In Minnesota, it is still lawful to ask job applicants about their pay and benefit history.  However, a number of states and cities are moving toward banning such practice. Thus, Minnesota employers with other locations should be mindful of these changing laws. The idea is that by doing so, the gender and minority job gap will eventually be equalized. As of today, the following locations (that I am aware of) have banned private employers from asking a job applicant about certain compensation history:

  • California. Effective January 1, 2018, per Assembly Bill 168, employers cannot ask salary history information, including compensation and benefits; however, applicants may volunteer the information.  Also note – “An employer, upon reasonable request, shall provide the pay scale for a position to an applicant applying for employment.”
  • Delaware. Effective December 2017, per House Bill 1, employers cannot seek  compensation (wages and benefits) history from an applicant or former employer, except after an offer has been made, for the sole purpose of confirming the applicant’s compensation history.
  • Massachusetts. Effective July 1, 2018, per S.2119, employers cannot seek the wage or salary history of a prospective employee. Note, this act has a lot more employer restrictions with respect to pay equity.
  • New York City. Effective October 31, 2017, per NYC Law, employers cannot solicit questions about current or prior earnings or benefits, search public records to find that information, or rely on current or prior earnings or benefits to set compensation.
  • Oregon. Effective January 1, 2019, per House Bill 2005, employers cannot screen job applicants based on current or past compensation (wages, salary, bonuses, fringe benefits and equity-based compensation), or determine compensation for a position based on current or past compensation for a prospective employee (except in the case of an internal transfer).
  • Philadelphia. Effective May 23, 2017, Philadelphia Code 9-1131 prohibits employers from relying on an applicant’s salary history when setting salaries.  While the law attempted to make inquiries into wage history unlawful, when challenged, the U.S. District Court for the Eastern District of Pennsylvania ordered that while employers cannot be prohibited from asking an applicant’s wage history, they can still prohibit reliance on salary history.
  • Puerto Rico. Effective March 8, 2018, per Puerto Rico Act No. 16-2017, employers may not ask an applicant or former employer of the current salary or wage history of the applicant.
  • San Francisco. Effective July 1, 2018, per the Consideration of Salary History Ordinance (also known as the Parity in Pay Ordinance), employers cannot consider the current or past salary of an applicant in determining whether to hire an applicant, and at what salary.  In addition, employers must post a salary history poster at the workplace.
  • Vermont. Effective July 1, 2018, per H294, employers cannot inquire or seek information regarding a prospective employee’s current or past compensation.

Keep in mind the above is just a quick overview; if any one of these applies to your business, you should familiarize yourself with the actual applicable law (most linked above). I suspect that the equal pay laws above are the start of a growing trend, and that if no federal law is passed in the next few years, state and local laws will continue. Until then, employers with locations in multiple states need to be sure to keep current on pending legislation and ordinances.

On Wednesday, May 9, 2018, the Minnesota District Court (Hennepin County) upheld the status quo (remember the temporary injunction I wrote about earlier), finally determining that state law does not preempt the Minneapolis Sick & Safe Leave Ordinance, but the Ordinance cannot be enforced by Minneapolis outside the geographic boundaries of the City of Minneapolis.

In March 2018, in response to the temporary injunction, Minneapolis amended the Ordinance as follows to narrow its geographic reach: “employees accrue a minimum of one (1) hour of sick and safe time for every thirty (30) hours worked within the geographic boundaries of the city up to a maximum of forty-eight (48) hours in a calendar year…” Further, “an employer is only required to allow an employee to use sick and safe time that is accrued pursuant to this ordinance when the employee is scheduled to perform work within the geographic boundaries of the city…” The Court, however, decided that the revisions still exceed the City’s territorial authority.  As a result, the Ordinance only applies to employers located within the geographic bounds of Minneapolis. The City may appeal this decision to the Minnesota Court of Appeals, so until that deadline is over, we won’t know if this is a done deal (but it is the law for now).

