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Employment Law

Challenges with Municipalities, Marijuana, #MeToo and More

By Sarah Crippen, Best & Flanagan


March 21, 2018

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With both local and federal employment laws becoming increasingly complex, learning how to approach some of today’s most contentious issues can be the key to mitigating risk and compliance issues for your organization.

There are many new developments in employment law at every level of government. For example, leave laws are being enacted at the city level in many communities. Those who are currently not affected by local, state, or federal laws and regulations will soon feel the effect.

What's Going to Happen in 2018?

What will change now that Donald Trump is president? Will Neil Gorsuchs’ appointment to the Supreme Court mean a change in attitudes towards employment law? Will Attorney General Jeff Sessions have any affect? Every indication is that he will have a much greater impact on employment law than many of us may realize. But the truth is, no one is quite sure what that will entail. That’s why it will important to keep a close eye on the federal developments.

On the local level, the mayors of Minneapolis and St. Paul could have an enormous effect on employment law, particularly leave laws and minimum wage levels. They both have strong ideas for expanding employment law, particularly leave laws and minimum wage.

Anticipating the Harvey Weinstein Effect

One person may have more national impact on HR work than any other: Harvey Weinstein. His is the case that precipitated the “MeToo” movement – and everyone in HR will be affected. For example, release and settlement agreements are going to look much different in the near future. And you have Harvey to thank for that.

SICK AND SAFE LEAVE AT THE LOCAL LEVEL

Minneapolis has led the way on sick and safe leave, with St. Paul currently crafting a very similar law. Duluth has a task force exploring options, and predictions are they will be creating an ordinance along the same lines.

How can you be sure you’re living up to the letter of the law if your business is based in Minneapolis or you have employees who work within the city limits? The city has a very good checklist on their website under “Sick and Safe Time” that articulates the rules.

  • All employees who work within the Minneapolis city limits who work 80+ hours per year qualify for sick and safe time off work. This includes part-time, seasonal and temporary staff.
  • Employees accrue the equivalent of a minimum of 1 hour of paid (at customary rates and benefits) sick and safe time for every 30 hours they work. However, if the company has fewer than 6 people, time off may be unpaid.
  • Employees can accrue up to 48 hours (or more) of sick and safe time per year and add it to an overall bank of accrued, but unused, time that carries over from one year to the next.
  • Employees begin accruing time when they are hired and can begin using accumulated leave 90 calendar days after their hire date.

How Can Employees Use Their Time Off?

Whether it’s the FMLA or the Minneapolis city ordinance, employees can use their time off for:

  • Treatment, recuperation or preventative care for a medical or mental health condition, illness or injury.
  • Legal proceedings, counseling or other services necessitated by domestic abuse, sexual assault or stalking.
  • Closure of the employee’s place of business for public health reasons.
  • Needs related to the medical health, mental health or physical safety of a family member, including child, spouse, domestic partner, parent, grandparent or household member.
  • Care of a family member due to unexpected closure of the family member’s school or place of care.

What Does HR Have to Do To Remain Compliant?

  • Keep records for 3 years, including payroll records (employee name, dates and hours worked, sick and safe time accrued, dates and amounts of sick/safe time already used.
  • Provide access for employees to see their current sick/safe time leave balance on request.
  • Post the “Notice to Employers and Employees” at your workplace in all languages required by employees.
  • The Americans with Disabilities Act prohibits asking employees about some medical leave. However, it’s generally considered acceptable to ask for a doctor’s note if the employee has been absent at least three consecutive days. And checking in on the employee’s progress is reasonable if you’re using the tools you have available but don’t cross the line.
  • It’s a good idea to not accept online medical diagnoses in lieu of an actual doctor’s note. It’s too easy to fake and not a solid verification that the diagnoses is even for the person in question.

The Minneapolis city website offers a checklist of optional policies that can be incorporated into your corporate policy and they provide a range of employer resources to help answer questions.

