In case, you aren’t aware, the Minnesota minimum wage was adjusted for inflation effective January 1, 2018.  The new large employer minimum wage is $9.65/hour, an increase of $0.15.  Small employer minimum wage went up $0.12 to $7.87/hour.  $7.87/hour is also the new 90-day training wage for employees under age 20 and youth wage for employees under the age of 18.  A “large employer” is defined as any enterprise with an annual gross revenue of $500,000 or more.  “Small employers” are defined as any enterprise with annual gross revenue of less than $500,000.

Minnesota’s minimum wage is higher than the federal minimum wage, so it is important for employers to know that if they have employees who are covered by both federal and state law the employer is required to pay the higher state wage.  Employees must be paid the new minimum wage for all hours worked, whether they are employed part-time or full-time.

The Minnesota Department of Labor and Industry has helpful information to aid employers.

For small business owners, if your business was thriving and growing in 2017, it is important to check your annual gross revenue and see if your status as a “small employer” changed under the minimum wage laws.  If so, your employees may be entitled to a higher minimum wage.    

The Department of Labor (DOL) has been very aggressive in auditing employers over the misclassification of workers as independent contractors, instead of employees.  Properly classifying workers is important for employers to avoid hefty fines, additional taxes, interest, and additional wage and overtime obligations.

The old test focused on the employer’s control over the worker.  Since 2015, the DOL has applied an “economic realities test,” to determine whether the worker is economically dependent on the employer.  The test asks six questions to determine a worker’s proper employment status.  They are:

  1. Is the work to be performed integral to the operation of the business? If the work is integral to the business of the employer, the worker is economically dependent on the employer and therefore considered an employee.
  2. Does the worker’s managerial skills affect their opportunity for profit and loss? This is generally determined by whether or not the worker has the ability to make decisions and use their managerial skill and initiative to impact their profit and loss.
  3. How does the worker’s relative investments in facilities and equipment compare to the employer? Under this test the worker must make an investment and bear some risk of loss in order to be an independent contractor in business for themselves. Examples of investments might include the purchase of a specialized business vehicle, advertising for the business, rented office space for the business, etc.  The investment can’t be minor and needs to be compared to the employer’s investment.
  4. Does the work require special skills and initiative? To qualify as an independent contractor, the worker would need to exhibit independent business judgment. Business judgment must be used in some independent manner which demonstrates initiative.  These may include marketing the business, ordering supplies and equipment for the business etc.
  5. Is the work relationship indefinite? Indefiniteness in the working relationship makes it appear more likely the worker is an employee. Generally, an independent contractor relationship is evidenced by a contract for a limited period of time or a special project.
  6. What is the nature and degree of the employer’s control? Analysis of this factor takes into consideration who sets the amount of and hours of work, who determines how the work is performed, as well as whether the worker is free to work for others and/or hire helpers.

The DOL has specifically stated however, that the fact a worker has incorporated a business and/or is licensed by a state or local government has little bearing on determining the nature of the employment relationship.  Similarly, the mode or time of the payment to the worker is not determinative.

Since the DOL has declared most workers are employees under their broad definition, it is a good time for employers to review their independent contractors, to determine if they in fact are misclassified.  Getting it right will save a lot of time, effort, and money.

The trend is shifting back to employees wanting their own workspace.  This is a shift away from more open work areas with shared desks, community areas, and collaborative workspaces.  Research has shown workers now want their own personal workspace to allow for personal boundaries.

In my career I have worked in many types of office workspaces from a cubicle with high walls and some semblance of privacy, to an open workspace area where everyone could hear you when you were on the phone, and see the clutter on your desk.  My favorite has always been a private office with walls and a door.

For many businesses, workspace layout is a budgetary concern.  It definitely costs more to have individual offices versus shared offices or cubicles. However, employee efficiency may be a factor impacted by the workspace provided.  While an extrovert might have no problem working in an open space where others are constantly around, an introvert might be very uncomfortable in the same environment and not work up to their full potential.  Writer Diane Stafford suggests people who are job hunting should inquire about office layout and desk assignment practices, when making job decisions on where they want to work. 

I understand an open workspace concept was originally thought to foster creativity and the free flow of information. However, those are not the only factors for employers to consider in workspace design.   It is important to also consider the type of work being performed, the personality types of employees, and how to get the best work performance from employees.

