As 2018 comes to a close, it is a great time for employers to address lingering issues that have been on the back burner and start “fresh” in the new year. A new year is a great time to roll out changes for both administration purposes and for employees; new year, new policies. Here are some items you may want to consider auditing internally and bringing up to current if need be for a January 1, 2019 revision date:

  • Wage disparities (male/female/minority)
  • Job classification (exempt, non-exempt, independent contractor)
  • Job descriptions (should reflect what the employee actually does – jobs morph over time)
  • Incentive compensation / bonus plans (the far majority I review need significant modification as they are written by sales folks and not HR/legal and thus leave out at-will language, deductions, prepayments, “earned” versus “accrued” and payout terms with absences, discipline, termination, etc.)
  • Minimum wage increases (State, Minneapolis, St. Paul)
  • Safe and Sick Leave Act ordinances (Minneapolis, St. Paul, Duluth)
  • Changing paid time off methods / calculations (from up front to accrual, etc. – and in compliance with any applicable ordinance)
  • Overtime (calculated weekly, all hours paid, no flex time between workweeks) – also, the new federal overtime rule is expected to be published in March 2019 – stay tuned on that (I would only be guessing as to how the DOL is going to roll it out).
  • Recordkeeping (best practices being followed; exempt/salaried employees can be made to record their time – which is very good to have if their classification is challenged in the future)
  • Wage deduction / loans / tuition reimbursement policies

On November 14, 2018, the St. Paul City Council passed an ordinance implementing a minimum wage of $15 for employees who work within the geographic boundaries of St. Paul. Employees based outside of St. Paul, but who occasionally perform work in St. Paul, are also covered if, “over the course of one week [the employee] performs at least two hours of work for an employer within the geographic boundaries of the city.” This means that the Ordinance (for now) appears to apply to employers both located within St. Paul, and those outside of St. Paul with employees who work two or more hours in a week in St. Paul. I cannot imagine that this will not be challenged, however, similar to the challenge made (and won) in Minneapolis by non-Minneapolis employers with respect to the scope of its Sick and Safe Time Act Ordinance.

Employers are defined in the Ordinance as “Macro” (more than 10,000 employees); “Large” (more than 100); “Small” (100 or less); and “Micro” (fewer than 5). The minimum wage hike begins January 1, 2020 for Macro businesses at $12.50 and ends up at $15 by July 1, 2022, with automatic increases thereafter. All other size employers begin the first increase on July 1, 2020. Large businesses start at $11.50 and end up at $15 by July 1, 2023.  Small businesses start at $10 and end up at $15 by July 1, 2026. Micro businesses start at $9.25 and end up at $15 by July 1, 2028. Once an employer has hit the $15 minimum wage, thereafter the minimum wage is automatically increased to whatever the City Minimum Wage rate is that applies to the City of Saint Paul (the adjusted minimum wage rates will be announced September 1 of each year). For purposes of determining company size, all employees, including temporaries, are included. Franchises with more than 10 locations nationally are based on all locations owned and operated by a single franchisee.

A few other items to note – there is no exemption for tipped employees.  Thus, like with our State minimum wage, employers cannot apply a tip credit to meet the minimum wage requirements. There are exceptions for youth wages, city-approved youth-focused training or apprentice program, persons with disabilities, extended employment program workers, independent contractors, and others. Finally, like Minneapolis, St. Paul will prepare a notice for employers to use, as well as accompanying regulations for the finer details…and likely a flashy website to make it easy for employees to learn their rights and file complaints.

Quick reminder – on January 1, 2019, Minnesota’s minimum wage will increase to $9.86 per hour for large employers, and $8.04 an hour for all others (small employers, training wage rate and youth wage rate).  Employers located in Minneapolis should already be paying $10.25 per hour for small businesses and $11.25 for large (more than 100) businesses.  Remember, the higher rate applies if you are a Minneapolis employer; those rates increase every July 1.  As for St Paul employers, the City Council announced a new minimum wage ordinance on October 9, 2018, which it hopes to pass into law before the end of the year (more on that later in a future post).

 

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.

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.