What's Happening in St. Paul?

The St. Paul ordinance is similar to Minneapolis with several key exceptions:

  • No small employer exception
  • Employees may sue employers directly
  • Slightly different rules for new employers (New companies have a grace period)
  • Broader definition of family member than Minneapolis (“individual related by blood or affinity whose close association with the employee is the equivalent to a family relationship”)

Who must provide sick and safety leave under the St. Paul rules? Employers that:

  • Maintain a physically permanent location in St. Paul
  • Employ one or more individuals who work at least 80 hours or more in a reporting year in the City of St. Paul

The St. Paul city website provides key examples to help employers better understand whether or not they must provide sick and safety leave.

EMPLOYEES WHO WORK FROM HOME?

Neither the Minneapolis nor the St. Paul ordinances are specifically clear on this issue. If an employee works 100 percent of their time within the city limits of either city, do they fall under either city’s rules? In St. Paul, the company doesn’t technically have a physical plant, so that should mean you aren’t required to give that employee sick and safe leave under St. Paul rules. But does a home office constitute a physical plant? In Minneapolis, the employee would technically be working within the city limits, even if the company has no physical presence. In either case, it would be best to consult your company’s employment attorney to get a final ruling.

MINIMUM WAGE & OTHER ISSUES

MINIMUM WAGE AT THE LOCAL LEVEL

Minneapolis has adopted a new minimum wage ordinance, which is higher than either the state or the federal level.

    • Large businesses (100+ employees) are required to pay a minimum of $10/hour as of January 1, 2018 and $11.25 as of July, 2018.
    • Small businesses (100 or fewer) are required to pay $10.25/hour as of July 2018.
    • In July, 2023, the minimum wage rises to $15/hour for large businesses.
    • In July, 2024, small businesses will be required to pay the minimum wage of $15/hour.

Once the $15/hour limit is reached, each subsequent year would increase to account for inflation. A complete chart showing the increases in each year between 2018 and 2023/2024 is available on the Minneapolis city web site.

St. Paul’s Mayor, Melvin Carter, is supporting a similar measure. Discussion and debate have begun.

MINIMUM WAGE AT THE STATE LEVEL

As of January 1, 2018, the state has enacted a new minimum wage structure:

      • Large employers (annual gross revenue of $500,000 or more) must pay at least $9.65/hour.
      • Small employers (annual gross revenue less than $500,000) must pay at least $7.87/hour.

The state will also now index to inflation. The Minnesota state web site has a complete employer fact sheet to help you.

The state legislature is also working to coordinate uniformity for minimum wage across the state, so there would be far less confusion. Currently, state law dictates that the company must pay the highest minimum wage in their jurisdiction. But many companies work in multiple jurisdictions, which obviously exacerbates the problem. The state legislature made an effort in 2017 to prohibit individual cities from creating one-off minimum wage legislation, but the governor vetoed the bill.

OTHER ISSUES THAT REQUIRE ATTENTION

      • States will begin examining rules to settle discrimination suits
      • States will also be looking at confidentiality rules
      • Legislation regarding non-compete agreements, currently governed by court-created law, is being put forward and discussed in many states
      • The Human Rights Act will more than likely not experience any changes for the broad protections it provides
      • Wage deductions are prohibited unless the employee has signed an agreement to pay after the debt has been incurred (see Minn. Stat. sec. 181.79)
        • The form doesn’t have to be fancy, just a promise to pay and a signature with a date.
        • This can’t do it before a debt has been incurred.
        • If there is an outstanding balance, you can’t simply deduct what is owed from a terminated employee’s final paycheck. This is prohibited under state statute.
      • State law governing Parenting Leave:
        • Employers with 50 or more employees fall under FMLA
        • Minnesota employers with 21+ employees must offer 12 weeks of unpaid time under state law. Employees can use PTO/sick or vacation time. It is recommended that benefits payments continue during leave time.
      • Break time
        • Minnesota law requires a 30-minute meal break
        • 15-minute bathroom breaks every 4 hours is considered standard but is not specifically called out in the state statute
      • Overtime
        • Federal law basically preempts any other rule as it covers all employees and employers involved in interstate commerce. That will include virtually everyone.
      • Personnel file reviews
        • This falls under Minn. Stat. 181.961
        • It should be easy for any employer to comply with, but it is recommended that your employment lawyer review all requests.
        • Employees can request a file review every six months
        • You must comply within 7 days (if they have left employment, you have 7 days to send it to them). Be sure to document what you sent and, if possible, what the employee looked at when reviewing the file. Numbering the pages makes this task easier.
        • If the file is stored out of state, you have 14 days to comply.
        • If the employee hires a lawyer, the employee isn’t due more access to their personnel file. If they should decide to litigate, that right will be granted during discovery.

