Not surprisingly, legislatures are also beginning to assess AI’s current and future impact on employees and the workplace, union and non-union. While legislation is currently under consideration in Minnesota it seems unlikely to reach the necessary bi-partisan support to pass this session. Employers would nevertheless be wise to monitor the bills and watch for new AI obligations and restrictions in the not-so-distant future.

Employers in the unionized setting are already seeing an increase in proposals from unions looking to reign in AI and to eliminate, or at least limit, its impact on workers. Recent examples of union successes include a new provision in an International Longshoreman’s Association contract that flat out prohibits all fully automated technology, and a Las Vegas Culinary union agreement that contractually obligates covered employers to bargain over any decision to implement AI in the workplace.

Most unionized employers understand that matters affecting the “terms and conditions” of employment such as wages, hours, benefits, etc. are mandatory subjects of bargaining. So, if an employer decides to reduce wages or cut employee hours, whether connected to AI or not, those must be negotiated. But what if, as widely predicted, the introduction of AI reduces the need for human labor, leading an employer to implement layoffs? The NLRB has not yet issued a definitive ruling on bargaining obligations from AI-induced layoffs. Such employer decisions would certainly require the employer to bargain over the impact the layoffs have on employees. Unions have very little leverage in such “effects” bargaining.

Whether the decision itself would be subject to bargaining might ultimately depend on the employer’s motivations behind its adoption of AI and the associated layoffs. Is it primarily to reduce labor costs? If so, the decision itself is likely subject to bargaining. Even if not, unions might successfully argue bargaining is required because such actions are akin to subcontracting. It also may be the case that bargaining is determined to be mandatory under various provisions of an existing collective bargaining agreement.

Regardless, the NLRB and the courts are sure to provide answers in the coming months and years.

Meanwhile, the Minnesota legislature is presently considering legislation that would, if passed, impose new limits on all employer use of AI. Senate File 4689 seeks to regulate the use of what it calls “Automated Decision Systems” (ADS). It would essentially cover all employment-related decisions relating to the implementation of AI. It would require advance notice of, and employee consent to, the use of ADS, would impose significant recordkeeping obligations, and employees would have the right to know when and how ADS influenced “adverse” employment decisions. Employees would have appeal rights to challenge those decisions. And of course, the legislation would provide employees with the right to sue employers over violations, obtain damages (including punitive damages), attorneys’ fees, and penalties of up to $2,500 per violation per day.

As we noted above, the current makeup of the Minnesota legislature means that a bill like this is unlikely to pass this session. However, as AI’s impact on the workplace accelerates exponentially, it is all but guaranteed that laws and regulations are coming.

Unless artificial superintelligence kills us all first.

The post The Looming Legislative And Labor Push Against Artificial Intelligence appeared first on Felhaber Larson.

As a refresher, before the Board’s Cemex decision, an employer was always free to reject a union’s claim of majority support among members of a proposed bargaining unit when based solely on presentation of cards signed by the employees. The union’s proper pathway in response to such a rejection was to file a petition for a secret ballot election to be conducted by the NLRB. Such elections have always been considered the “gold standard” for determining majority support.

In Cemex Construction Materials Pacific, LLC ( 372 NLRB #130, 2023) the NLRB overturned 52 years of precedent by setting up a regime that put the burden on an employer to file for an NLRB election or face a “Cemex bargaining order”  for refusing to recognize a union voluntarily. Cemex also allowed bargaining orders to be issued if the board determined that the employer had engaged in unfair labor practices while the petition/election was pending, without any election being held.

The Cemex decision, issued by the “Biden Board” was widely seen to be on the chopping block of the new Trump- nominated Board. Delayed nominations and “other distractions” have left the current Board without the three republican members historically needed to overturn precedent. On March 6, 2026, U.S. Court of Appeals for the Sixth Circuit (covering Kentucky, Michigan, Ohio and Tennessee) stepped in with a body blow to Cemex, at least as far as its remedies are concerned.

In Brown-Forman v. NLRB (6^th Cir. 2026) a union lost an election but claimed that multiple actions by the employer interfered with the election results and constituted unfair labor practices that justified the issuance of an order forcing the company to recognize and bargain with the union, regardless of the vote. The NLRB reviewed the employer’s conduct, which included a unilateral $4.00 hour wage increase for everyone, enhanced the ability of employees to schedule vacations and holiday time off, and free bottles of bourbon. (The employer distills and distributes The Woodford Reserve brand.  But really?)

The Board (when still controlled by President Biden’s appointees) concluded that the employer’s actions were, in fact, unlawful and did interfere with the election results. Following its decision in Cemex, the Board issued the order requiring the employer to bargain with the union, with no case-specific reasoning and without any explanation as to why the election could not simply be re-run.

On review, the Appeals court had no disagreement with the findings that the employer’s conduct was unlawful and did interfere with the election. However, the court strongly rejected the NLRB’s Cemex-driven remedy of an order to bargain. Relying on recent Supreme Court precedent regarding limitations on agency powers and the long-standing preference for elections to determine employee support, the court declared that the Cemex decision reflected “an improper exercise of the Board’s adjudicatory authority,” that it cannot be used in fashioning a remedy for ULPs in the election context, and that it “has no precedential value.”

Bottom Line:  The Court of Appeals sent the case back to the Board for reconsideration in light of its actual statutory authority.  When that occurs, we can assume this Trump-appointed Board will terminate all aspects of Cemex. Because the 8^th Circuit has not yet considered the issue, Minnesota employers and others within that Circuit should still seek qualified advice before deciding how to react to a union demand for recognition and how to run an election campaign involving a union vote. At a minimum, it would be prudent not to give away free bottles of liquor to voters.

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Impasse is “synonymous with a deadlock,” occurring only when the parties have bargained in good faith and neither is willing to move from its position. The Board examines the totality of the circumstances, including bargaining history, the good or bad faith of each side, the frequency of negotiations, the importance of unresolved issues, and the parties’ contemporaneous understanding of where things stand. Critically, a failed ratification vote alone does not establish impasse, nor does the passage of time or failure to reach agreement after multiple sessions.

The Southwest Florida Symphony decision offers several practical compliance lessons. Employers should document the bargaining process thoroughly, maintaining records of every session, proposal, and concession. They should avoid declaring impasse shortly after a ratification vote fails. Especially if the union signals any intention to regroup or consult its membership. Employers should also be cautious with “last, best, and final” language if they intend to keep negotiating, as subsequent movement can undermine a later impasse claim. Most importantly, employers should look for signs that the union may still be willing to move; if the union is requesting meetings, surveying members, or expressing willingness to revisit issues, impasse likely has not been reached.

