The U.S. Equal Employment Opportunity Commission (EEOC) and U.S. Department of Labor’s Wage and Hour Division (WHD) signed an agreement on September 13, 2023 to immediately start collaborating between the two agencies to share information, coordinate investigations and enforcement, cross-train personnel, and conduct joint outreach and public education efforts.

The Memorandum of Understanding (MOU), signed Wednesday, allows the agencies to work together to ensure employers are following the various federal laws. What does this really mean? If you are investigated by the DOL for an alleged wage violation and in that investigation a female employee reports that they believe their wages are not only incorrect but also less than all the males because they are not given the good jobs because they are women, the DOL may then share that information with the EEOC to investigate the alleged discrimination (while the WHD continues its wage investigation). Another example is that both the EEOC and WHD enforce the PUMP Act and Pregnant Workers Fairness Act, signed into law by President Biden on December 29, 2022.

After nearly 40 years, the U.S. Department of Labor (DOL) has updated its regulations and issued a Final Rule for the Davis-Bacon and Related Acts (DBRA), effective October 23, 2023. The Davis-Bacon Act, originally enacted in 1931, requires contractors and subcontractors performing construction work on federal contracts to pay their workers at least the locally prevailing wage and benefits (largely union wages and fringe benefits). Not surprisingly, the changes will bring more workers under the DBRA’s purview.

What Is Changing?

The most notable change involves redefining “prevailing wage”, which resurrects the “three-step” method (also known as the 30% rule) that was used until 1983. Under this approach, if a wage rate isn’t the standard for a majority of workers, a rate will be recognized as “prevailing” if at least 30% of the workers within a specific job classification in an area earn that rate.

In addition, the definition of “building or work” has been expanded to include solar panels, wind turbines, broadband installations, and electric vehicle charger installations.

The term “material supplier” has now been defined and is excluded from the definition of a “contractor”. A material supplier includes entities whose responsibility is restricted to the delivery of materials and supplies and activities related to those tasks. An entity that engages in other construction work at the site is considered a contractor or subcontractor.

The regulations now state that demolition activities compromising of construction, alteration, or repair are covered under DBRA.  Demolition at sites with anticipated construction under DBRA is also covered.

The definition of “site of the work” now includes any site where “significant portions” of a project are produced.

The DOL has specified that flaggers and traffic operators are regarded as working on the site of work, even if they are working several blocks away or further down the highway from the actual construction site.

Compliance and Enforcement

Contractors and subcontractors are required to retain DBRA-related documents and worker contact information for at least 3 years following completion of the contract.

Upper-tier contractors and subcontractors will be liable for lower-tier subcontractors’ violations. Both groups must pay back any owed wages on behalf of lower-tier subcontractors.

When dealing with back wages, any interest will be determined based on the rate set by the IRS (26 U.S.C. § 6621). This interest will be compounded daily.

Historically, the triggering factors for debarment under Related Acts were rooted in instances of “willful or aggravated” violations. However, the latest regulations have incorporated Davis-Bacon’s broader “disregard of obligations” standard into the Related Acts, broadening the scope of potential actions by employers that could lead to debarment.

A notable update has been the clarification of cross-withholding. Funds can be withheld from any contract falling under the same prime contractor. This holds true even if that contract was awarded or supported by a different agency than the contract where violations had taken place.

In short – Employers performing DBA work should review the new rule; employers performing work tangentially related to DBA work should verify whether the work now falls with the DBA’s purview.

Here we go again! On August 30, 2023, the U.S. Department of Labor (DOL) announced a proposed rule to raise the minimum salary threshold requirement for employees to be exempt from minimum wage and overtime provisions under the Fair Labor Standards Act (FLSA). You may recall my 2016 blog post when the DOL issued a final rule that was later challenged in the courts and withdrawn. The proposed increase will increase the current salary threshold of $35,568 ($684 per week) to $55,068 per year ($1,059 per week) for certain executive, administrative, and professional employees. The DOL also intends to raise the salary threshold for the “highly compensated” employee exemption from $107,432 to $143,988 per year. The DOL’s proposed rule also includes a provision that would establish automatic updates to the salary thresholds every three (3) years based on earnings data.