TERMINATION ISSUES

      • Final pay is due within 24 hours from the time the employee requests it, whether it’s in person or in writing (a phone call does not count).
      • It’s a good idea to work with a payroll service to have a final check ready in advance. It’s a bit of a pain in the neck but can save you trouble on the back end.
      • Request for explanation – Employees can legally make “a written request for a written explanation of the truthful reason for termination.” They have 15 calendar days to make this request after being terminated. The employer has 10 calendar days to respond.
      • Keep explanations concise and precise. Don’t elaborate or hedge. Be straightforward. Don’t go into a long recitation of reasons or make up any “lofty” reasons for their termination.
      • Be truthful. What you say could end up being an exhibit in a law suit. But remember: state law says you can’t be sued for defamation because you truthfully articulated why an employee was terminated.
      • Giving references – Make sure you are giving truthful answers and information. You have qualified immunity if you answer factually and in good faith.

EMPLOYMENT LAW AT THE FEDERAL LEVEL

Current and upcoming federal issues:

      • EEOC (Equal Employment Opportunity Commission) is shifting focus under the current administration. Two appointments are waiting approval and they are currently functioning with an Acting Chair and two commissioners. The EEOC has not issued much in the way of policy guidance over the past year. Any litigation they’re involved with has moved forward as expected. Charges were down 7,500 nationally in 2016. No statistics have been published for 2017.
      • NLRB (National Labor Relations Board) is under Republican control for the first time since 2007. It was an activist organization under the Obama administration and it is expected they will roll back many of the Obama-era policies without replacing them with new ones. Definitely an anti-regulatory approach.
      • Department of Labor is expected to revisit what constitutes overtime pay, including what constitutes an independent contractor. Those parameters were drawn much more tightly under the Obama administration but those have been withdrawn by now-Secretary Acosta. Labor law legislation concerning what is required to be a joint employer passed the House in November of 2017. Senate passage and Presidential signature are expected.
      • Workflex in the 21st Century legislation – This creates a federal rule on leave laws, essentially a voluntary program where companies can offer flex hours and more without having to comply with local regulations.

THE QUESTION OF MARIJUANA

      • 29 states allow the use of marijuana for medical purposes.
      • 9 states along with the District of Columbia and the U.S. Virgin Islands allow the manufacture and sale of marijuana for recreational use.

However, a 2013 letter from the then-Attorney General stating that the federal government would not enforce federal laws prohibiting the use of marijuana has been rescinded by the current administration, which means it’s acknowledged as illegal at the federal level – so, any business can prohibit the use of marijuana in the workplace.

WHAT’S HAPPENING IN THE FEDERAL COURTS?