Bottom Line

Impasse is a high bar, and premature declarations expose employers to liability. When in doubt, continue bargaining. Candidly, because the stakes of getting the call wrong are so high, no employer should declare impasse and implement without engaging labor counsel. If you have questions regarding collective bargaining or making an impasse determination, please contact our office for additional guidance.

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The analysis in the department’s proposed rule has the following key components:

• Describes an “economic reality” test balancing whether the individual is in business for himself/herself or, instead, whether the person is economically dependent on an employer for the work.
• Identifies and explains the primary “core factors” to determine if the economic realities indicate independent contractor or employee status, including:  (1) the nature and degree of control over the work, and (2) the worker’s opportunity for profit or loss based on initiative, business acumen, and/or investment.  Under the proposed rule, these core factors are the most probative.
• Identifies other factors to weigh, which include: skill required for the work;  permanence and repetition of the relationship; and whether (and if so how much) the work is integrated within the alleged employer’s operations.
• The facts of the relationship are key, as opposed to what may be contractually or theoretically possible.
• Provides a number of illustrative examples to highlight application of the proposed rule.

The DOL encourages employers and other interested parties to submit comments.  The 60-day comment period closes on April 28, 2026.

Bottom Line

The DOL’s proposed rule provides a more straightforward analysis of independent contractor status for purposes of the FLSA.  As constructed, the proposed rule tends to be more employer-friendly, meaning, application of the standard may decrease risk of independent contractor misclassification.  However, the proposed rule is a good reminder that the actual facts of the relationship matters the most.  Although a well-written independent contractor agreement is of paramount importance, it will not necessarily save the day if the facts do not support such status.

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In 2023, New York Presbyterian Hospital Association and the New York State Nurses Association. entered into a Memorandum of Understanding in which minimum RN staffing levels would be maintained in the hospital’s Cardio Thoracic Intensive Care Unit (CTICU). The MOU specifically linked the number of patients in the CTICU to a minimum number of RNs. For example, if there were 31 patients, the hospital needed to staff the unit with 27 RNs. If there were 25 patients, the minimum number of nurses was 22.

Not surprisingly, the hospital found it nearly impossible to guarantee those ratios due to leaves of absence, staff shortages, and less than successful recruiting efforts. The union filed a grievance in June of 2023 asking an arbitrator to declare the hospital in violation of the contract and to award financial remedies. In May of 2024, a highly respected arbitrator did just that. The arbitrator found that the MOU was specific in its requirements and that the hospital agreed to the terms knowingly. The arbitrator rejected the hospital’s defenses that it should not be found liable because it was aggressively recruiting to fill open positions, the CTICU was never unsafe, and the hospital had no pattern of attempting to circumvent the agreement. The arbitrator awarded nearly $300,000 in backpay, awarded to any nurse who was required to work on a shift where the agreed upon ratios were not met, although the arbitrator did make a technical adjustment to minimize the impact.

Following the award, the hospital went to federal district court seeking to have the arbitrator’s decision vacated. That court denied the motion and granted the union’s motion to enforce the award. It is that case that is on appeal. Given the comments by the judges hearing the appeal, relief appears unlikely.

Bottom Line:  Employers in any setting should just say NO to any and every demand from a union to put language into a contract that could reasonably be read as requiring a minimum number of employees on duty at any particular time, or to contractually binding limits on things like production expectations. Alternatively, if you feel compelled to add language, it is imperative that you include an “out” for the employer that recognizes circumstances beyond the employer’s control such as unanticipated leaves, absenteeism, and recruiting difficulties.

The post Yet Another Reason Never to Agree to Staffing Minimums appeared first on Felhaber Larson.

The plaintiff had taken FMLA leave and later sought accommodation that significantly cut her schedule, including fewer shifts per pay period and elimination of weekend work. When the hospital declined to renew her contract, she sued under the ADA, FMLA, and Iowa law, but both the district court and the Eighth Circuit sided with the employer.

Central to the opinion is the definition of essential duties. “Essential functions are ‘the fundamental job duties of the employment position the individual with a disability holds or desires.’” The hospital showed that working a minimum number of shifts and covering weekends were mandatory aspects of the physician assistant role. Because the requested changes would remove those core duties, the court held they were not “reasonable accommodations.”

Bottom Line

For employers the case highlights the importance of clearly defining and consistently enforcing essential job functions in descriptions and schedules. While it remains important to continue making good faith efforts to accommodate, the ADA does not require outright elimination of core or essential duties of positions to do so. If you have more questions about FMLA requests and accommodation at your business, please contact our office for additional guidance.

The post Eighth Circuit Solidifies Essential Function appeared first on Felhaber Larson.

By way of very brief overview, the tax treatment of Minnesota paid leave benefits is driven by then-current IRS guidance.    Until the issuance of the new guidance, we understood the taxability of benefits would be governed by IRS Revenue Ruling 2025-4 (“RR 2025-4”).    In a somewhat surprise move, the IRS issued new guidance delaying the implementation of RR 2025-4 for calendar year 2026.     The net effect is that medical leave benefits (as distinguished from family leave benefits) do not need to be reported on an employee’s W-2 in 2026.   This is, however, just a one-year pause — unless something changes again.

The Bottom Line

As a result of the developments described above, medical leave benefits received by an employee in 2026 (i.e., for an individual’s own illness, injury, etc.)  will not be treated as “third-party sick pay” as contemplated by RR 2025-4 for calendar year 2026 and do not need to be reported on an employee’s W-2.

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Once the quorum is officially established, the Board will be able to issue decisions and begin to set policy on key labor relations issues. This development marks an important shift for labor relations professionals across the country who have been operating in a period of limited agency activity due to board vacancies. The Board plays a central role in interpreting and enforcing the National Labor Relations Act. The Act governs collective bargaining, workplace policies, and employee rights.

Murphy, a career NLRB attorney, has stated that he intends to adhere to the Board’s historical custom of not overturning precedent without at least three members voting to do so.  With Democrat David Prouty still serving as the third Board member, and no nomination of a fourth member yet, it’s unlikely that significant deviations from Biden Board decisions will occur any time soon.  That custom would not, however, prevent 2-1 decisions narrowing the application of extant law.

The Bottom Line

The imminent, restored quorum sets the stage for a more active NLRB entering 2026. Business owners and HR professionals should monitor Board announcements and take a proactive stance by partnering with labor counsel. Whether you operate in a unionized environment or not, the NLRB’s renewed capacity means changes that will impact workplace policy, disciplinary decisions, union organizing, and communications strategies across the board. For more information on how we can help, please contact our offices.

