On March 23, 2018, President Trump signed into law the Consolidated Appropriations Act. As you may remember, earlier this year the U.S. Department of Labor (DOL) sought comments related to rescinding portions of the 2011 Obama Administration’s ban on tip-sharing arrangements (see my earlier blog here). However, the Act eliminated the issue before the
Minneapolis Minimum Wage Ordinance Survives Another Challenge – “In Harmony” with the Minnesota Fair Labor Standards Act
As I briefly mentioned in my last post on the Minneapolis minimum wage increase, a Hennepin County District Court denied Graco Inc., the Chamber of Commerce, and two other business groups’ request for a temporary injunction. While the business groups dropped out of the lawsuit after the court denied the temporary injunction, Graco continued the
What Is A “Workweek” Anyway?!
Here is a hint – it is NOT Monday – Friday. Believe it or not, as frequently as this term is used, it is not often use properly. A workweek (or work week or work-week) is actually defined by the Minnesota Fair Labor Standards Act (MnFLSA) and Fair Labor Standards Act (FLSA). Accordingly, employers should
MN Supreme Court to Review Burt v Rackner Opinion That Created A New Wrongful Discharge Action
Hope is on the horizon for Minnesota restaurants! On September 20, it was announced that the Minnesota Supreme Court will hear the appeal from the novel decision, Burt v. Rackner, Inc. d/b/a Bunny’s Bar & Grill (MN App. June 27, 2016). As I wrote about on August 4, 2016, the plaintiff, Todd Burt, was
Small Minnesota Employers & Overtime = 40 or 48 Hours?
With all the press about the December 1, 2017 overtime changes, I’ve spoken to a few small employers recently that didn’t even consider the fact that the federal Fair Labor Standards Act may not apply to their business. So, I wanted to take a step back and explain how this works. First, I should caveat
MN Court of Appeals Decides Employees May Sue For Lost Future Wages When Terminated For Not Sharing Tips
Unless you’ve been sleeping for the past decade, you know that Minnesota is an at-will employment state. Thus, either an employee, or an employer, may terminate the employee’s employment at any time, with or without notice. But what happens if an employee is terminated for not sharing tips with other employees? Despite not losing tips
Minneapolis Sick and Safe Time Ordinance Approved – Snow Days Covered
On May 27, 2016, the Minneapolis City Council unanimously approved the Minneapolis Sick and Safe Time Ordinance, Title 2, Chapter 40 – Workplace Regulations. The final Ordinance mandates unpaid sick and safe leave for employers with 1 to 5 employees, and paid sick and safe leave for employers with 6 or more employees. Notably, the final amendment includes not only the use for sick and safe care, but also school snow days.
Below is a quick overview of what the ordinance requires, who it applies to, what burdens employers have, and the implications of a violation. However, time will only tell how this plays out in reality.
What Does the Minneapolis Sick and Safe Time Ordinance Require?
The Ordinance, effective July 1, 2017, requires employers to provide employees with paid/unpaid sick and safe time. New employers (with 1 or more employees), will have 12 months to provide unpaid time off. After 12 months, new employers will be subject to the Ordinance in its totality (this 12 month delay will only be allowed for 5 years from the enactment).
Employees working in Minneapolis will accrue sick and safe time unpaid leave at the rate of 1 hour for every 30 worked, up to an annual cap of 48 hours (either calendar or fiscal year). Exempt (salaried) employees are deemed to work 40 hours each week unless their normal workweek is less than 40 hours. Employees must be allowed to use sick and safe time after 90 calendar days of employment. Employers must permit an employee to carry over at least 80 hours of accrued but unused sick and safe time into the following year.
Additionally, sick and safe leave time need not be paid this time out at termination. Employees must be able to use the leave in the same increment of time consistent with current payroll practices and existing employer policies (but no more than 4 hours). They must be compensated at the same hourly rate with the same benefits (except they are not entitled to lost tips or commissions and compensation is only required for the hours the employee was scheduled to work).