The proposed rule does not make any changes to two components of the three-pronged criteria that determine whether an employee is excluded from FLSA’s minimum wage and overtime requirements. The first prong, known as the salary basis test, mandates that an employee must receive a fixed salary that remains unaffected by variations in quality or quantity of their work. The second prong, the duties test, requires that the employee’s job duties must involve executive, administrative, or professional duties as defined by the FLSA. The third component, which is the focus of the DOL’s proposed rule, is the salary level test which requires a specific minimum threshold.

It’s important to note that most Minnesota employers are subject to both state and federal wage laws. While federal laws, like the FLSA, allow exemptions for certain positions, Minnesota doesn’t recognize some of them, such as the computer professional and “highly compensated” employee exemptions.

What Should Employers Do?

If you haven’t done an internal audit of your pay practices, it is always a good time to do so.  Employers could increase salaries to maintain exempt status (so long as all the other factors are met) or transition employees to non-exempt status and pay hourly plus overtime (or salary plus overtime). Employers needing to reclassify employees can then set policies that restrict or prohibit overtime. If an employee does work beyond their set hours, they must still be compensated, but disciplinary actions may be taken against them for violating company policy.

The public will have until November 7, 2023 to submit comments to the DOL on the proposed rule (meaning it is not likely to go into effect in 2023).

Rounding of time is nothing new. For payroll simplicity, employers have rounded time up and down for decades, beginning when we actually put a timesheet into a punch clock to “punch the time” (yes, I did!). To that extent, the US Department of Labor (DOL) has long permitted employers to round the times employees “clock in and out”, provided the rounding goes both directions (up and down). The DOL’s regulations (29 C.F.R. §785.48(b)) requires that rounding must “not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.” However, the regulations also make clear that even if employees punch in early, if they are not performing work, the “minor differences” between clock records and actual hours worked may be “disregarded”.

On August 11, 2023, the Eighth Circuit issued an opinion in Houston v. St. Luke’s Health System, Inc., finding that a genuine dispute remained regarding whether a rounding policy was lawfully applied. In that case, ex-employee Torri Houston, suing on behalf of herself and fellow coworkers, argued that St. Luke’s rounding policy based on an automated timekeeping system resulted in underpayment to employees. The employers policy rounded clock times within 6 minutes of the shift’s scheduled start or end time. Thus, an employee who clocked in at 12:54 p.m. for a 1:00 p.m. shift would have their time rounded up to 1:00 p.m. (and not get paid for the six minutes worked). Conversely, if an employee clocked out at 2:54 p.m. for a shift that ended at 3:00 p.m., they would have their time rounded up to 3:00 p.m. (getting paid for 6 minutes they did not work). St. Luke’s argued that its rounding policy was lawful and neutral.

Yet, the Eighth Circuit found there was a consistent pattern of employees receiving less compensation than they were owed over the years. Data showed that the policy resulted in cutting time from about 1/2 of the shifts, adding time to a little over 1/3 of the shifts and had no effect on the remainder. The experts concluded the policy favored St. Luke’s by 74,000 employee hours over a 6 year period ($140k in damages for a 2 year FLSA period and $2.2M for a Missouri 6 year period – no, we don’t worry abbot that here in MN). For the named plaintiff, overall she only lost 7.6 hours over a 6 year period ($205.13 or $32 per year). Fortunately for her, even if she is owed $1 she can win the case, plus (importantly for her counsel), attorneys’ fees and costs. The district court found in St. Luke’s favor given the rounding was not much per person and was neutrally applied as it went up and down.