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The Acting General Counsel alleged that Starbucks unlawfully changed its “past practice” by suddenly enforcing attendance more strictly to punish union activity and Board participation.  The judge found instead that the written attendance policy remained unchanged and that a new store manager legitimately chose to prioritize enforcement of that existing policy.  The record also showed prior attendance-related discipline by earlier managers, undercutting the idea that there had been a consistent, more lenient practice that required bargaining to change.

The General Counsel further argued that discipline issued to a pro-union shift supervisor, who had been involved in organizing, picketing, and NLRB proceedings, was discriminatory.  The judge rejected that claim too, pointing to multiple corrective actions issued to various employees (not just union supporters) for similar attendance violations over the same period.  There was no credible evidence that the manager’s decisions were driven by anti-union animus rather than documented tardiness, including an opening shift where the store opened late because the keyholder arrived over an hour late.

The decision also addressed alleged unlawful surveillance of a strike and “march on the boss.”  Because the employer had a two-employee safety rule requiring the manager to leave the store when other employees walked out, the manager waited in his car and was only occasionally visible to the picketers.  The judge held that such limited, safety-driven observation was not out of the ordinary and did not amount to coercive surveillance of protected activity.

Bottom Line

For employers dealing with unions, the case underscores several practical points: keep written policies stable and clear, train new managers to enforce those policies consistently, document discipline for all employees—not only union supporters—and avoid tying any disciplinary conversation to union or Board activity.  With careful documentation and neutral application of existing rules, employers can enforce attendance and performance standards, even in highly charged organizing environments, while maintaining strong defenses before the NLRB. Please contact our office if you have questions about how this pertains to your place of business and how we may be able to help.

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Employees Must Be “Allowed” To Take Meal and Rest Breaks

MN-DOLI’s guidance addresses an important element of the meal and rest break laws.   That is, employers must “allow” their employees to take rest and meal breaks.  MN-DOLI recognizes that employees may choose not take these breaks.  An analysis of whether an employer “allows” their employees to take breaks is fact-intensive and may include, but is not limited to, whether the employer has break policies which are communicated to employees and whether work circumstances make it possible for employees to take breaks.  In some circumstances, it may therefore be possible for an employee to voluntarily waive a break.  These are nuanced issues and employers should seek counsel before adopting any related policies or practices.

Rest Breaks

By way of quick background, Minnesota’s amended rest break law requires employers to provide its employees with rest breaks that: (a) last at least 15 minutes; (b) occur within each four consecutive hours of work; and (c) provide time to use the nearest restroom or otherwise take a break.  Here is what we can learn from MN-DOLI’s new guidance:

• A rest break cannot be provided at the very end of a four consecutive hour shift.   The law requires an employee to be able to take the break within this period, not at the end;
• Rest breaks are predicated on four consecutive hours worked.  Therefore, if an employee only works 3.5 hours before, for example, an unpaid meal break, a 15-minute break is not required.
• Depending on an employee’s work schedule, there may be circumstances when an employee’s rest and meal breaks can be combined into a longer, single break.

Meal Breaks

Under the updated meal break law, employers must allow employees to take a meal break that: (a) lasts at least 30 minutes; (b) occurs when working six or more consecutive hours; and (c) provides time to eat a meal.  MN-DOLI attempted to answer one of the most burning questions surrounding the new meal break requirements, that is, how should the “six or more consecutive hour” requirement be applied.  MN-DOLI provided the following hypothetical example to highlight its interpretation:

On Jan. 2, 2026, Employee B works from 6 a.m. to 6 p.m.

Q:   How many meal breaks must the employer allow Employee B to take?

A:   The employer must allow Employee B to take at least one meal break, as Employee B is working six or more consecutive hours. Minnesota’s updated meal break law does not require more than one meal break if an employee works six or more consecutive hours.

Collective Bargaining Agreements

The agency confirmed that employers and labor unions can “establish break requirements different from those provided under Minnesota law in a collective bargaining agreement.”

Employees Must Be “Allowed” To Take Statutory Breaks

MN-DOLI’s guidance addresses an important feature of the rest and meal break laws.  That is, employers must “allow” their employees to take rest and meal breaks.  However, MN-DOLI recognizes that employees may choose not take these breaks.  An analysis of whether an employer “allows” their employees to take breaks is fact-intensive and may include, but is not limited to, whether the employer has break policies which are communicated to employees and whether work circumstances make it possible for employees to take breaks.  In some circumstances, it may therefore be possible for an employee to voluntarily waive a break.  These are nuanced issues and employers should seek counsel before adopting any related policies or practices.

Remedies

Finally, MN-DOLI’s guidance provides some clarity on the new penalty provisions associated with the meal and rest break laws (also set to take effect January 1, 2026).   According to MN-DOLI, if an employer does not allow employees rest and meal breaks as required by the statutes, they may be liable for the break time that should have been allowed plus an additional equal amount as liquidated damages.  Therefore, a penalty which equals double the amount of time that should have been given to the employee.

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At the heart of the Employers’ claims and the Court’s decision is the question of whether Congress placed removal protections for the NLRB’s members and Administrative Law Judges (ALJs) that inappropriately limit the President’s Executive Powers.  The Court determined that the protections for ALJs are plainly unconstitutional and the protections for members of the NLRB are likely so. The Appeals Court’s decision leaves in place a July 2024 preliminary injunction that paused NLRB proceedings against the Employers regarding unfair labor practice charges.

The decision included two important concepts.  First, no entity should be forced to choose between foregoing its rights under the Constitution and subjecting itself to compliance with an agency that is unlawfully constituted:  “The Employers have made their case and should not have to choose between compliance and constitutionality.”

The Court also noted that being subjected to enforcement proceedings by an unlawfully structured agency imposes irreparable harm, one element that is needed for a court to impose injunctive relief:  “When an agency’s structure violates the separation of powers, the harm is immediate – and the remedy must be, too.”

The NLRB is expected to seek review by the Supreme Court of the United States. We will continue to monitor these cases as well as other court cases being litigated against the NLRB.

