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.    

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.

In Minnesota, it is not uncommon for smaller municipalities, counties, townships or school districts to enter into joint powers agreements with another small entity for purposes of providing better services to its citizens.  A joint powers agreement establishes a board which has the power to receive and expend funds, enter contracts, and hire employees, creating a separate joint entity apart from the individual municipalities involved.   As an example many communities have entered into joint powers agreements for purposes of providing law enforcement services or fire protection.

In 2014, the Minnesota legislature adopted a new statute which provides certain employee protections in joint powers agreements.  The statute governs any joint powers entities established after January 15, 2015 and addresses unionizing, determination of an appropriate bargaining unit, transitioning to a new bargaining unit, interim collective bargaining agreements, as well as contract negotiations and administration.    

In addition to reviewing the new statute prior to entering into a joint powers agreement, I would also recommend you review the League of Minnesota Cities document “Ten Things To Watch For When Entering Into Joint Powers Agreements.”  By doing a little research upfront regarding the process, headaches could be avoided later. 

 

Whether Minnesota employers want to or not, this Friday, they are required to increase the wages of employees working for minimum wage. The Minnesota legislature made several changes to Minn. Stat. § 177.24, including modifying the definition of “large employer” and “small employer” for purposes of determining minimum wage. Previously a “large employer” was an enterprise whose gross volume of business was $625,000. This amount has been reduced to $500,000. This has the effect of making businesses which were previously considered “small employers” to now fall in the “large employer” category, and therefore have to pay a significantly higher minimum wage. Businesses with less than $500,000 in gross annual business are defined as “small employers.”

Effective August 1, 2014 large employers will be required to increase the minimum wage from $6.15/hour to $8.00/hour. The minimum wage will increase August 1, 2015 to $9.00/hour and to $9.50 on August 1, 2016. Small employers will pay $6.50/hour in 2014, $7.25/hour in 2015, and $7.75/hour in 2016. Effective January 1, 2018 the minimum wage may be adjusted for inflation.

There are some notable exceptions to the new minimum wages. For example, large employers whose employees are under the age of 18 may pay the minimum wage set out for small employers. Additionally, large employers who have employees under the age of 20 may pay the minimum wage set out for small employers for the first 90 days of employment. After that the wage reverts to the standard for large employers. There is also a detailed exception for hotels, motels or “lodging establishments” with a summer work travel exchange visitor program.

Now is the time to review your payroll protocols and determine which minimum wage is applicable to your employees.