Keep in mind, employers located within the city of Minneapolis must still comply with the Ordinance.  If you are a Minneapolis-based employer and haven’t done so already, be sure to check your handbook and paid time off policy to be sure it is compliant with the Ordinance’s accrual rates, carry-over rules, and employee notice requirements. Additionally, as I blogged about earlier, Duluth employers should be aware that Duluth may only be a month away from enacting its own Earned Sick and Safe Time Ordinance, which is expected to pass.

Duluth is one step closer to passing its own Earned Sick & Safe Time ordinance (ESST), to go into effect January 1, 2020. Following in the footsteps of Minneapolis and St. Paul, Duluth’s proposed ordinance would require employers to provide employees with 1 hour of time off for every 50 hours worked. Employees would also be able to bank up to 40 hours of earned sick time from one year to another.

For purposes of Duluth’s ESST, an “employee” is defined as a person working within the geographic boundaries of Duluth for more than 50% of the employee’s working time in a 12-month period, or is based in Duluth and spends a “substantial part” of work time in Duluth and not more than 50% of work time in a 12 month period in any other place. Notably, seasonal workers (those employed 120 days or less) would be exempt as would independent contractors, student interns, and those covered under the federal Railway Unemployment Insurance Act. An “employer” under the ESST is defined as having 5 or more employees in any location, whether or not they work in Duluth. A temporary employee supplied by a staffing company is considered an employee of the staffing company. The definition of “employer”, however seems problematic in light of the recent Court order regarding the Minneapolis Sick & Safe Leave Ordinance (more on that in my next blog), as it appears to govern non-Duluth based employers. Thus, I suspect a lawsuit will follow challenging the scope of the ordinance, if enacted as amended.

The original ordinance and amendments can be found here. The City Counsel meets again May 29, 2018, and is expected to vote on it, as amended. Stay tuned for a detailed blog should it pass.

A question I’m often asked by employers is whether they can decrease an employee’s rate of pay. This usually comes up after the business has a reason to do so, notifies the employee, and the employee responds that it’s unlawful and they’re going to report the company to the Minnesota Department of Labor and Industry, U.S. Department of Labor, or call an attorney. Despite the angry employee, it is not an unlawful pay practice, so long as the employer and employee do not have a contract for employment that specifically sets forth a rate of pay or other compensation terms.

That being said, there are some potential traps and other considerations. For example, the pay should only be decreased prospectively – in other words, before the hours have been worked and thus, the money earned. For example, if an employee is paid on April 15 for work performed from April 1 to April 14, and you tell the employee on April 10 that their hourly rate of pay is being decreased, the old rate of pay should be used from April 1 through April 10 and the new (lower) rate of pay could be used thereafter. However, from a personnel (employee happiness) perspective, it would be a better practice to make the change effective April 15 for the next payroll, or even the payroll following, in order to give employees plenty of time to juggle their finances if need be. It also would be a good idea to provide the employee with notice of the change in pay in writing that clearly states it is applicable starting on whatever date in the future. Again, make sure that notice is received before any hours are worked under the new pay rate.

Finally, of course it goes without saying, the employee must at least be paid minimum wage at all times – and be sure that you are using the most recent wage whether it be the federal minimum wage, Minnesota minimum wage, or city minimum wage (such as the Minneapolis Minimum Wage Ordinance).

 

Hopefully you all got outside this weekend as Spring (and maybe we jumped right into summer) has finally arrived! In the spirit of Spring cleaning, I wanted to remind employers to take a look at your HR board, and make sure that all of your mandatory workplace posters are up to date. After having visited two employers in the past few weeks who were woefully outdated (one had minimum wage around $4), I thought it may be a good time to remind you all to check out your postings. If your board is cluttered with out of date notices, you might as well file those away too.

Minnesota mandatory workplace posters can be found here: http://www.doli.state.mn.us/LS/Posters.asp. Note, you can download it (for free) as a pack, and sign up to be notified when a poster has been updated (no reason not to!).  The last update was the age discrimination poster in September 2017.