Earlier this year, I wrote a blog about a new workplace benefit – student loan debt relief.  Now, it seems employers are again thinking outside the box with respect to employee benefits.  The latest workplace benefits employers are offering include onsite meditation, yoga and other programs that help workers de-stress.  Other unique benefits are cooking classes, standing desks, bringing a pet to work, and free snacks or meals.  All these benefits are in addition to the more traditional benefits of medical and dental insurance, paid vacation, sick time, and retirement accounts.

A recent news article discussed a research study conducted by which found 57% of people said benefits and perks were among their top considerations when accepting a job.  Also, four out of five employees indicated they would like additional benefits over a pay raise.

These new and unique job perks are structured to help employees with work/life balance.  A challenge for employers is finding benefits their employees are interested in.  Older workers or working parents are going to be interested in different benefits than  younger millennials.  As long as employers keep all employees in mind when deciding what benefits to offer, I think they will definitely increase employee job satisfaction.

Last month, Arbitrator Stephen Befort denied the grievance of a Faribault County deputy who claimed the County did not have just cause to terminate his employment.  Deputy Dulac was terminated by the Faribault County Sheriff’s office for misconduct surrounding two different issues.  The first issue involved his off-duty conduct at a bar where he failed to secure evidence of criminal behavior.  The second issue involved him repeatedly pointing his loaded service weapon at other deputies as gunplay.

Arbitrator Befort found the incident at the bar where Deputy Dulac failed to secure custody of some Vicodin pills as evidence of possible criminal behavior warranted discipline but was not substantial enough to warrant discharge.  Arbitrator Befort, then turned his analysis to the second issue involving the pointing of his loaded service weapon at fellow employees.

This is not the first time, Arbitrator Befort has heard a case about gunplay in the workplace.  In 2005, Arbitrator Befort reduced a termination to a 30-day suspension for a deputy in Washington County who was accused of inappropriately pointing his gun at coworkers.  Arbitrator Befort stated in his award, the difference between the Washington County case and the current case was in Washington County there was evidence the supervisors were aware of the conduct, and never told the deputy to stop the behavior.  Additionally, in Washington County there was evidence of a culture of gunplay in the department.  Neither of these factors were present in the Faribault County case.

Arbitrator Befort agreed that Deputy Dulac’s actions of pointing a loaded gun at fellow employees was serious misconduct.  Deputy Dulac admitted he had done this on multiple occasions over the years.  The evidence showed none of the supervisors at the Faribault County Sheriff’s Office were aware of his actions.  During the course of the arbitration hearing, Deputy Dulac testified that two other deputies had pointed their weapons at Deputy Dulac many years before.  The County immediately began an investigation into Deputy Dulac’s claims, and the arbitration hearing was put on hold.  The subsequent investigation concluded that Deputy Dulac’s claims were unfounded.  All eight deputies who were interviewed during the investigation indicated they never observed another deputy, except Deputy Dulac, point a weapon at a colleague.

While most workplaces may not have guns, there may be other dangerous horseplay happening at work.  Arbitrators are not inclined to overlook dangerous working conditions.


The Minnesota Court of Appeals has affirmed two unemployment law judges’ decisions to deny unemployment compensation to individuals terminated for clear policy violations.

In Nolan v. Great River Federal Credit Union, Ms. Nolan was terminated for violating the credit union’s policies which prohibit employees from performing transactions concerning family members’ accounts.  Ms. Nolan testified at the unemployment hearing, her mother called her at work and asked about transferring money from her account.  Ms. Nolan asked another teller to assist in transferring the money, but was advised a hold was on her mother’s account and a transfer couldn’t occur.  Ms. Nolan advised her mother of this.  Ms. Nolan then contacted a collections representative to discuss the hold and electronically accessed her mother’s account information.  Ms. Nolan acknowledged she was familiar with the credit union’s policies indicating, “we are not supposed to help family members in anyway” and are prohibited from doing anything regarding a relative’s account.  The Court of Appeals has stated, “As a general rule, refusing to abide by an employer’s reasonable policies and requests amounts to disqualifying misconduct.”  In this case, Ms. Nolan’s testimony established she violated the policies when she engaged the teller and collections representative on her mother’s behalf.  This knowing disregard for the reasonable policies constitutes employment misconduct and benefits are denied.