Here’s where St. Luke’s went wrong. It actually stipulated that all “on the clock” time was compensable time. As you read above, the regulations require pay for all hours worked, but contemplate that employees may clock in but not work right away (i.e., clock in at the desk, grab coffee, put lunch in fridge, etc.). Here, St. Luke’s curiously agreed for purposes of the summary judgment motion (asking the court to rule without a trial based on the facts alone) that all time on the clock was work time. Thus, it could not argue that employees clocked in and did not do work right away and thus, even if the records show they were “underpaid” some of the clock time was time not worked. Further, the plaintiff showed that the rounding policy does not average out over time as the majority of employees were underpaid.

Accordingly, the Eighth Circuit found there was sufficient evidence to raise a genuine dispute regarding whether St. Luke’s rounding policy results in systematic underpayments over time (sending the case back down to the district court for trial). Now, St. Luke’s will need to provide evidence at trial that employees did not work all the time reflected on the time clocks (i.e., showing employees would stop for coffee, etc.).

Your takeaway – if your business rounds time, make sure it goes both ways AND you should consider regular internal audits to determine whether time does in fact “average” out. If you find that more often than not that the clock is rounding to the employer’s favor (i.e. your employees always clock in early and always leave right on time), consider a different pay policy.

If you’ve read my recent blog about the new paid sick and safe time (required January 1, 2024), you may be wondering how that affects your business if you are a federal contractor. You are right – you are special! Under the federal contractor requirements established pursuant to Executive Order 13706, you must provide the following:

Accrual method

  • 1 hour of PTO for every 30 hours worked (same as state).
  • Earning cap minimum: 56 hours of PTO per year.
  • Carryover to next year: Yes, but may limit PTO banking to 56 hours.

Frontloading method

  • 56 hours of PTO at the beginning of every year.
  • Carryover to next year: Yes, may limit PTO banking to 112 hours.


  • Employees who work on or in connection with a covered federal contract (see below), and their wages under the contract are governed by the DBA, SCA, or FLSA.
  • Employees who perform work in connection with covered federal contracts but less than 20% of their work hours in a given workweek are exempt from this regulation.

What Are Covered Federal Contracts (Awarded on or after January 1, 2017)?

  1. Procurement contracts for services or construction covered by the Davis Bacon Act
  2. Contracts for services covered by the Service Contract Act
  3. Concessions contracts
  4. Contracts related to federal property or lands offering services for federal employees, their dependents, or the general public

How Is This Different from Minnesota’s Paid Sick and Safe Leave Requirements?

  1. Annual Earning Cap Minimum
  • Federal Regulation: 56 hours.
  • Minnesota ESST Law: 48 hours.
  1. Carryover
  • Federal Regulation:
    • Under both the accrual method and frontloading, paid sick leave carries over from one year to the next. With the accrual method, federal contractors may limit the available sick leave in the “bank” to 56 hours at any time. With frontloading, contractors can limit yearly carryover to 56 hours, where the maximum amount of sick leave in the “bank” for an employee could potentially reach 112 hours (or more if you allow).
  • Minnesota ESST Law:
    • Accrual Method: Employees can carry over unused sick leave from year-to-year and employers may cap the maximum number of hours in the “bank” to 80 hours (but don’t need to).
    • Frontloading Method: Employers who frontload 48 hours annually are required to pay out employees for any unused paid sick leave. Employers choosing to frontload 80 hours annually do not have to pay out employees for unused paid sick leave.

In short, if you are a federal contractor in Minnesota, not only do you need to be sure you are in compliance with every local ordinance (so far, Bloomington, Minneapolis, St. Paul and Duluth), but also the new State law (Jan. 1, 2023) and the federal regulation due to the Executive Order.

Unless you’ve been hiding under a rock, you know that in just a few short weeks, August 1, 2023, recreational cannabis (marijuana) will be lawful in Minnesota (under state law). However, recent news has also highlighted the fact that it may take up to 18 months for new cannabis dispensaries to obtain a license to sell. In the meantime, new business owners are setting up their cannabis business, hiring employees, and doing all the things necessary to obtain the license. So, what wage and hour considerations should you think of if this is your business?