The full decision of the case can be found here: https://www.ca5.uscourts.gov/opinions/pub/24/24-50627-CV0.pdf

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The Rules are contained within Chapter 3317, and some of the more pertinent provisions are highlighted here:

• Employees have an obligation to attest to DEED that the employee provided proper notice to the employer in connection with an application for paid leave benefits.  The Rules set out a process whereby the employer can challenge the notice which, if upheld, may delay the leave;
• The Rules make clear employers have affirmative reporting requirements including, for example, an obligation to notify DEED of supplemental benefit payments paid to employees;
• The Rules address situations where an employee seeks to end a leave early, extend an approved leave, or change an intermittent work schedule.  Employees have certain notice and reporting obligations to both DEED and the employer and there are processes for employers to challenge those notifications;
• The Rules contain provisions that cover certain employer/employee disputes about intermittent leave; specifically, whether the employee made a “reasonable effort” to share the need for a leave and proposed schedule before applying with DEED for benefits;
• Finally, the Rules address requirements for private plans to file amendments to the plan, employee notice requirements, and obligations to provide employees with requested information about a claim for benefits.

Bottom Line

The Rules provide some helpful guidance with respect to the topics covered.  However, in a perfect world, the Rules would have gone further to address some of the more nuanced provisions contained in MPLL such as, coordination of employer provided “supplemental” benefits,  the “camouflaged” minimum wage requirements surrounding employee premium deductions, and the limitations on waivers and releases of claims under MPLL.  But, at this point, we’ll take what we can get as we prepare for implementation of MPLL.  Continue to be on the lookout for updates throughout the Fall.

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Who qualifies?

Employees and certain self-employed individuals may deduct tips received in occupations that the IRS identifies as “customarily and regularly receiving tips.” The IRS is expected to publish a list of qualifying occupations by October 2025.

Eligible tips must be properly reported on Form W-2, Form 1099, or Form 4137, and must be voluntary tips received from customers directly or through tip-sharing arrangements. Mandatory service charges or automatic gratuities do not qualify. The deduction phases out for individuals with gross income over $150,000 for single filers or $300,000 for joint filers.

What does this mean for employers?

The new provision places little burden on employers. The deduction is claimed by employees on their individual tax returns and employers are not responsible for filing or managing the deduction.

However, because employees can only deduct properly reported tip income, employer recordkeeping must be accurate and up to date. That means:

• Continue tracking tips carefully through workplace systems and payroll.
• Ensure tips are separately identified on employees’ Form W-2.
• Maintain clear and accurate job titles, as only workers in qualifying occupations will be eligible.

It is also important to note that this new deduction does not affect employer payroll tax obligations. Tips remain subject to Social Security and Medicare taxes, and must be reported accordingly.

Bottom Line:

While there is no new filing to manage on the employer side, accurate recordkeeping and clean tip reporting are essential to help employees benefit and keep employers compliant.

The post What Employers Should Know about ‘No Tax on Tips’ appeared first on Felhaber Larson.

The Wage and Hour Division (WHD) has reinstated the Payroll Audit Independent Determination (PAID) program as a tool to assist employers in resolving potential compliance concerns related to federal minimum wage and overtime and the FMLA.   According to WHD, “this program allows employers to correct mistakes efficiently and ensure employees receive back wages or other remedies promptly, all while avoiding litigation.”

Th PAID program contemplates the following:

• Employer Self-Audit– Employer conducts a self-audit to identify the potential violations, employees affected, and timeframes each employee was affected.  The employer is responsible for calculating the amount of back wages owed to each employee, if applicable; and specify any other remedies that are necessary for compliance.
• Report to WHD— Employer contacts WHD to discuss its findings, back wage calculations, remedies, supporting evidence, and methodology. Employers must also submit a statement of the scope of the potential violations for inclusion in a release of liability, and certification that the employer reviewed and meets all the program’s requirements.
• WHD Review— WHD evaluates the submission and provides guidance on next steps.
• Resolution & Payment or Other Remedies— Employer pays back wages and/or other remedies within 15 days of receiving the summary of unpaid wages, and provides proof of payment and documentation to WHD.

Bottom Line

Under the right circumstances, the PAID program could be deployed to proactively address known compliance issues and very well may be worthy of serious consideration.  However, there are a number of other factors an employer should consider before taking the plunge into the PAID program, including for example, risks of third-party litigation and the scope and efficacy of releases of legal claims.  A skilled advisor can worth through all of these issues so that the employer can make an informed decision about participation.

The post The P.A.I.D. Program Is Back appeared first on Felhaber Larson.

Minn. Stat. § 342.57, subd. 5a: Protections for Registry Program Participants—Notice Requirement

If an employer takes an adverse employment action against an employee because of their participation in a cannabis registry, they must provide the employee written notice at least 14 days before they act. This written notice must cite the specific federal law or regulation that the employer believes would be violated if the employer failed to act. If applicable, the notice must also specify what monetary or licensing-related benefit under federal law or regulations that the employer would lose if the employer failed to act.

Bottom Line

As a result of these changes, cannabis-related protected classes have been expanded to now include . . .

• employees that participate in a state cannabis registry;
• employees that participate in a tribal registry; and
• employees with a history of a positive cannabis test that occurred off-duty.

What this means for employers is that they may not take adverse employment actions against their employees by virtue of their employees belonging to one of these classes. However, if an employer must take an adverse employment action due to an employee’s membership in a cannabis-related protected class for federal compliance purposes, it must provide timely, detailed written notice explaining the legal and/or regulatory basis for the action.

Cannabis law in Minnesota is an area of law which is continuously evolving. Employers are encouraged to reach out to Felhaber attorneys for any questions they may have regarding these changes and how they may impact their operations.

*A special thanks to Fidelina G. Valverde-Rivera for her help with this post.  

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The National Labor Relations Act

Section 8 of the National Labor Relations Act (“NLRA”) permits employers to hold meetings with employees about unionization but prohibits employers from threatening or interrogating employees. Under Section 8(c), not all employer communications are considered interrogations, threats, or coercive acts. So long as the employer’s expression contains no threat of reprisal, force or promise of benefit, it is permissible. In essence, employers may express their views, arguments, or opinions on unionization, as long as the communication is non-coercive.

Background

In May 2022, Workers United began a unionization effort at a Starbucks store in Los Angeles. In response to these efforts, the store manager held individual meetings with employees, including a shift supervisor. The manager, noting she was not in favor of the union, asked the supervisor if they knew who had initiated the union effort and remarked that unionization could negatively affect employee benefits and raises – though she acknowledged not knowing exactly how they might be impacted. The supervisor described the meeting as calm and said she did not feel pressured to express a view on the union, although she did not feel free to leave. Following the store’s vote to unionize in August 2022, Workers United filed charges against Starbucks with the NLRB alleging the manager threatened economic retaliation to employee benefits and raises and coercively interrogated the supervisor about union activities. An administrative judge (“ALJ”) concluded that a Section 8(a) violation occurred. The Board affirmed the decision.

