We are less than a month away from the 1-year anniversary of when the Minneapolis and Saint Paul sick and safe time ordinances went into effect. Both cities have recently released a tracking spreadsheet available to employers to compute and track accrual and use of sick and safe time hours. Minneapolis employers can use this link and St. Paul employers can use this link to access the spreadsheets.  Minneapolis also updated their notice poster to include the minimum wage increase schedule. Employers should make sure to update their handbooks and workplace posters with the current version (found here).

For those of you keeping track of the Minneapolis ordinance, as I discussed most recently here, the Minneapolis ordinance has been the center of a legal dispute between business groups and the City of Minneapolis. However, we may finally have a resolution to the question I am most frequently asked, whether an employer must comply with the ordinance if they are not located in Minneapolis, or if they are located in Minneapolis, but do not have employees who work in Minneapolis. On May 9, 2018, the Minnesota District Court held that state law does not preempt the ordinance, but the amended ordinance still exceeds Minneapolis’ territorial authority due to the record keeping and administrative obligations placed on employers.

As a result of the court decision, businesses located outside of the geographic bounds of Minneapolis do not need to comply with the ordinance. If you are unsure of whether your company is located within the geographic bounds check the city ward map found at here.

As expected, on May 29, 2018, the Duluth City Council voted to pass the Earned Sick and Safe Time Ordinance (“Ordinance”). The Ordinance currently mandates that employers (wherever located), with 5 or more employees, provide paid sick and safe leave to employees starting January 1, 2020. That being said, given the recent ruling on the Minneapolis Ordinance, I would not be surprised if Duluth’s Ordinance is challenged as well, and eventually limited to employers with a business in Duluth.

What Does the Duluth Earned Sick and Safe Time Ordinance Require?

Effective January 1, 2020 employers are required to provide employees with 1 hour of earned sick and safe time for every 50 hours worked, up to 64 hours per year. However, the Ordinance only allows employees to use up to 40 hours of accrued but unused sick and safe time each year. Alternatively, employers can comply with the Ordinance by front-loading at least 40 hours of earned sick and safe time following the initial 90 days of employment each year and again at the beginning of each subsequent year.

Accrual begins at the commencement of employment, or for current employees, January 1, 2020. If an employee has unused accrued sick and safe time at the end of the year, the employee may carry over 40 hours of accrued but unused sick and safe time into the next year. Employers are not required to payout the accrued but unused sick and safe time hours upon termination or other separation from employment (make sure your handbook is clear especially if you have different types of time off such as vacation, sick, etc.).

Employers must compensate employees at their standard hourly rate, or an equivalent rate for salaried employees. The Ordinance does not require compensation for lost tips or commissions.

Who Is An “Employer” and “Employee” Under the Ordinance?

All individuals, corporations, partnerships, associations, nonprofit organizations with 5 or more Employees (as defined below), are considered an “employer” under the Ordinance. The number of employees is calculated based on the average number of employees per week in the previous year. Temporary employees from a staffing agency are considered an employee of the staffing agency under the Ordinance. Notably, in an attempt to avoid challenges to the Ordinance similar to the ones that arose surrounding the Minneapolis Sick and Safe Time Ordinance, the Duluth Ordinance defines an “employee” as:

  1. 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
  2. “is based in the city of Duluth and spends a substantial part of his or her time working in the city and does not spend more than 50 percent of their work-time in a 12-month period in any other particular place.”

The Ordinance does not cover independent contractors, student interns, or seasonal employees.

Construction Company Opt-Out

Similar to the Minneapolis Ordinance, construction companies may opt to satisfy the requirements of the Ordinance by paying at least the prevailing wage rate (Minn. Stat. 177.42), or the rates set for in a registered apprenticeship agreement.

What If An Employer Already Offers Paid Time Off?

Continue Reading Duluth Passes Sick & Safe Time Ordinance

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.

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).

On March 6, 2018, the U.S. Department of Labor announced a new nationwide pilot program called “PAID” – Payroll Audit Independent Determination. For an initial 6 month trial period, employers can self-audit their wage and hour practices.  If violations are found, an employer can voluntarily report it to the DOL’s Wage and Hour Division (WHD), in hopes of resolving the potential violations without liquidated damages penalties (usually an amount equal to the back wages due) and with a release of claims (as to the violations only).

Why? The DOL is hopeful that employers who discover violations will come forward and pay the employee 100% due promptly, in exchange for a settlement waiver and no liquidated damages, lawsuit, attorneys’ fees, etc. In turn, employees are paid faster than in a lawsuit or DOL investigation, and 100% of what is allegedly due.

Who is eligible? All employers subject to the FLSA. The program cannot be used for any pending investigation, arbitration, lawsuit, or threatened lawsuit (with an attorney involved). Also repeat offenders are ineligible.

What’s the catch? The DOL notes that it is an employee’s right to not accept the back wages, and not release any private right of action against the employer (and they cannot be retaliated against for such refusal). Further, unlike a typical litigation settlement release, the release must be narrowly tailored to only the identified violations (i.e. overtime, minimum wage, off-the-clock, misclassification, recordkeeping (for every violation)), and time period for which the back wages are paid. The WHD can still conduct future investigations of the employer, and employers cannot use the program to repeatedly resolve the same violations. So, in reality, an employer could notify 100 employees that they were paid incorrectly, and 90 accept and 10 reject and file a lawsuit seeking liquidated damages and attorneys’ fees (since they were just told by the employer that they “stole” their wages).