Federal Fair Labor Standards Act

As far as we know, yes, it applies, and yes, you should follow it. While there has been an argument before the 10th Circuit Court of Appeals (this is not where MN is located – we are in the 8th Circuit) that a cannabis employer need not follow the FLSA as cannabis is federally unlawful, the Court rejected that argument, rather holding that the FLSA does apply.

Employee v. Independent Contractor

Don’t fall for this trap! Yes, your best friend, neighbor, etc. whomever is going to help you start up this business may want to be an independent contractor to (try to) get around certain taxes, don’t do it. I have posted previously several times about this distinction so you can search it, but here’s the short of it – if it looks like a joint, smells like a joint, it probably is a joint. If a worker acts like an employee, can be seen to someone on the outside as an employee, they probably are an employee. If you are telling the person what to do, when to do it, how to do it, they are most likely an employee. You can never “err” by classifying someone as an employee – only by misclassifying them as an independent contractor. Also – it does not matter if both parties want that. The law states what it is to be and the current Biden Administration is working to make it harder to be properly classified as an independent contractor.

Recordkeeping & Payroll

Given the issues with federal banking for cannabis businesses you may be tempted to pay cash. Don’t do it. A cannabis business – like any other – must follow the federal Fair Labor Standards Act (FLSA), the state equivalent Minnesota Fair Labor Standards Act, and the Minnesota Wage Theft Protection Act. These require employers keep certain records such as hours worked, wages paid, paid time off available (in MN), address of the employer and the like. Paying cash leaves no trace, no records, and is up for future dispute = bad. Just because you start small (1 employee) does not mean you don’t have to follow these recordkeeping laws.

Minimum Wage & Overtime

Again- pay it. Pay all wages up front, keep records of wages paid, and be sure you’re paying the minimum wage for the local you are in (i.e., Minneapolis, St. Paul, Duluth, Bloomington) which may have a different minimum wage rate than the state minimum wage. As to overtime – Minnesota requires overtime be paid after 48 hours (not 40 like federal). Your business will fall under FLSA’s 40 hour requirement if you have an annual dollar volume of sales or business of at least $500,000 (enterprise coverage) OR your employee is engaged in interstate commerce (individual coverage). In this regard, I believe cannabis employers may be uniquely suited as – unlike virtually all other businesses – you are necessarily NOT producing goods to be sent out of state, handling interstate transactions, traveling to other states and doing work where goods are produced for shipment out of state. However, I would caution using the 48 hour state requirement if you even remotely anticipate $500,000 in sales your first year of business. Again, you can always pay more (i.e., overtime based on 40 hours) but never less – so budget to err on the cautious side. If you anticipate overtime, set the regular rate lower to account for overtime. That said, don’t change the rate thereafter (except normal increases) as that itself can be an FLSA violation.

As to exemptions from overtime – you may be tempted to pay all your starting employees a “salary”. Keep in mind that under both state and federal law, employees are entitled to overtime UNLESS they are exempt. You can pay a salary, but if they are a non-exempt employee, you must also pay overtime. Have a job description for each job that supports the classification – if they supervise two or more employees, state that; if they have “independent discretion with matters of significance” make those duties clear (i.e., signing contracts, developing policies and procedures). I do have lots of posts on exemptions if you need more information, use the search function (or better yet – subscribe to my blog!). Side note – if you are going to require overtime from time-to-time, add that to the job description. Again, for a start-up, one wage claim can be crippling. It never hurts to pay an employee hourly and time and one-half of that for overtime over 40. Then, so long as they are paid for actual hours worked, you can’t go wrong!