Starbucks v. NLRB

On appeal, the Eighth Circuit recognized that the “relevant question” in assessing a potential Section 8(a) violation is whether the employer’s questioning or remarks would tend to coerce an employee from exercising their right to engage in union activity. However, the court found that the NLRB applied the wrong legal standard when it “erroneously” concluded that the factual context – such as the employee’s impressions of the conversation and their reactions – were “immaterial.” While an employee’s subjective impressions are not dispositive in determining whether an employer’s statements were threatening or coercive, they are also not irrelevant. An employee’s subjective impressions should be weighed to determine how a reasonable employee would have objectively viewed the employer’s conduct, under a totality of the circumstances.

In this case, both the ALJ and the Board expressly “disclaimed” any reliance on the supervisor’s reactions to the manager’s statements, thereby applying an improper legal standard. For instance, the supervisor’s perception that the manager was merely “venting” and that the meeting was “calm” was wrongly deemed irrelevant. While these observations are not dispositive, they should nonetheless be considered in determining whether a Section 8(a) violation occurred.

Bottom Line

The Eighth’s Circuit ruling reinforces the notion that employers are given some latitude in expressions of speech under Section 8 of the NLRA, but employers should remain cognizant of intent and employees’ perception of the conversations regarding union-related matters. Coercive conduct under Section 8(a) is assessed based on the totality of the circumstances approach, including how a reasonable person would objectively perceive the conduct – making employees’ subjective impressions relevant, although not dispositive.

*A special thanks to Grace M. Sjoberg for her assistance with this post.

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Below is a summary of significant legislative changes for Minnesota employers.

Mandatory Work Breaks

Effective January 1, 2026, employers must provide employees with a rest break of (i) at least 15 minutes; or (ii) at least enough time to reach the nearest convenient restroom—whichever is longer—for every four consecutive hours of work. This change therefore establishes the minimum duration of time afforded for rest breaks. In conjunction with these changes, the legislature also added new remedies (namely, penalties) for failure to provide mandatory work breaks.

Mandatory Meal Breaks

Effective January 1, 2026, employers must provide 30-minute unpaid meal breaks to any employee that works six or more consecutive hours. Previously, an employee had to work eight or more consecutive hours to be entitled to a meal break and the statute did not express a finite number of minutes associated with a meal break. Here too, there are new remedy/penalty provisions that will apply.

Minnesota Nursing Home Workforce Standards Definitions

 The legislature amended the definition of “nursing home employer” to only include those that operate licensed nursing homes in Minnesota which are Medicaid-certified and reimbursed by the state.

Minnesota Nursing Home Standards Board Duties

The Nursing Home Standards Board is now required to carefully contemplate the financial impact of rules it promulgates relating to wages or benefits for nursing home workers. Further, new job standards promulgated by the Board will now go into effect pursuant to one of two “pathways.” Under the first pathway, if the cost increases associated with the new job standard is within the Board’s budget limits, the Board can set the start date of the standard. Under the second pathway, if the cost increases associated with the new job standard exceed what is appropriated in the state budget to the Board, the new job standard only goes into effect after the state approves the additional funding and the federal government approves of the arrangement. If the Board seeks to implement a rule under pathway two during a year when strict limits on cost increases are in place, any funding to cover costs that exceed those contemplated in the budget must be awarded through special processes that adjust the payment rates that nursing homes receive.

Expansion of Whistleblower Protections For State Employees

The legislature amended whistleblower laws with the result being that state employees may not be discharged or otherwise retaliated against for reporting fraud, misuse, or related conduct by state programs, services, or financing to specific entities. These entities include legislators, constitutional officers, their employers, governmental bodies, or law enforcement officials. The legislature also added definitions for fraud, misuse, and personal gain to define what constitutes conduct which whistleblowers will receive protections for if they report:

• Fraud: an intentional or deceptive act, or failure to act, to gain an unlawful benefit.
• Misuse: the improper use of authority or position for personal gain or to cause harm to others, including the improper use of public resources or programs contrary to their intended purpose.
• Personal gain: a benefit to a person; a person’s spouse, parent, child, or other legal dependent; or an in-law of the person or the person’s child.

Earned Sick and Safe Time

The 2025 legislative session also saw several slight amendments to the Minnesota Earned Sick and Safe Time laws.   First, employers may now require employees who have an unforeseeable need for the use of earned sick and safe time to give notice for the need as reasonably required by the employer.   Previously, employers could require notice in this scenario “as soon as practicable.”

Second, when employees use earned sick and safe time for more than two consecutive scheduled work days, employers may require reasonable documentation that the time is covered by the statute. Previously, the threshold for triggering the ability to request reasonable documentation was three consecutive scheduled workdays.

Third, the legislature added additional language to the provision that prevents employers from requiring employees to find replacement workers to cover hours they use as earned sick and safe time. This provision states that employees can voluntarily seek or trade shifts with replacement workers to cover hours the employee uses as earned sick and safe time.

Fourth, effective January 1, 2026, the provision permitting front loading of earned sick and safe time will permit employers to advance earned sick and safe time to an employee based on the number of hours the employee is anticipated to work for the remaining portion of the accrual year, subject to certain limitations and requirements.

Minnesota Paid Family and Medical Benefits Program

The 2025 session saw very minor amendments to the Minnesota Paid Family and Medical Benefits Program. First, the legislature capped the annual payroll premium rate at 1.1 percent of taxable wages paid to each employee. Previously, this percentage was 1.2 percent.

Second, the legislature expanded permissible uses of program data to certain, other government agencies such as the Department of Commerce and the Bureau of Criminal Apprehension.

Importantly, the 2025 regular and special sessions did not pause the implementation date for Minnesota Paid Family Leave (“MPFL”), and therefore, the effective date remains January 1, 2026.

Bottom Line

Although this legislative session may seem “light” as compared to 2024, the changes to Minnesota’s meal and rest break requirements constitute a significant development that will require careful consideration, planning and active management.    This, coupled with the looming implementation of MPFL will keep employers hopping as we head toward year end.

*A special thanks to Fidelina G. Valverde-Rivera for her assistance with tracking the results of the 2025 legislative session and for her contributions to this post.  

The post Minnesota 2025 Legislative Update: It’s A Wrap! appeared first on Felhaber Larson.

The attorneys at Felhaber Larson are working diligently to prepare a 2025 Minnesota legislative review based on the changes made in both the regular and special sessions.

The post Minnesota Legislature’s Special Session Concludes Tuesday, June 10, 2025—Stay Tuned for Updates appeared first on Felhaber Larson.