The Equal Employment Opportunity Commission “EEO is the Law” poster can be found here: https://www1.eeoc.gov/employers/poster.cfm.

Federal workplace posters (other than the EEO one) can be found here: https://www.dol.gov/general/topics/posters.  Take note if you are a federal contractor, there are additional notices you will need to post which are also available at that website.

The National Labor Relations Board Employee Rights Notice can be found here: https://www.nlrb.gov/poster.  Keep in mind this is no longer mandatory to post due to a court injunction – but employers may chose to post.

Of course, there are several companies that will sell you an all-in-one laminated poster. Those are nice too if you don’t mind shelling out the money, but be sure you get the correct poster(s) – not just Minnesota, and not just federal. Also be sure that you update the individual notices on the all-in-one poster – just because you have shiny laminated poster doesn’t mean you can post it and forget it when updates are made. Finally, feel free to cross out notices on the poster that do not apply to your business (i.e. FMLA poster for a company that has less than 50 employees).

In one of two DOL Opinion Letters issued on April 12, 2018, the DOL clarified an extremely frequent question employers have – when to pay a non-exempt (hourly) employee for travel time (and gave me a great excuse to finally post a picture of a Jeep!). In other words, when is travel time “work”.  DOL Opinion Letter FLSA2018-18 finally provides some guidance regarding the DOL’s interpretation with three very common scenarios. Specifically, we know compensable work time generally does not include commute time, but what happens when an hourly worker does not have a normal business to commute to but rather goes to different job sites? Well, we know that travel away from home communities is worktime when it “cuts across the employee’s workday”, which includes the same normal work hours on a Weekend day as well (i.e. 9 to 5). Thus, the DOL has long held it does not consider work time that time spent as a passenger outside of regular working hours (see my earlier blog). However, what happens when employees don’t have a fixed location or set hours each day?

OPINION LETTER FACTS: At this employer, hourly technicians do not have a fixed location but work at varying customer locations each day. They have no fixed schedule, though they often start at 7 am, and often work between 8 and 12 hours, sometimes having to spend the night and complete the service the following morning. Occasionally technicians travel out of town for training. They are provided with vehicles to use for personal and business and covers all fuel and maintenance.

Scenario 1: “An hourly technician travels by plane from home state to New Orleans on a Sunday for a training class beginning at 8:00 a.m. on Monday at the corporate office. The class generally lasts Monday through Friday, with travel home on Friday after class is over, or, occasionally, on Saturday when Friday flights are not available.”

  • The key question is how to determine when travel time is compensable when there is no regular workday.
  • The DOL “scrutinizes” claims that employees don’t have regular or normal work hours, as after reviewing time records usually work patterns emerge (in other words it is a loosing argument for 99% of employers that there is no normal workday)
  • Assuming there is no regular workday, an employer can choose the average start and end times for the employee’s workday.  The employer and employee (or representative) can also negotiate and agree on a reasonable amount of time which travel outside of home community is compensable. When these methods are used, no violation will be found for compensating employees only during those hours.
  • If the employee chooses to drive instead of ride as a passenger in a plane, the employer may count as “hours worked” time spent driving the car or time that would have had to have counted as hours worked if the employee had taken the plane.
  • Time between a hotel and the remote work site is considered home-to-work travel and not compensable.

Scenario 2: “An hourly technician travels from home to the office to get a job itinerary and then travels to the customer location. The travel time from home to office varies depending on where the technician lives and can range from 15 minutes to 1 hour or more. All of this travel is in an assigned company vehicle.”

  • Time spent commuting between home and work is not compensable. Travel between site after arriving at work is. If an employee is required to report to a meeting place or pick up tools, travel from that site to the job site is part of the day’s work, regardless of contract, custom or practice.

Scenario 3: “Hourly technicians drive from home to multiple different customer locations on any given day.”

  • Same outcome as above.

Again, it’s still very fact specific, so keep in mind that this is an opinion letter related to one employer – but can be used as guidance for the rest.