Employee Handbook – Earned Sick and Safe Time – Paid Time Off

Yes, you started small. However, anticipate growth. Make sure your employee handbook (you have one employee, you need one) has all the required notices (many new ones for MN which I recently blogged about), and includes the January 1, 2024 required state Earned Sick and Safe Time requirements (this can be via PTO). Make sure you have policies about recording all time worked, not working off the clock and reporting any errors or discrepancies in payroll. Your best friend that is your first worker? Yes, they too need to sign the acknowledgement. You are now an employer and all employees must be notified of the policies, procedures, etc. related to the workplace. One of those – not being at work under the influence – should be in there as well. Plan for dealing with the worst employee ever, and then hope for the best.


New hire/best friend not working out? Recall if they ask, you must provide their final paycheck within 24 hours. Thus, save yourself the headache and if you are going to terminate, prepare the last check ahead of time and just give it to them on their way out.


At the end of the day, be sure to follow both federal and state wage laws (check out my blog search bar for any specific/general issues) and remember your business already will have enough hurdles to jump through, this need not be another one! Finally, I’m neither a CPA nor a tax attorney, and I recognize a lot of the payroll issues may be easier said than done – don’t give up. Do your due diligence, find a reputable payroll company that will work with your business and a good tax attorney/CPA to get you started on the right path to grow your business! Yep, pun intended.

Effective January 1, 2024, Minnesota employers (including employment agencies and labor organizations) are prohibited from inquiring into a job applicant’s pay history (prior or current wage, salary, earnings, benefits) “for the purpose of determining compensation or benefits”. However, applicants may voluntarily disclose it (without being asked or prompted). If they do this, employers may take this information into consideration as a basis to offer a higher wage or salary than initially planned. 

However, the new Minnesota Human Rights Act provision (Minn. Stat. 363A.08) does not restrict employers from providing applicants with information on compensation or benefits associated with a particular job position. For example, employers may still discuss applicants’ expectations or requests pertaining to compensation and benefits in relation to a position.

As I’ve recently blogged about here, Minnesota recently passed a statewide earned sick and safe time (ESST) law, effective January 1, 2024. However, ESST ordinances already exist in the cities of Bloomington, Duluth, Minneapolis, and St. Paul. In honor of Bloomington’s recently implemented ESST ordinance, which came into effect July 1st, this post compares the four different city ordinances (with Duluth being the most divergent) with the state law. Why? Because an employer who is working in more than one or in all of these cities must provide for a policy that is compliant with all of them – and as of January 1, the state’s ESST also.

Who is Covered?

  • Minnesota: Employees who work in Minnesota for at least 80 hours in a year.
  • Bloomington, Minneapolis, and St. Paul: Employees who work within the city limits for 80 hours or more in a year.
  • Duluth: Employees who spend more than 50% of their working time in Duluth in a year.
  • If you were to have one policy for all cities, you’d likely want to use the 80 hour requirement and not bother with whether someone spends more than 50% in Duluth because they’d meet the 80 hour requirement after working 160 hours in Duluth anyway (which is 4 weeks of full time work).

When Can ESST Be Used?

  • Minnesota: Employees may begin using ESST once they have worked 80 hours in Minnesota in a year.
  • In all four cities, ESST can start being used by employees upon their 91st day of employment (calendar days, not business days).

Accrual Method:

  • Minnesota: Employees earn 1 hour of ESST for every 30 hours worked.
  • Bloomington, Minneapolis, and St. Paul: Employees earn 1 hour of ESST for every 30 hours worked.
  • Duluth: Employees earn 1 hour of ESST for every 50 hours worked.

Earning Cap (Minimum):

  • Minnesota: Employees may earn up to 48 hours of ESST per year.
  • Bloomington, Minneapolis, and St. Paul: Employees may earn up to 48 hours of ESST per year.
  • Duluth: Employees can earn up to 64 hours of ESST per year.
  • Employers may provide more ESST than the above, of course (and yes, you can also have various levels based on years of service).