The “Background Circumstances” Requirement

 In Title VII cases alleging reverse discrimination (where member of a majority group alleges discrimination), some jurisdictions have adopted a rule requiring plaintiffs to demonstrate “background circumstances” in addition to the other elements required to establish a prima facie case of discrimination. These jurisdictions require such plaintiffs to produce evidence showing “background circumstances” to support the suspicion that the employer is the unusual employer who discriminates against the majority.

Appellate courts are split concerning the application of the background circumstances rule. Historically, the Sixth, Seventh, Eighth, Tenth and D.C. circuits apply the rule, while the other circuits do not.

Ames v. Ohio Department of Youth Services

In Ames v. Ohio Department of Youth Services, Marlean Ames, a heterosexual woman, was passed over for a promotion in favor of a lesbian candidate for the position of Bureau Chief of Quality by her employer, the Ohio Department of Youth Services. The department subsequently demoted Ames and hired a gay man to fill the role of program administrator. Based on these actions, Ames filed suit against her employer under Title VII, alleging it discriminated against her based on her sexual orientation as a heterosexual woman.

In a unanimous decision authored by Justice Ketanji Brown Jackson, the Supreme Court rejected the Sixth Circuit’s “background circumstances” rule as being incompatible with the text of Title VII and longstanding precedent.

“By establishing the same protections for every “individual”—without regard to that individual’s membership in a minority or majority group—Congress left no room for courts to impose special requirement on majority-group plaintiffs alone.” Jackson wrote.

What Employers Need to Know

The decision has significant implications in the 6th, 7th, 8th, 10th, and D.C. Circuits. As part of the 8th Circuit, this new standard will apply to employers with operations in Minnesota. Employers should expect to see increased litigation risks with “reverse discrimination” claims given the bar for raising such claims has been lowered. Employers should continue to take steps like reviewing or updating employment policies as needed to reduce risk.

Bottom Line

Employers should be cognizant that they have a legal obligation to comply with Title VII to ensure employment decisions are based on legitimate, non-discriminatory reasons, regardless of whether such decisions relate to individuals in minority or majority groups.

Given the context of this evolving area of law, employers should feel free to reach out to their trusted Felhaber attorneys for guidance.

*A special thanks to Ikran J. Noor for her help with this post.

The post Gutting the “Background Circumstances” Requirement for “Reverse Discrimination” Claims under Title VII of the Civil Rights Act appeared first on Felhaber Larson.

• E-12 Education Policy and Finance Budget Omnibus Bills
• Jobs, Labor, and Economic Development Budget & Policy Omnibus
• Labor Budget & Policy Omnibus
• Environment Budget & Policy Omnibus
• Commerce Budget & Policy Omnibus
• Tax Omnibus
• Liquor Omnibus
• Human Services Budget Omnibus
• Elections Budget & Policy Omnibus
• Higher Education Budget & Policy Omnibus
• Health and Human Services Budget and Policy Omnibus
• Transportation Budget & Policy Omnibus
• Energy, Utilities, Environment, and Climate Budget & Policy Omnibus

Governor Walz is expected to call a special session to address this unfinished business. Although we do not yet have a date for this session, lawmakers hope to complete the budget before June 1st with an absolute deadline of June 30th to avoid a state government shutdown.

Felhaber Larson will continue to closely monitor the status of the special session and will provide a comprehensive 2025 legislative update once all bills are passed.

*A special thanks to Fidelina G. Valverde-Rivera for her help with this post.

The post Update (If you can even call it that) on Minnesota Legislature’s Regular Session appeared first on Felhaber Larson.

Who Must Comply with the MCDPA?

The MCDPA applies to businesses that:​

• Control or process personal data of at least 100,000 Minnesota consumers annually; or
• Derive over 25% of gross revenue from the sale of personal data while processing data for at least 25,000 Minnesota consumers.​

The MCDPA applies to the collection and processing of personal data about Minnesota residents acting in an individual or household context. “Personal data” is broadly defined to include any information that is linked or reasonably linkable to an identified or identifiable individual. This may include names, email addresses, device identifiers, IP addresses, geolocation data, and biometric information.

The MCDPA contains several important exemptions. To name a few, the law does not apply to small businesses as defined by the U.S. Small Business Administration, unless those businesses sell sensitive data, in which case opt-in consent is still required. The law also excludes data processed in an employment context, meaning personal data collected solely in the course of hiring and managing personnel is not subject to the MCDPA’s consumer rights framework. In addition, entities and data already subject to federal privacy laws such as HIPAA, GLBA, or FERPA are generally exempt to the extent they overlap.

Consumer Rights

Minnesota consumers are granted several rights concerning their personal data:​

• Right to Access: Consumers can confirm if a business is processing their data and access that data.
• Right to Correction: Consumers may request corrections to inaccurate personal data.
• Right to Deletion: Consumers can request deletion of their personal data.
• Right to Obtain: Consumers can obtain a copy of their data in an accessible format.
• Right to Opt-Out: Consumers can opt out of targeted advertising, the sale of personal data, and certain profiling activities.
• Right to Appeal: If a business denies a consumer’s request, the consumer can appeal the decision.​

A unique aspect of the MCDPA is the right for consumers to question the results of profiling decisions, including understanding the reasoning behind such decisions and how to achieve different outcomes.

Compliance Requirements

Businesses subject to the MCDPA must undertake several actions to ensure compliance:​

• Data Inventories: Maintain comprehensive records of personal data collected and processed.
• Privacy Notices: Provide clear and accessible privacy notices detailing data collection practices and consumer rights.
• Data Protection Assessments: Conduct assessments for processing activities that present heightened risks, such as targeted advertising or processing sensitive data.
• Contractual Agreements: Establish contracts with data processors outlining processing instructions, confidentiality obligations, and compliance requirements.
• Security Measures: Implement reasonable administrative, technical, and physical safeguards to protect personal data.​

Enforcement and Penalties

The Minnesota Attorney General has exclusive authority to enforce the MCDPA. Penalties for non-compliance can reach up to $7,500 per violation. Until January 31, 2026, businesses have a 30-day period to cure alleged violations before enforcement actions proceed.​ Postsecondary institutions governed by the Office of Higher Education have until July 31, 2029 to comply with the MCDPA.

Next Steps for Businesses

With the MCDPA’s effective date approaching, businesses should:​

1. Assess whether they fall within the scope of the MCDPA.
2. Review and update data collection and processing practices.
3. Develop or revise privacy policies and notices to align with MCDPA requirements.
4. Implement mechanisms for consumers to exercise their rights.
5. Train staff on data privacy obligations and consumer rights under the MCDPA.

