Minnesota Labor & Employment Law Blog

Minnesota Labor & Employment Law Blog

Serving the Legal Needs of Minnesota Employers

New Overtime Salary Test for Exempt Employees Coming December 1, 2016

Posted in Department of Labor, FLSA, Informational, Wages

US%20Department%20of%20Labor%20logoThe final overtime regulations on exempt employees were issued by the Department of Labor last week, raising the salary test from $23,660 annually to $47,476.  It is estimated this will result in an additional 4.2 million more employees qualifying for overtime.

The new salary threshold has sparked controversy and claims by both labor and management suggesting the sky was falling.  Others have predicted the true impact has yet to be determined.  No one seems to dispute the changes were long overdue.  The previous salary test has not changed in over 10 years.  The good news is they built in an automatic update to occur every three years based on wage growth in the lowest-income census region, which is currently in the south.

The DOL has provided guidance for non-profits, public sector, and private sector employers to assist in applying the new salary test.  In general the DOL suggested options for addressing the new regulation including: 1) limit exempt employee hours to 40 hours per week, 2) pay the employees time and one half for work over 40 hours, or 3) raise the employee’s salary to exceed the new salary threshold..

All employers should review the salaries of their exempt employees and determine the impact of the new DOL regulations now, so they can be ready for implementation December 1, 2016.  

Per Diem Payments Are Not Wages Under Minn. Stat. 181.13

Posted in Business Practices, Minnesota Court of Appeals, Wages

Earlier this year, the Minnesota Court of Appeals held a per diem payment does not fall within the definition of wages under Minnesota Statute § 181.13, resulting in the reversal of a penalty against the employer issued for non-payment of wages.

In Schreader v. D, C & D Enterprises, LLC, Case #: A15-1140 (Minn. Ct. App. 2016), Ms. Schreader was terminated from her employment.  On the day of her termination she e-mailed DC & D Enterprises LLC and notified them she had forgotten to add five days of per diem to her last time sheet.  She received a per diem rate of $30 for each day she was out of town for work.  She also requested payment of ten hours of paid time off and her full wages to the date of her termination.  She received payment for her full wages, but was not paid the per diem rate for 5 days or the ten hours of paid time off.  Ms. Schreader sued and was awarded judgment of $3,109.62.  $2,884.62 of the $3,109.62 was the penalty for failure to make the per diem payments.  DC & D Enterprises appealed the Court’s imposition of the 15 day wage penalty.

Minnesota Statute § 181.13 provides, “…If the employee’s earned wages and commissions are not paid within 24 hours after demand… the employer is in default. In addition to recovering the wages and commissions actually earned and unpaid, the discharged employee may charge and collect a penalty equal to the amount of the employee’s average daily earnings at the employee’s regular rate of pay or the rate required by law, whichever rate is greater, for each day up to 15 days, that the employer is in default, until full payment or other settlement…”

According to the Court of Appeals when a statute provides for a penalty, it must be strictly construed.  Therefore, the plain meaning of the words “per diem” and “wages” prevail.  The common definition of “per diem” is a daily allowance used to cover expenses.  The Court relied on the common definition of wages when it determined the per diem payments are not considered wages within the meaning of Minn. Stat. 181.13.

Minnesota employers should refer to Minnesota Statute 181.13 so they don’t run the risk of having to pay penalties in regards to compensating a terminated employee.  Don’t forget to pay them within 24 hours of a request from the terminated employee.

Hiring an Employee: The Most Important Decision an Employer Will Make

Posted in Business Practices, Hiring Practices

Last week I spoke at the “Professional E.D.G.E” morning business event co-sponsored by the White Bear Area Chamber of Commerce and the Vadnais Heights Economic Development Corporation.  I spoke on the importance of good hiring practices and in particular, hiring employees for character.

I have blogged about the importance of hiring for character in the past and routinely talk to clients about the importance of good hiring practices.  In fact, I see good hiring as a gift that will keep paying off in rewards to any workplace for years and years.   A poor hiring decision can be costly in terms of potential litigation, morale, low-productivity, and may even lead to retention problems with the exit of many great employees.

If you are still relying on the old standard interview questions “What are your strengths?” and “What are your weaknesses?” STOP immediately!    The Internet is full of websites and blogs that provide answers to these and other standard questions.  You are not gaining any insights about the candidates and most likely are just getting rehashed Google search responses for the most commonly asked interview questions.  Instead, go deeper.  Check out my blog for character questions that will be helpful in vetting candidates.

As always, interview questions should be focused on the skill set necessary for the position being filled.  Employers should keep the focus on the job, and not attempt a fishing expedition into protected waters. 

Wisconsin Supreme Court Holds Continuation of At-Will Employment is Lawful Consideration for a Non-Compete Agreement

Posted in At-Will Employees, Business Practices, Law Updates
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In Minnesota the long-standing rule is that continuation of employment by itself, is insufficient consideration for a non-compete agreement entered into after employment has commenced.  Minnesota employers have always been able to require new employees to enter into non-compete agreements in exchange for starting a job.