In Baker v. Minn. State Supreme Court, Ms. Baker worked as an assistant appellate clerk for the Minnesota Supreme Court and Court of Appeals.  She was hired by the Minnesota Judicial Branch in 1985.  In 1998, the Minnesota Judicial Branch enacted Policy 317 governing the use of internet and technology by employees.  Inappropriate use was defined as “…(1) wagering, betting, selling, (2) commercial activities, e.g. personal for-profit business activities,….”  Employees may access all policies on the employee intranet site, and they also receive e-mail notifications when policies are updated.

In 2014, Ms. Baker’s supervisor, Ms. O’Neill, became concerned with Ms. Baker’s productivity.  Ms. O’Neill has previously seen Ms. Baker using the internet when she was to be working and had warned Ms. Baker about excessive internet use.  Ms. O’Neill then asked the human resources department and IT division to review Ms. Baker’s internet use.  It was discovered Ms. Baker had used the internet during work to access numerous non-work related websites like eBay, Amazon, and PayPal.  Ms. Baker was then discharged for violation of the internet and technology use policy.

Ms. Baker argued she did not commit employment misconduct because she did not know of Policy 317.  During the hearing before the ULJ, Ms. Baker admitted to visiting websites for personal use.  Ms. Baker also acknowledged “I’m sure I probably have used it (intranet site) but I don’t know exactly what is on there or why I went to it.”  The ULJ denied unemployment compensation finding Ms. Baker used the Judicial Branch’s telecommunication system to engage in selling activity and personal business, and spent a significant amount of time on personal websites outside of authorized break times.  The Court of Appeals stated, misconduct need not be deliberate and that Ms. Baker’s argument she did not know of Policy 317 was unpersuasive given she had received approximately ten verbal warnings about excessive internet use.  The Court of Appeals affirmed the denial of unemployment benefits.

A couple of points to consider:

1)      Employers need to have clear policies;

2)      Employees need to know about the policies; and

3)      It is a good idea to be able to prove the employees have access to the policies or have received copies of the policies.    

Last month, El Azteca, a Wisconsin business which owns four restaurants, reached a consent judgment in U.S. District Court to resolve a lawsuit filed by the U.S. Department of Labor. The U.S. Department of Labor’s Wage and Hour Division conducted an investigation and discovered numerous violations of the Fair Labor Standards Act.  The violations included:

–          Failing to keep records of daily and weekly hours worked.

–          Failing to pay employees the federal minimum wage for all hours worked.

–          Failing to pay overtime.

–          Paying kitchen staff, a flat salary without regard to numbers of hours they worked.

–          Making illegal deductions from servers’ pay for uniform shifts, nametags and aprons.

Under the consent judgment, the restaurant will pay 129 current and former employees $350,000 in back wages, and $350,000 in liquidated damages.  The defendants will also be paying $25,000 in civil penalties.  Additionally, the restaurants are now required to provide to employees:

1)      Several wage and hour division publications in both Spanish and English;

2)      The Wage and Hour division’s phone number; and

3)      Each pay day, a pay stub showing the pay period, hours worked, rate of pay, overtime hours worked, overtime rate and all deductions.

The FLSA provides that employers who violate the law are generally liable to employees for any back pay, and an equal amount of liquidated damages. The law also prohibits employers from retaliating against employees who exercise their rights under the law.

I have blogged in the past about FLSA issues in the food service industry. The Department of Labor has targeted their investigative efforts on FLSA violations.  Take this opportunity to:

1) confirm your business is accurately tracking hours worked and maintaining records of hours worked;

2) all employees are being compensated correctly; and

3) all your required posters are up to date.

Norfolk Southern Corp. is a federal contractor that has reached an agreement with the U.S. Department of Labor to pay almost $500,000 to 2,086 African-American job applicants in order to resolve claims of race-based hiring discrimination.

The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) conducted a routine compliance evaluation, and found over a two-year period a division of Norfolk Southern engaged in hiring practices which discriminated against African-American applicants.  These actions were in direct violation of Executive Order 11246 which prohibits federal contactors from discriminating in employment practices.

Norfolk Southern has not admitted liability.  But the Company has agreed to discontinue use of its current selection procedures, as well as to review and modify its employment practices for recruiting, screening, selecting, interviewing, rejecting and hiring candidates.  These changes resolve all the violations found by the OFCCP.

I recently blogged about the importance of not discriminating against job applicants.  This case shows how expensive it can be for employers who fail to review their hiring processes for potential discrimination.    Before making your next hires, review your policies and procedures to make sure you are not discriminating against job applicants.  