Conclusion

The Minnesota Consumer Data Privacy Act marks a significant development in the state’s approach to data privacy regulation. Given the law’s complexity and broad scope, businesses may find it difficult to determine whether they are subject to its requirements—and if so, how best to comply. While the statute provides an initial 30-day cure period for alleged violations, businesses should not wait for an enforcement letter from the Attorney General to take action. Proactive compliance is the most effective way to reduce legal risk and demonstrate good faith in handling consumer data.

The post Minnesota’s New Consumer Data Privacy Act: What Businesses Need to Know appeared first on Felhaber Larson.

• Executive Order No. 14151—Ending Radical and Wasteful Government DEI Programs and Preferencing: Ends the provision of federal “equity related” grants and contracts as well as DEI/DEIA employee performance requirements for contractors and grantees.
• Executive Order No. 14168—Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government: Orders agencies to end federal funding of “gender ideology,” which the Order defines as a “replace[ment] [for] the biological category of sex” and an “ever-shifting concept of self-assessed gender identity
  . . . [which] all institutions . . . [must] regard . . . as true.”
• Executive Order 14173—Ending Illegal Discrimination and Restoring Merit-Based Opportunity: Conditions the receipt of federal contracts and grants on a certification from recipients that they do not operate DEI/DEIA programs.
• Executive Order 14187—Protecting Children from Chemical and Surgical Mutilation: Prevents the provision of federal research or education grants to medical institutions that provide permanent and semi-permanent gender-affirming procedures.
• Executive Order 14201—Keeping Men Out of Women’s Sports: Prevents the provision of federal funding to educational programs that allow transgender girls and women to participate in women’s sports.

Judicial Challenges to Executive Orders

The Fourth Circuit Court of Appeals recently lifted a nationwide block which prevented the enforcement of Executive Orders 14151, 14168, and 14173 in their entirety.  Nat’l Ass’n of Diversity Officers in Higher Educ. v. Trump, No. 25-1189, 2025 WL 750690 (4th Cir. March 14, 2025).  However, individual parts of these executive orders have been rendered unenforceable by other courts.  In Minnesota specifically, provisions of these executive orders which cut federal funding for programs promoting “gender ideology” and healthcare providers offering gender-affirming care for those under the age of nineteen have been rendered unenforceable.  Washington v. Trump, No. 2:25-cv-00244-LK, 2025 WL 659057 (W.D. Wash. Feb. 28, 2025).  In short, the landscape related to these Executive Orders and legal changes is changing rapidly.  It is therefore important to monitor the Orders that relate to your organization carefully, and frequently.

How Will These Executive Orders Impact Organizations?

Impacts on Federal Grant and Contract Recipients

Organizations that receive federal grants or contracts related to DEI/DEIA or environmental justice should anticipate the termination of these grants and/or contracts altogether.  Recipients of general federal grants and/or contracts (i.e. Grants and/or contracts awarded for purposes unrelated to DEI/DEIA or environmental justice) should be prepared to certify that they do not promote DEI/DEIA as a condition of their receipt of these federal benefits.  Since federal agencies are encouraged to prioritize investigation into organizations that receive federal grants or contracts and are or may be engaged in DEI/DEIA activities, these organizations should anticipate legal and compliance costs associated with preventing or addressing administrative proceedings.

Internally, organizations receiving federal funding or contracts need to ensure that their hiring practices do not involve DEI/DEIA-based criteria that could be seen as giving preferential treatment based on race, gender, or other protected categories.  DEI/DEIA training and policies—as well as training and policies that may be construed as relating to DEI/DEIA—may need to be modified or removed to ensure compliance with these executive orders.

Finally, these executive orders will very likely impact employee recruitment and retention for organizations receiving federal funding, grants, and/or contracts.

Impacts on Educational and Healthcare Institutions

Places of higher education and medical providers that receive federal funding must revise or end their DEI/DEIA programs and policies to avoid funding cuts or administrative proceedings. Further, institutions which allow transgender women to play in women’s sports programs may face similar federal funding cuts or administrative proceedings.

It is important to note that in Minnesota, at least for now, funding may not be cut to healthcare providers on the basis that they offer gender-affirming care to those under the age of nineteen.

Next Steps for Impacted Organizations

 Organizations impacted by these executive orders should consider taking the following steps to ensure compliance and reduced risk:

• conduct internal audits to assess the use of DEI/DEIA in hiring practices and company policies and make necessary changes to comply with these executive orders;
• stay informed about ongoing litigation and court rulings on these executive orders; and
• consult an attorney to develop legal strategies to ensure compliance or defend against policy challenges or enforcement actions.

^* A special thanks to Fidelina G. Valverde-Rivera for her assistance with this post.

The post Executive Orders Targeting DEI Initiatives and Developments appeared first on Felhaber Larson.

Information about the proposed rules and your opportunity to comment can be found here:

https://www.dli.mn.gov/business/employment-practices/rulemaking-docket-minnesota-rules-chapter-5200

Some of the notable highlights from MN-DOLI’s proposed ESST rules are as follows:

• Employers may not force employees to use ESST for a qualifying reason.  However, if an employee declines, the absence is not protected.
• The rules would give employers ability to push back and request documentation sooner than current parameters (of three consecutive days of absence) where there is a pattern of misuse.  A pattern of misuse is defined to include absences surrounding holidays or weekends or use at the beginning of a shift.
• The rules provide guidance when an employee works some of his or her time in Minnesota and sets forth default parameters depending on whether the individual works more or less than 50% of their time in Minnesota.

Bottom Line

We strongly encourage employers to review the proposed rules and exercise your right to send comments to MN-DOLI.

The post Proposed Rules on Minnesota Earned Sick and Safe Time and (LIMITED) Opportunity To Comment appeared first on Felhaber Larson.

After terminating Biden appointee Jennifer Abruzzo, President Trump appointed William B. Cowen as Acting General Counsel (AGC) of the National Labor Relations Board (NLRB). The General Counsel is responsible for the investigation and prosecution of unfair labor practice cases. Accordingly, the General Counsel has great power to affect labor law policy, as it can decide what types of cases are brought before the Board and argue for more pro-union or pro-employer interpretations of the National Labor Relations Act. Additionally, the General Counsel often issues memoranda providing policy guidance as to how the General Counsel, and the NLRB’s regional field offices, will interpret the Act.