The Wisconsin Supreme Court ruled the continuation of at-will employment is lawful consideration for a non-compete agreement entered into with existing employees.  No additional payments, training, promotions or other benefit is necessary.  In Runzheimer International, Ltd. v. Friedlen, 862 N.W.2d 879 (Wis. 2015), the Court only evaluated the existence of consideration, not the adequacy of it.

In that case, the employee, Mr. Friedlen had worked for the company for more than 15 years without a non-compete agreement.  In 2009, as part of a corporate initiative all employees were required to sign agreements containing provisions against disclosure of confidential information, solicitation of customers or competing against Runzheimer after their employment ended for any reason.  Mr. Friedlen was given two weeks to review and consider the agreement.  He was told he would be fired if he didn’t sign it.  Mr. Friedlen eventually signed the agreement and continued working for Runzheimer for over 2 years.  Mr. Friedlen subsequently was hired by a competitor and Runzheimer sought to enforce the non-compete agreement.  The Wisconsin Supreme Court stated, “Runzheimer’s promise was that it would not fire Friedlen at that time and for that reason.  Thus, Runzheimer performed immediately when it forbore its legal right to fire Friedlen at that time.”

The courts in Minnesota have taken the opposite stance, instead ruling that a current employee lacks bargaining power when presented with a non-compete agreement and told to sign it or be terminated.  Under Minnesota law a current employee must receive a real benefit that is directly related to the signing of the non-compete agreement.

If you are a Minnesota-based employer who has employees who live or work in Wisconsin you may want to consider selecting Wisconsin as the governing law for employment agreements with non-compete provisions.    

New – Employer FMLA Guide Available and an Updated FMLA Poster

Posted in FMLA, Uncategorized

FMLA employerguideThe Department of Labor has announced a new FMLA guide designed to help employers through the FMLA process.  “The Guide is organized to correspond to the order of events from an employee’s leave request, to restoration of the employee to the same or equivalent job at the end of the employee’s FMLA leave. It also includes a topical index for ease of use.”  The new employer guide comes almost four years after the DOL published an employee’s guide to the FMLA.

An FMLA covered employer is required to prominently post an FMLA poster, whether or not there are FMLA eligible employees at that location.  A free download of the required poster is available through the DOL.  The DOL is in the process of reworking the poster to make it more reader friendly.  According to the DOL website, the 2013 version of the poster is still acceptable and employers will not be required to use the new version of the poster.  The information has not changed, and the new poster reflects new formatting rather than any substantive changes.

The employer guide is long overdue, and hopefully will help employers as they implement FMLA in their workplaces.

Best Reason Ever to Take Time-Off Work

Posted in Informational
golf hole - free

Employees can be very creative when it comes to reasons to take time off of work.  Of course, there are always legitimate reasons for time off of work, such as a family emergency, illness, family vacation, etc…  But occasionally, the reason an employees gives can make an employer pause and wonder just how legitimate is this request.  For example, today is the first beautiful day of warm spring weather in Minnesota, and suddenly several employees are calling in  with reasons they can’t come to work like, food poisoning, their child is sick, their car won’t start, or is it just spring fever?

Last week, Sammy Schmitz from Wisconsin had the very best reason ever to take time-off of work.  Last weekend was the Masters at Augusta National in Georgia.  My husband is a huge golfer and golf fan, so we are always in tune to what is going on.  Every year the Masters invites a select number of amateur golfers to come and play at the Masters.  Last week, one of those lucky amateurs was Sammy Schmitz.  Mr. Schmitz is a regular guy, with a regular job and a family.  He loves golf and plays when he is able.  Last fall, he qualified to play in the U.S. Mid-Amateur in Florida, with the winner being invited to play at the Masters.  Well, Sammy won!  Not long after he won a trip to the Masters, Mr. Schmitz called his boss to request the week of April 4-8 off because he would be playing at Augusta National.  Not too many employees are able to use playing in the Masters as their reason for taking time off work.  Of course, Mr. Schmitz was approved for his time off, and his boss and his boss’s boss both came to Augusta to cheer him on.

Sammy Schmitz had the best reason ever to take time off work! 

Back-pay Settlement Affects Unemployment Benefits

Posted in Minnesota Court of Appeals, Unemployment
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Ms. Kern worked for the Minneapolis Institute of Arts (MIA) from August 2004 to July 1, 2014.  In 2012, Ms. Kern received a demotion.  Following the demotion she filed a sex-discrimination complaint with the Minnesota Department of Human Rights.  The parties reached a settlement and Ms. Kern was paid $6,000 “to extinguish any liability whatsoever that the MIA has or allegedly has for claimed lost wages.”  The Minnesota Department of Employment and Economic Development (DEED) determined the $6,000 was deductible from any unemployment benefits Ms. Kern was to receive.  Ms. Kern appealed and the Unemployment Law Judge (ULJ) agreed with DEED.  Ms. Kern appealed to the Minnesota Court of Appeals, for a de novo review.

Minnesota Statute § 268.085, Subd. 3 defines, “back pay” as a payment by an employer to an employee or former employee for lost wages.  The Court looked at the plain language of Minnesota Statute § 268.085 and determined the ULJ correctly determined the $6,000 was back pay and covered the period of time immediately following Ms. Kern’s termination of employment.