During the past legislative session, the legislature passed several significant changes to the Minnesota Veteran’s Preference Act, including reducing the 60 day notice period to 30 days, eliminating the three-person panel and replacing it with a single arbitrator, providing for the termination of a Veteran during probation without the protection of a Veteran’s hearing, and providing for the possibility the employer may be responsible for a discharged Veteran’s reasonable attorneys fees.

Minn. Stat. § 197.455 now allows, counties, cities, towns, school districts and other municipalities to require a veteran to complete an initial hiring probation period.  After the initial probation period is completed, a veteran may not be removed from a position except for incompetency or misconduct shown after a hearing.

The legislature also made changes to Minn. Stat. § 197.46.  After a veteran receives notice of the government’s intent to discharge him/her from employment, the veteran now has only 30 days to request a hearing, instead of the previously allowed 60 days.  The failure of the veteran to request a hearing within 30 days constitutes a waiver of the right to a hearing and all other legal remedies for reinstatement.  Additionally, the option to have the hearing before a “three-person panel” has now been changed to “an arbitrator.” In cases where the hearing will be before an arbitrator, the employer is to request a list of seven possible arbitrators from the Bureau of Mediation Services.  The legislature also stated the employer is required to strike first from the list of seven arbitrators, giving the Veteran the final selection.

The last significant change involves the costs associated with the hearing.  The statute will now read, “For disputes heard by a civil service board, commission or merit system authority, or an arbitrator, the governmental subdivisions shall bear all costs associated with the hearing, but not including attorney fees for attorneys representing the veteran.  If the veteran prevails in a dispute heard by a civil service board, commission or merit system authority, or an arbitrator and the hearing reverses the level of the alleged incompetency or misconduct requiring discharge, the governmental subdivision shall pay the veteran’s reasonable attorney fees.”

The most significant change for employers is the exposure to liability for the Veteran’s reasonable attorney’s fees in the event a discharge is reversed.

job-applicationIf you are an employer you are aware you may not discriminate against your employees, but it is important to know the law also applies to job applicants.  Most employers include an equal employment opportunity (EEO) statement in their employee handbooks or policy manuals.  If you don’t, then you definitely need to update those documents.  The EEO statement will typically read, “This Company will comply with all applicable laws governing equal employment opportunity. This policy extends to all applicants and employees and to all aspects of the employment relationship including, but not limited to, recruiting, hiring, promotion, transfer, and compensation…”

Last year, the Minnesota Court of Appeals remanded a case back to district court for determination of damages, after holding the employer discriminated against a job applicant on the basis of her pregnancy.

In LaPoint v. Family Orthodontics, P.A., A15-0396 (Minn. Ct. App. 2015), Dr. Ross with Family Orthodontics, a small business with only 9 employees, rescinded a job offer made to Ms. LaPoint after learning she was pregnant and wanted to take 12 weeks of maternity leave.  Family Orthodontics had a policy allowing for six weeks of maternity leave.  When notifying Ms. LaPoint the job offer was rescinded, Dr. Ross identified two concerns: 1) why Ms. LaPoint didn’t tell her about the pregnancy when she was interviewed and 2) that a three-month maternity leave would be too disruptive to the business.

The Minnesota Human Rights Act (MHRA) prohibits employers from discriminating against a person with respect to hiring on the basis of sex.  Sex includes “pregnancy, childbirth, and disabilities related to pregnancy or childbirth.”  See Minn. Stat. §363A.03. Employers are also prohibited from asking for information from a job applicant that pertains to sex.

In LaPoint, the court determined there was substantial direct “evidence in the record that Family Orthodontics discriminated against LaPoint on the basis of her pregnancy in a purposeful, intentional, and overt manner.”  The court stated the first reason Dr. Ross gave for rescinding the job offer, was substantially based upon the pregnancy and illegitimate because it punished Ms. LaPoint for failing to disclose a fact which Family Orthodontics could not lawfully inquire about.  The court held the second reason, anticipated maternity leave, was also related to the pregnancy.  Additionally, there was evidence presented that Family Orthodontics reposted the ad for the orthodontic assistant shortly after learning about Ms. LaPoint’s pregnancy.

Employers be cautious when interviewing job applicants and do not ask questions that can lead to you learning information about a protected class status.  As my law partner has blogged about in the past, hiring decisions are some of the most important ones an employer makes.  The last thing you want to do is open your business up to litigation because of a job applicant you didn’t hire.