On April 12, 2018, the U.S. DOL issued Opinion Letter FLSA2018-19 regarding the compensability of frequent breaks. As the DOL notes, most employers provide employees a 20 minute (or less) paid break in the morning, a 30 minute (or more) unpaid lunch break, and 20 minute paid afternoon break. In this case, several employees had a serious medical condition under the Family Medical Leave Act (FMLA) that required a 15 minute break every hour.  Accordingly, out of an 8 hour day, the employees were only working 6 hours. The question posed by the employer was whether that time needed to be paid since it was less than 20 minutes (and the Supreme Court has held that rest breaks up to 20 minute are ordinarily compensable as they are for the benefit of the employer).

The DOL opined that an employee who uses intermittent FMLA for additional breaks need not be paid for that time outside of the normal 20 minute break provided to all employees (i.e. the morning and afternoon break).  The DOL concluded that neither the Fair Labor Standards Act (FLSA) nor the FMLA requires that the breaks be paid, except that “employees who take FMLA-protected breaks must receive as many compensable rest breaks as their coworkers receive”. This opinion letter is a great reminder to employers of the interplay between the FMLA and FLSA (and often ADA).

The Department of Labor Wage and Hour Division (WHD) recently released a new fact sheet providing guidance on the “white collar” exemptions under the Fair Labor Standards Act (FLSA) for positions common in Higher Education Institutions. These positions include teachers, coaches, professional employees, administrative employees, graduate teaching assistants, research assistants, and student residential assistants. As I know you know, the FLSA provides a so-called “white collar” exemption from minimum wage and overtime requirements for employees who perform executive, administrative, professional, or outside sales duties.

The new fact sheet notes that professors, instructors, and adjunct professors generally qualify under the exemption. The WHD also noted that “the regulations do not restrict where bona fide teaching may take place, to whom the knowledge can be imparted, or how many hours a teacher must work per week to qualify for the exemption.” Thus, the exemption may also apply to faculty who teach online or remotely.  The WHD notes that it is unlikely that recruiters qualify, and whether a coach qualifies depends on (among other things), the amount of time instructing student-athletes in a team sport. Additionally, the fact sheet indicates that professional employees including certified public accountants, psychologists, certified athletic trainers, librarians, and postdoctoral fellows, generally are exempt under the professional employees’ exemption. Employees may also be exempt under the administrative employees or the academic administrative employee’s exemption. Such employees may include admissions counselors, student financial aid officers, and department heads.

I think I’ve said this ad nauseam, but for each test, it is important to look at an employee’s actual job duties, qualification and education for determining whether an employee is exempt under any of the “white collar” exemptions. Employers cannot just rely on Fact Sheets, but must put each job to the test. Additionally, don’t forget the employee must also meet the salary basis test – currently a salary at a rate not less than $455 per week.

As food industry businesses are well aware, in Minnesota, you cannot take a credit for tips when computing minimum wage, nor can an employer require tip pooling (Surly Brewing recently paid $2.5 Million in back wages for alleged tip pooling).  In response to cities in Minnesota passing or introducing higher minimum wage ordinances (such as $15 in Minneapolis and St. Paul), Republican lawmakers introduced a bill that would allow employers to pay their tipped employees a lower minimum wage. The bill is in response to concerns from primarily restaurants and bars, regarding the strain a higher minimum wage will incur on them.  The House committee is currently debating this proposed bill.

Under the bill, large employers (employers with annual gross receipts of $500,000 or more), may cap an employee’s minimum wage at $9.65, so as long as the employee makes an average of $14 per hour, including tips.  For small employers (employers with annual gross receipts of $500,000 or less), an employer may cap an employee’s base wage at $7.87 if the employee makes an average of $12 per hour, once the tips are included. If an employee does not make $14 or $12 per hour, depending on the employer’s size, the employer is required to pay them the higher of the Minnesota or federal minimum wage. Stay tuned!