Who Is An “Employer” and “Employee” Under the Ordinance?
Does this Ordinance affect your business based in Eden Prairie or Alexandria? It depends on whether you are a covered employer, defined below. The Ordinance defines several terms with specificity, but here it is in a nutshell:
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Don’t Trim Off Too Much! Handling Commissions & Minimum Wage
I got asked a great question the other day by a colleague that made me think a bit, so I thought, what a perfect topic for a blog. So, here’s the question that started it all: Can a Minnesota employer in the service industry pay an employee the greater of: (a) minimum wage for each hour worked; or (b) commissions earned for services rendered during an employee’s shift? Her questioning this practice stems from the thought that the employer is affirmatively stating that, for some hours, $0 is attributed to certain time at work. In this example, let’s use a small employer, a hair salon. The employee is scheduled to work from 8:00 a.m. to 5:00 p.m. and has 3 clients on the books (with 8 total slots for the day). The rest of the day, the employee relies on walk-ins to fill her schedule, does other tasks around the salon to keep busy, or just waits around waiting for someone to walk-in. Some days she may leave to run errands. The employee earns $15/hr. commissions for each hour-long appointment, but credits $0/hr. for time without an appointment.
How Can the Employee Be Paid?
Can the employer pay the employee minimum wage for 8 hours of work ($7.25 x 8 = $58)? Yes, but I know you know that. That’s the easy one. Can the employer just pay the employee for the 3 clients the employee serviced if the employee stayed all 8 hours? No – I know you know that too. As 3 x $15 = $45, the minimum wage requirements have not been met and the employer would have to pay the additional $13 ($58-$45) to get the employee up to minimum wage for all hours worked. A Minnesota employer must pay for all hours worked, including waiting time, on-call time, training time, and any other time the employee is restricted to the employer’s premises. Minn. Rules 5200.0120. If the employee is free to leave during nonscheduled time (but must be able to receive a call to come back for an appointment), the employee is no longer working and need not be paid – so long as there are no restrictions that the employee remain close to the premises.
Can the employer just pay the employee commissions earned for services rendered during the shift?
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Making Deductions and Adjustments to Commissions
In an earlier post regarding payroll deductions, I promised to write about the unique aspects of deductions from a sales employee’s commissions. This topic is always ripe for discussion. Why? Well, good salespersons will make great commissions! They are winners. They don’t like to lose sales – or money. They are usually very aware of what they have sold and the related commission. Accordingly, when they see a deduction on a commission, or a commission less than they expected, naturally their radar goes on high alert. I can’t blame them, this is their bread and butter after all – and this is what drives them; these are folks generally highly motivated by monetary compensation – which is the whole point. They bring in revenue for the business and want to be rewarded accordingly.
There are actually two different aspects to salespersons commissions – with an extremely important distinction between the two. First, when can an employer deduct from commissions owed, due to errors or omissions? Second, when can an employer reduce a salesperson’s commission not due to the salesperson’s errors or omissions? Hopefully I can help clarify. However, for purposes of this post, I should specify that this is all about employed salespersons – not independent contractors. Commission salespersons who are independent contractors have their own prompt payment statute and that would throw us off track here.
Making Deductions From Commissions Due to Errors or Omissions
As I mentioned before, Minnesota law (Minn. Stat. 181.79) treats sales commissions differently when it comes to allowing wage deductions. Indeed, the wage deduction requirements for faulty workmanship, loss, theft, or damages do not apply when an employer has rules related to commissioned salespeople, when the rules are used “for purposes of discipline, by fine or otherwise, in cases where errors or omissions in performing their duties exist”.
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The Overtime Bank of America Does Not Exist
Fun fact – the Fair Labor Standards Act (FLSA) does not allow the “banking” of overtime hours (or “comp time”) from one workweek to the next. This is when an employee works overtime hours one week and then instead of getting paid the overtime that week, takes extra time off the following week.