inflation thereafter. He also asked for regulations to eliminate the tip credit by 2024 (which does not affect Minnesota employers as we are not allowed to take a tip credit under Minnesota law).

Accordingly, the DOL has until November 24, 2021 to issue final regulations to implement the order’s requirements.  At this point, the DOL has taken the first step by issuing the Notice of Proposed Rulemaking (this is like a “draft” for everyone’s review). Accordingly, once the timeline for comments closes (August 23, 2021), the DOL will review the comments make any changes it feels are prudent, then finalize for the final rule to be published.

At this point, federal contractors will want to review the notice and keep an eye on the final rule (which must be published by November 24, 2021).  For example, determine whether it will even apply to your business and/or which employees. Just because your company may  be a federal contractor does not mean this automatically applies to your business (or all your employees). For example, the proposed rules provide, “This part does not apply to contracts for the manufacturing or furnishing of materials, supplies, articles, or equipment to the Federal Government…”  It will also be applicable only to workers who spend more than 20% of their time performing “on” or “in connection with covered contracts”. However, in an example, the DOL suggests wide coverage with it’s interpretation of “in connection with” – stating that a payroll clerk would be performing covered work “in connection with” a covered contract as their work would be necessary to the performance of the contract.

Also – keep in mind that the minimum wage will only be applicable to new contracts on or after January 30, 2022 (or renewed, extended or optioned contracts thereafter). The government contracting agency will be required to include notice of this requirement in all covered contracts and solicitations. Thus, for new contracts, it should be crystal clear; in renewals or options, if it is not clear, ask the contracting agency to confirm whether it applies (and get it in writing). Though you can’t rely on that (yes, the government can screw up), it can be used as a good faith argument to avoid a willful violation claim.

In sum, I think I said a whole lot of nothing: There is a rule that is coming requiring federal contractors to pay $15/hr. minimum wage on or after January 30, 2022, that may apply to your business (or not), may apply to some or all employees (or not), and we don’t know exactly how it will work, but it might work as proposed, or it may change. You’re welcome!

I know, it’s been awhile since I’ve done one of these. I’m thinking of trying to keep this going.  Or maybe starting a “Why Not Wednesday” (telling stories of what NOT to do and why)! Here’s a fun fact for your Friday…

Minnesota’s 2021 minimum wage for large employers (gross annual revenue greater than $500,000) is $10.08 per hour and $8.21 for small employers.  MN is:

  • 1 of 30 states that has its own minimum wage.
  • The 21st lowest of the 30 states that have a minimum wage.
  • 1 of 18 states that annually adjusts its minimum wage based on a formula (inflation).
  • 1 of 4 states that has a different minimum wage rate based on business receipts.

If you want to geek out with me a bit, there is a 2014 article from MinnPost that details the history of Minnesota’s minimum wage laws back to 1913.