Last year was a quiet one of employment law at the Supreme Court. No decisions were passed down. There are several in the court’s queue:

      • Mandatory arbitration provisions will more than likely be eliminated
      • Fair share fees (collected by unions from members that don’t pay dues but still benefit from any collective bargaining on their behalf) will, in all likelihood, be prohibited by SCOTUS. That will cause a huge economic hit to unions, further weakening their ability to have an impact on the workforce.
      • The issue of Title 7 lack of protection for sexual orientation might be changing through District court rulings.
      • SCOTUS will also hear a case concerning definition of independent contractors. That will hopefully provide welcome guidance.
      • The issue of federal law protection for transgender individuals will come up at the state or even the federal level, which could lead to a Supreme Court decision.

TOP HR PRIORITIES FOR 2018

  1. #MeToo Movement

    The Harvey Weinstein case set the snowball rolling down the mountainside, and it’s been gaining momentum ever since. We’ll see a renewed focus on sexual harassment and gender discrimination during 2018. So, how do you manage that coming tsunami?
    • Make sure you do a policy review. Immediately, if not sooner.
      • Focus on non-retaliation
      • Create enforcement that makes employees feel that they can come forward and tell their stories without fear
      • Make the process reasonable and as accessible as possible
      • Be absolutely clear about who people should talk with and exactly what the process entails. Don’t assign the task to one person; they could be the one causing the problem. Assign by title or general description, rather than an individual.
      • Again, make certain that your policy is crystal clear. If you wind up in litigation – and the employee hasn’t availed themselves of a clearly written policy – you’re in the best possible position.
    • Create training that goes deeper than simply the legal definition of sexual harassment.
      • Develop programs for how to deal with a problem
      • Help people become sensitized to the issue. This requires helping employees understand how others respond to particular behaviors. Otherwise, it’s too easy for many offenders to think “well, that’s not what I do.”
      • You have an obligation to make sure you train the harasser. It’s not only the right thing to do, it’s good liability protection.
    • Take every instance seriously.
      • Don’t dismiss cases even if they’re now outside the statute of limitations. Work with the employee – as well as the potential offender – to make sure the problem is resolved.
    • Settlements, releases and other matters.
      • Courts will probably discourage “gag orders” and will be looking closely at what is considered “fair and reasonable” under current law.
      • Balance the rights of the accuser with the rights of the accused. Investigate thoroughly and fairly. Keep the final report simple. The accuser does not have the right to see every detail of your investigation.
  2. Employment Agreements

    There is a definite movement away from non-competes in favor of non-solicitation agreements. Prospective employees don’t want them, and courts don’t like them. Non-solicitation agreements hold up in court. As far as employees who have already signed a non-compete, it’s difficult to redo them so talk with employment lawyer about next steps.

  3. Involuntary Terminations

    These “yucky terminations” tend to be unpleasant surprises for the employee in question.

    First order of business is to make sure you’ve documented everything that has gone into the decision to terminate the employee. Next, make sure you have two people in the room – one tasked to deliver the bad news and one who acts as the “box of Kleenex.” Make certain there are no “lightning rods” in the room (anyone who will automatically become the focal point for the employee’s anger and resentment).

    Get to the point quickly and be concise. Just deliver the facts. Don’t embellish, it will just cause more problems.

    Say “thank you” and “I’m sorry it’s come to this” (as opposed to saying you’re sorry for the decision). These words can have a profound effect and help the employee get through a tough situation.

    And make sure you get a release agreement before you pay a dime of severance. Otherwise, you could be paying severance and wind up being sued.

It’s always important to have access to the expertise of a good employment law attorney. With the help of our specialized HR consultants, your MMA representative can give you the guidance you need to navigate most business situations. Call us to learn more.

>> Watch the video of the 2018 Employment Law Seminar.

ADDITIONAL RESOURCES:


This document is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Marsh & McLennan Agency LLC shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting or legal matters are based solely on our experience as consultants and are not to be relied upon as actuarial, accounting, tax or legal advice, for which you should consult your own professional advisors. Any modeling analytics or projections are subject to inherent uncertainty and the analysis could be materially affective if any underlying assumptions, conditions, information or factors are inaccurate or incomplete or should change.