Employers have the option of frontloading ESST at the beginning of the year or having employees accrue as detailed above (where employees carry over unused ESST from one year to the next).

Frontloading of ESST:

  • Minnesota: Employers that wish to frontload and avoid carryover may (i) provide 48 hours of ESST at the start of the year and pay out any unused ESST from the previous year, or (ii) provide 80 hours of ESST at the start of the year, where no payout for unused ESST is required.
  • Bloomington, Minneapolis, and St. Paul: Employers may frontload at least 48 hours for an employer’s first benefit year. Every year following, employers may frontload at least 80 hours per year.
  • Duluth: Employers may frontload as long as they provide at least 40 hours of ESST.

Carryover Cap If Using Accrual Method:

  • Minnesota: Employees may carry forward 80 hours of unused ESST from year-to-year.
  • Bloomington, Minneapolis, and St. Paul: Employees may carry forward 80 hours of unused ESST from year-to-year.
  • Duluth: Employees may carry forward up to 40 hours of unused ESST from year-to-year.

A friendly reminder to employers located in these cities that they must provide employees with a notice informing them of their ESST rights. Again, an employer can always provide for MORE leave, MORE accrual, MORE everything noted above – just not less than the law requires.

On October 13, 2022, the U.S. Department of Labor (DOL) released a proposed new rule regarding the classification of independent contractors under the Fair Labor Standards Act (FLSA). If enacted, the rule will narrow the definition of “independent contractor”, having significant implications for workers and employers.


In January 2021, the DOL (under President Trump) issued a rule outlining a five-factor test for determining a worker’s status. Two factors were designated to be of greater importance: (1) nature and degree of control the worker has over their work, and (2) worker’s opportunity for profit or loss. Three less probative factors included: (3) amount of skill required for the work, (4) degree of permanence of the working relationship, and (5) whether the work is part of an integrated unit of production.

The Biden administration promptly published rules to delay and withdraw this Trump-era rule. However, a federal district court found that the Biden administration failed to follow proper procedures and concluded that the Trump rule became effective March 8, 2021. The DOL appealed to the Fifth Circuit, but asked proceedings to be paused while it withdrew the Trump rule and issued a new rule. 

DOL’s Proposed New Rule

The DOL’s proposed new rule seeks to return to a totality-of-the-circumstances approach, where 7 factors are analyzed without given a predetermined weight: (1) worker’s opportunity for profit or loss, (2) investments by the worker or employer, (3) degree of permanence of the working relationship, (4) nature and degree of control the worker has over their work, (5) extent to which work performed is integral to employer’s business, (6) skill and initiative of the worker, and (7) additional factors that are relevant in determining whether the worker is economically dependent on the employer.

On June 9, 2023, the Fifth Circuit granted the DOL’s request to suspend proceedings in the case for 120 days while it considers whether to adopt the rule. The DOL has until October 7, 2023 to finalize the rule or continue with its appeal. However, the more recently published Spring Regulatory Agenda indicates an anticipated rule release to be August 2023.

It is unclear which timeline will ultimately prevail, but workers and employers should stay informed and monitor updates from the DOL.

School’s out! Good news for educational support professionals! Minnesota has amended its unemployment insurance law for education support professionals that work in a non-instructional position (i.e., it does not apply to teachers). Effective May 28, 2023, school employees such as bus drivers, food services staff, paraprofessionals, and administrative workers, are now eligible to apply to receive unemployment insurance during the summer months (so long as there is a “reasonable assurance they will be employed the next school year). Any employee in a non-instructional capacity may use wages earned from school employment into the calculation of their weekly benefit amount – even if they are returning to the same or similar job during the next school term.

A question I have received a lot is whether the payment of wages during the summer would prevent receipt of unemployment. The answer is NO. Qualifying individuals that have their salary spread out through the entire year are still eligible for unemployment during the summer when they are not working. MN Unemployment Insurance has provided guidance on its website here.