St PaulAs predicted in my earlier post, on September 7, 2016, St. Paul joined Minneapolis in unanimously approving a sick and safe leave ordinance – with a very big difference. Unlike Minneapolis, the St. Paul ordinance mandates paid leave be provided by all sizes of employers. For purposes of the St. Paul Ordinance, an “employer” is a person or entity that employs 1 or more employees – even if that person is part-time or a temporary employee. As of July 1, 2017, employees working in the city for a large employer “shall” be provided paid time off for sick leave, safe leave, and…snow days.

What Does the St. Paul Sick and Safe Time Ordinance Require?

The St. Paul Ordinance is effective July 1, 2017 for large employers (those with 24 or more employees), and January 1, 2018 for smaller employers. Similar to Minneapolis, employees working in St. Paul will accrue sick and safe time leave at the rate of 1 hour for every 30 worked, up to an annual cap of 48 hours (either calendar or fiscal year). 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.

Accrued but unused sick and safe time does not need to be paid 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?

The Ordinance defines these terms with specificity, but here it is in a nutshell:

  • An “Employer” is a non-government person/entity employing one (1) or more employees.
  • An “Employee” is any individual employed by an Employer (including temps and part-time) that performs work for the Employer within St. Paul for at least 80 hours in a year.  An Employee is not an independent contractor.
  • Family Members” are children (step, adopted, foster, adult); spouse; sibling; parent (step and in-laws); grandparents; grandchildren; guardian (ward, or member of household); registered domestic partner; and “any individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship”

Unlike Minneapolis’ ordinance, this Ordinance does not specifically allow employers operating under a collective bargaining agreement to develop alternate means of meeting the goals of the Ordinance. In fact, the St. Paul ordinance sates that, “Nothing in this chapter shall be construed as diminishing the obligation of an employer to comply with any contract, collective bargaining agreement, employment benefit plan, or other agreement providing more generous sick and safe time to an employee than required herein.”

Construction Company Opt-Out

Also like Minneapolis, construction companies may opt-out of this Ordinance if the employees are paid at least the Minnesota prevailing wage (Minn. Stat. 177.42) or the rates set forth in a registered apprenticeship agreement. Such employers shall be deemed in compliance for those employees who receive either prevailing wage rate or the apprenticeship rate – regardless of whether the employees are working on a private or public project.

What If An Employer Already Offers Paid Time Off?

Employers may certainly have more generous sick and safe time policies – but no lesser. Employers do not need to offer additional paid time off to employees if they already offer the same amount of PTO to employees that “may be used for the same purposes and under the same conditions.” In other words, the PTO policy must meet these minimum standards of accrual, use, recordkeeping, notices, etc.

Further, the Ordinance does not prohibit employers from having policies allowing donation of this paid leave to other employees – so an employee may accrue the time but not “use” it, instead “donating” it to another (seems to me that this goes against the whole purpose of the ordinance for the benefit of that employee). Employers may also advance sick and safe leave to an employee prior to accrual.

What Can Accrued Sick and Safe Time Be Used For?

Like Minneapolis, after 90 calendar days of employment, an employee may use sick and safe time for:

  • Mental or physical illness, injury, or health condition (theirs or family members).
  • Medical diagnosis, care, or treatment of a mental or physical illness, injury or health condition (theirs or family member).
  • Preventative medical or heath care (theirs or family member).
  • Absence due to domestic abuse, sexual assault, or stalking (so long as the absence is to seek related medical attention, victim services, counseling, relocation or legal action).
  • Closure of the employer’s business by a public official due to public health emergency or an infectious or hazardous situation.
  • Accommodation of need to care for child whose school or daycare has been closed by a public official due to public health or emergency situation.
  • Accommodation for need to care for family member whose school or place of care has been closed due to inclement weather, loss of power, loss of heating, loss of water, or other unexpected closure.

Unlike Minneapolis, the St. Paul ordinance does not carve out that a health care provider may only use sick and safe time when the provider has been scheduled to work (this does not include when the provider calls in and requests a shift within 24 hours or for on-call shifts – unless asked to remain on the premises during the on-call shifts).

What Can Employers Require of Employees?

The St. Paul ordinance requires an employee to do far less to obtain this new benefit.  Whereas a Minneapolis employer may require an employee to provide up to 7 days’ advance notice of foreseeable leave (such as doctor appointments) if the employee intends to use sick and safe time leave and notice of the need to use such leave “as soon as practicable” when it is unforeseeable (such as domestic violence), St. Paul only states that:

Earned sick and safe time shall be provided upon the request of an employee.”