That being said, an employer could, as always, pay the employee the alleged back wages due in a supplemental check, and thus cut off their alleged damages as to that portion (which makes it a lot less attractive as a case to a plaintiff’s attorney), but they will not get a release. Sure, the employee cannot be forced to cash the check, but that would be a remote occurrence. Of course, the employee could still sue, stating they are entitled to interest or liquidated damages, etc., but such suit would likely not sit as well before a court without additional claims (i.e. you were paid what you were due, why are you taking up our limited judicial resources…).

How does the process work? Employers wanting to participate must review the program information and compliance assistance materials that will be available on the PAID website.  The employer then conducts the audit and identifies the potential violations, affected employees, time frame, and back wages. Next, the employer contacts WHD to discuss the issues, and the WHD determines if it will allow the employer to participate in the program. If allowed, the employer must then submit information such as the backup calculations, scope of violations for release, certification that this is all in good faith and the materials have been reviewed, and that practices will be adjusted to avoid the same violation in the future. The WHD finally issues a summary of unpaid wages (this is likely the same form they use today except no liquidated damages will be assessed).  KEY – once this process has been completed, the employer must issue the back wages by the end of the next full pay period.  Thus, employers should be careful to not begin/end the process until ready and able to pay.

In reality…while some are calling it a “get out of jail free card” for employers, I really don’t see it. An employer who discovers an error after a good faith internal investigation can chose to report itself to the DOL. Now, they are on the DOL’s radar with an admission that they believe they have paid their employees in error. The DOL can reject participation in the program and conduct a full investigation. If the DOL allows participation, all affected employees will be notified of the error (who may not have otherwise known), and can chose to opt-out and file a private lawsuit against the employer that just came clean. Further, neither relieves the employer of a future DOL investigation. Get out of jail free card? I think not. More like playing a game of Risk.

In August 2017, the EEOC sued Estee Lauder Companies, Inc. based on a parental leave program that provided employees with paid leave to bond with a new child, as well as flexible return-to-work benefits. Mothers were given 6 additional weeks of paid bonding leave, while fathers were only given 2 weeks, and were not provided the flexible return-to-work benefits. The EEOC alleged such a policy violated Title VII and the Equal Pay Act of 1963, prohibiting discrimination in pay or benefits based on sex. It was recently announced that the lawsuit has been settled, while the terms have yet to be disclosed.

What does this mean for employers? While bonding leave or parental leave policies that go above and beyond any legal requirement are more common and certainly routed in good intentions, you should consider taking another look at any such policy that provides different benefits based on gender.

 

As many employers are reviewing handbooks and policies for revisions for the new year, Employers without a business located in Minneapolis (but who have workers working in Minneapolis) should note that you do not yet need to comply with the City of Minneapolis Sick and Safe Leave Ordinance. On September 18, 2017, the Minnesota Court of Appeals upheld the temporary injunction as to non-Minneapolis resident employers. Thus, while Minneapolis employers must continue to comply with the Minneapolis Sick and Safe Leave Ordinance, non-Minneapolis resident employers are off the hook for now (keep in mind it is just a temporary injunction). That being said, employers can certainly chose to revise existing policies to comply with the ordinance’s requirements, but do not need to (yet – maybe someday, or maybe never). We will have to wait until the final Court order when it is heard on the merits.

It’s been a month since the City of Minneapolis Sick and Safe Time Ordinance has gone into effect (July 1, 2017), and thus, employers based in Minneapolis with workers in Minneapolis should have already modified their existing paid time off (PTO) policy, or created a new sick and safe time policy. The most frequent question I’ve been getting recently is regarding whether an employer must comply if they are not located in Minneapolis, or if they are located in Minneapolis, but employees do not work in Minneapolis. The confusion is quite understandable, as the answer is not found in the ordinance, but the result of a temporary injunction issued in a Hennepin County District Court case (Minnesota Chamber of Commerce et al v. City of Minneapolis, Court File No. 27-cv-16-15051).

The City of Minneapolis is currently not enforcing its ordinance against employers who are not physically located in Minneapolis, or employers who are located in Minneapolis but whose employees do not physically work in Minneapolis. The City of Minneapolis Sick and Safe Time Ordinance is currently only being enforced against Minneapolis-based employers with employees performing more than 80 hours of work a year in the city limits of Minneapolis (which does not include pass-thru drivers). However, keep in mind that this is only a temporary pause in enforcement. On January 26, 2017, the City appealed the decision to the Minnesota Court of Appeals, and has noted in the rules that, “Once a final order has been issued through the court process, the City may amend these rules to provide additional guidance.”

Oral arguments were heard on July 11, 2017.  Accordingly, as I find myself saying way too much these days, we wait.  Employers not located in Minneapolis but with workers in Minneapolis not wanting to wait have two options: (1) continue business as usual;  or (2) amend your PTO or vacation policy to meet the ordinance requirements, even though they are not being enforced. Recall you may always offer employees more than they are entitled to, just not less.

Joining its twin city, St. Paul’s Earned Sick and Safe Time (EEST) Ordinance is now in effect. As of July 1, 2017, employers located in St. Paul with 24 or more employees must provide 1 hour of EEST for every 30 hours worked, commencing on their start date, up to 48 hours per year (or more). Of course, it can’t be this simple! A complete “how to” can be found on St. Paul’s website here.  In addition, the latest Rules can be found here, updated June 30, 2017.