Most Employers and Employees don’t realize settlements may affect an employee’s unemployment compensation.  Clearly, Ms. Kern was expecting to receive unemployment compensation in addition to any settlement reached with MIA.  However, receipt of unemployment compensation is not automatic or guaranteed for employees.  Employers should know both settlements and severance packages can affect an employee’s unemployment compensation benefits.

Legislature considering paid family and sick leave for Minnesota employees

Posted in At-Will Employees, Benefits, Informational, Law Updates, Legislation

A coalition of Minnesota DFL legislators is proposing a bill that would ensure all employees in Minnesota have paid family and sick leave.  The DFL proposal would establish a state insurance program which would offer employees in Minnesota up to 80% of their pay for up to 12 weeks a year for pregnancy or medical issues.  It would also apply to employees who need leave to care for a sick family member or newborn child.  Under the proposed plan, employers and employees would share the costs for the program.  The program would be mandatory for employers and employees, however, employers who currently have paid family and sick leave policies that match or surpass the proposed state insurance plan would be exempt from the new law.

According to a study conducted by the University of Minnesota almost 136,000 employees would benefit from the program.  It is estimated over $450 million in benefits would be paid out in one year.  The Minnesota Chamber of Commerce although understanding of the program’s goal, objects to the plan because it would take away the flexibility currently available to employers.

Governor Dayton has already proposed a similar program for Minnesota State employees.  California, New Jersey, and Rhode Island all have similar benefits.

This law would be a huge change for Minnesota employers.  For many small employers it could be a financial hardship to require them to contribute to this type of benefit.  I agree with the Minnesota Chamber of Commerce, it is a great idea in concept, but I’m not sure it is the best idea for Minnesota’s small entrepreneurial businesses.

No Shift Differential for Jail Sergeants

Posted in Arbitrations

Recently, I blogged about the basics of interest arbitration and the factors arbitrators consider.  To illustrate my point, I ran across a new interest arbitration decision which cites the very same factors in my blog post.  In Nobles County, Minnesota and Minnesota Teamsters Public & Law Enforcement Employees Union – Local # 320, Arbitrator Miller did a nice job of walking through each of the factors he considered when making his decision to deny shift differential to Jail Sergeants. 

The sole issue at arbitration was whether or not shift differential should be established for the Jail Sergeants and if yes, for what hours and what amount?  This was a brand new benefit the Jail Sergeants were seeking.  Nobles County opposed the inclusion of the new benefit.

Arbitrator Miller found that although Nobles County could afford to pay the new shift differential proposed by the Union, that wasn’t an automatic reason to award the new benefit.  Arbitrator Miller determined none of the County’s other settled bargaining units, including deputies who worked a night shift, received shift differential.  Only four of the eight external comparables offered some type of shift differential, and the amounts varied greatly from the amount requested in Nobles County by Teamsters Local # 320.  Lastly, there was no need to award shift differential as an incentive to attract or maintain Jail Sergeants, because out of the four Jail Sergeants, three had more than 10 years of seniority.

It is a big hurdle for either side to try and obtain a new benefit through interest arbitration.  By doing research you can see how arbitrators are making their decisions, which can  help in negotiations and in preparation for an interest arbitration hearing. 

The Basics of Interest Arbitration

Posted in Arbitrations, Collective Bargaining

The State of Minnesota recognizes that vital services are provided to the public by specific governmental employee groups, and therefore prohibits them from going out on strike.  These employees are considered “essential” and include firefighters, peace officers, public safety dispatchers, correctional facilities guards, confidential, and supervisory employees.  Instead of the right to strike, essential employees are afforded the opportunity to proceed to mediation and interest arbitration to resolve contract disputes over terms and conditions of employment.

Most arbitrators agree interest arbitration is supposed to reflect what the parties would have negotiated, had they been able to reach an agreement on the disputed contract terms.

Factors an interest arbitrator looks at include:

1)      What is the internal pattern? – What did other employees in the workplace receive in wages and benefits?  If all the other employees received a 2% wage increase, and this group is asking for a 4% wage increase, the group asking for 4% will have to justify why they are entitled to a higher wage increase than their fellow employees.

2)      What do external comparisons show? – I’ve blogged in the past about creating a good comparable group.  An arbitrator may look at what are other essential employees in the area received in wages and benefits.  For example, is this group of essential employees far under paid compared with other essential employees in the area, or are they average or over paid in comparison?

3)      What is the Employer’s ability to pay? – Is the Employer able to pay the increase in wages or benefits?  Public employers have an obligation to be fiscally responsible with public funds.  If a public employer can establish an inability to pay an increase in wages or benefits, it might be persuasive for an arbitrator.

4)      Is there a compelling need for a change? – If either party is interested in making a change to a benefit or to contract language, it is necessary to convince the arbitrator there is a compelling reason for the change.  Another argument is to show the arbitrator that an appropriate quid pro quo was offered at bargaining, in exchange for the requested change.

Keeping the factors an arbitrator considers in mind during negotiations and mediation, may help parties reach a contract settlement and perhaps even avoid the need for interest arbitration.