Like Minneapolis, St. Paul employers may require “reasonable” documentation that the leave is covered for absences of 3 or more days. For all leave, “when possible, the request shall include the expected duration of the absence.” Further, “An employer may require an employee to comply with the employer’s usual and customary notice and procedural requirements for absences or for requesting leave, provided that such requirements do not interfere with the purposes for which the leave is needed.” In other words… “sick and safe time shall be provided upon the request of an employee”.

Notices Required at Workplace, Employee Handbook & Upon Request

Employers must post a notice that addresses the following: “Employees are entitled to earned sick and safe time; the amount of earned sick and safe time and the terms of its use guaranteed under this chapter; that retaliation against employees who request or use earned sick and safe time is prohibited; and that each employee has the right to file a complaint or bring a civil action if earned sick and safe time as required by this section is denied by the employer or the employee is retaliated against for requesting or taking earned sick and safe time.” The St. Paul Department of Human Rights and Equal Economic Opportunity (HREEO) will be creating a model notice for employers to use, which must be displayed in a “conspicuous and accessible place”.

Further, if you have an employee handbook – which I strongly advocate every employer should – the notice must be included in the handbook. Also, upon request, the employee must be provided their then-current hours of sick and safe leave he or she has earned, and how much has been used. This may be provided on a pay stub or other online system for employees to access their own information.

Recordkeeping, Confidentiality & No Retaliation

Employers must keep records of hours worked and sick and safe time taken for 3 years. HREEO may have access to the records to monitor compliance, as well as the employee. Similar to Minneapolis, if an employee is transferred to a location outside of St. Paul by the same employer, and the employer doesn’t have sick and safe leave outside the city, the employer has to keep the employee’s accrued time on the books for 3 years. If that employee returns to work in the city within 3 years, the employee is entitled to all previously accrued time not used. Thus, employers that have employees perform work in Minneapolis and St. Paul should consider providing this leave outside of the city so that there is only one bucket of paid leave for all work, wherever performed.

Further, if an employee is terminated but thereafter returns to the same employer within ninety (90) days, his or her sick and safe leave must be reinstated and the employee may use it at the commencement of reemployment (no 90 day wait). In the case of mergers and acquisitions of businesses where the employees remain, the employees accrued time remains intact (no 90 day wait).

Not surprising, any health or medical information collected as a result of the employee’s use of sick and safe time must be treated as confidential.  As with any laws providing employee rights, retaliation for any employee actions under this Ordinance must be prohibited.

What Happens If An Employer Violates the Ordinance?

Any person may report a suspected violation. The HREEO Director may decide to investigate and/or pursue a violation. Note, the “relief and administrative fines” are different than Minneapolis (and the procedure a little less clear at this point):

  • Reinstatement and back pay.
  • For the first violation – payment to the employee of the time unlawfully withheld x2 or $250, whichever is greater, as liquidated damages.
  • For a second violation against the same employee – an additional  fine payable to the City of St. Paul, up to $1,000.
  • For a third violation against the same employee – ad additional penalty of up to $1,000 to the employee, or an amount equal to 10% of the total amount of unpaid wages, whichever is greater.
  • Administrative penalty of up to $1,000 payable to the employee for each violation.
  • Administrative fine of up to $1,000.

An employee, former employee or employer may appeal any violation of this Ordinance within 21 days from the determination. Following the appeal process, the violation determination becomes final. If an employer does not comply the City of St. Paul may initiate a civil action in Court against the employer and, upon prevailing, “shall be entitled to such legal or equitable relief as may be appropriate to remedy the violation.” Further, an employee does have a private right of action to sue the employer directly in district court if retaliated against for exercising rights under the Ordinance.

What’s Next?

The HREEO has to create the notice for employers.  It’s expected that the HREEO will also adopt guidelines and regulations for its implementation. As to the bigger picture, as predicted in my blog about Minneapolis’ ordinance, I suspect Duluth will be next as on July 18, 2016, the Duluth City Council approved a resolution establishing an earned sick and safe time taskforce.