Cowen quickly signaled a sharp departure from his predecessor’s pro-union policies, rescinding many via Memorandum GC 25-05 issued on February 14, 2025. Cowen’s memo rescinds 18 memoranda issued by former GC Abruzzo, including GC 21-06 and GC 21-07, instructing Regions to seek expansive remedies in unfair labor practice (ULP) cases and settlement agreements; GC 21-08, classifying student-athletes as “employees” under the National Labor Relations Act (NLRA); GC 23-08 and GC 25-01, asserting that noncompetes and “stay-or-pay” provisions violate the Act; GC 21-01, which permitted mail-in ballot elections during the COVID-19 pandemic; and more. AGC Cowen also rescinded 13 additional memoranda pending further guidance, including GC 24-01 on the Board’s union-friendly recognition standard adopted in Cemex Construction Materials Pacific, LLC, 372 NLRB No. 130 (2023).

This move comes in the wake of President Trump’s controversial decision to remove Democratic Board Member and Chair Gwynne Wilcox in addition to discharging Abruzzo. Section 3(a) of the NLRA states that “[a]ny member of the Board may be removed by the President, upon notice and hearing, for neglect of duty or malfeasance in office, but for no other cause.” Although a federal judge ruled on March 6 that Trump exceeded his authority by firing Wilcox, the NLRB has since taken the position in at least six pending court cases that removal protections are unconstitutional. Regardless, the termination of Abruzzo and appointment of Cowen will undoubtedly shift the landscape of labor law.

Bottom Line

While the rescission of the former general counsel memos was expected under the Trump administration, the move nevertheless reshapes federal labor law in a more pro-employer direction. Acting General Counsel Cowen has indicated that further adjustments will be made as needed. We will continue to monitor and report on these developments.

The post The NLRB’s Interim General Counsel is Shaking Things Up appeared first on Felhaber Larson.

Guidelines for an ICE Raid

A raid happens when ICE agents go to a facility without warning as part of an investigation. ICE agents may come to find a particular person (or people). While they are present, ICE agents may try to question, detain or arrest people. Employers are always permitted to comply with ICE agents, but are only required to comply with agents under specific circumstances. If ICE agents arrive at your facility, the host or receptionist should immediately contact a designated representative, who should immediately contact counsel. The host or receptionist should inform the ICE agents that counsel is being contacted.   As discussed below, it is important that the business understand whether there is a valid warrant in place if ICE intends to access private areas of the property.

Public Areas

Anyone, including ICE agents, may enter public areas of the business without permission. However, being in a public area does not give ICE the authority to stop, question or arrest just anyone. Workers encountering agents in a public section of the facility have the right to remain silent and to ask for an attorney at all times. Employers may (but are not required to) tell employees that they can choose whether or not to speak with ICE, but employers must not direct employees not to cooperate with ICE.

Private Areas

Employers are not required to grant ICE access to private areas of the facility without a valid judicial warrant. A valid judicial warrant will say “U.S. District Court” or a State Court at the top. A valid warrant will be signed by a judicial officer, describes the place to be searched, and the persons or things to be seized, is dated and has been issued within the past 14 days. If the warrant is missing one or more of these requirements, it is invalid. For example, if the warrant does not list the facility’s correct address, it is invalid, and officers cannot conduct a search without your permission.

Administrative warrants do not come from a court but rather will say “Department of Homeland Security” and are on Forms I-200 or I-205. An administrative warrant does not allow agents to enter private areas without your permission.

If ICE agents tell you they have a warrant, ask for a copy and read it. Determine the type and validity of the warrant and proceed accordingly.

If you have any questions or doubts about the validity of the warrant, reach out to legal counsel, and simply inform the agent you need to seek legal advice – which is your absolute right. 

During a Search

Immigration officers may present a valid search warrant, signed and dated by a judge. This search warrant will include a time frame within which the search must be conducted, a description of the premises to be searched, and a list of items to be searched for and seized (e.g., payroll records, employee identification documents, I-9 forms, SSA correspondence, etc.)

If a search warrant is presented, examine it to ensure that you understand the scope permitted by the warrant itself, and monitor the agents’ activities to ensure they stay within that scope.

Protect attorney-client privileged materials during this search. If agents wish to examine documents designated as attorney-client privileged material (such as this memorandum or other communications to or from counsel), tell them they are privileged and refuse to produce them  until you are able to speak to your attorney. If the agents nevertheless seize them,  try to make note of exactly which documents were taken by the agent (even through photographs, if possible).

Arrests or Detentions

If ICE presents a valid arrest warrant, signed by a judicial officer, you must promptly comply.

However, if ICE shows you an administrative warrant with an employee’s name on it, you may (but are not required to) say if that employee is working that day or not. You are not required to lead ICE agents to the named employee.

If ICE agents try to stop, question, detain, or arrest a worker, the worker is not required to hand over any IDs or papers to ICE. The worker may stay silent and ask for an attorney.

Guidelines for a Form I-9 Audit

When ICE notifies you that there will be a form I-9 audit, contact an attorney. You are allowed up to three workdays to produce your I-9 forms. After reviewing the I-9 forms, ICE may find some employees are not authorized to work. If this happens, ICE will give you ten days to provide valid work authorization for these employees. If this happens, you must notify the affected employees.

At all times, you are permitted to speak to your lawyer before answering questions or signing ICE documents.

Bottom Line

With immigration enforcement becoming a top priority under the Trump administration, employers should be prepared to respond should ICE agents arrive at your doorstep.  Employers should have a response plan in place and ensure designated personnel know how to respond to ICE agents and who to contact if agents arrive.

Any questions? Contact your trusted Felhaber attorney.

The post Understanding Employer Rights and Obligations If ICE Knocks on Your Door: What You Need to Know appeared first on Felhaber Larson.

Executive Order 11246

Under Executive Order 11246, covered federal contractors and subcontractors were required to affirmatively recruit women and minorities for employment and ensure employment practices did not discriminate on the basis of race, color, religion, sex, and national origin. Executive Order 11246 further mandated that contractors develop annual affirmative action plans measuring their compliance with these objectives.

The Rescission of Executive Order 11246

The Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) has been responsible for enforcing Executive Order 11246 and its implementing regulations. Trump’s new EO directs the OFCCP to immediately stop:

• Promoting “diversity.”
• Holding Federal contractors and subcontractors responsible for taking “affirmative action.”
• Allowing or encouraging Federal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin.

The EO further provides, however, that contractors “may continue to comply with the regulatory scheme” for a period of 90 days, or until April 21, 2025.

Moving forward under the EO, executive agencies must require federal contractors “to agree that . . . compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions” and “to certify that [the contractor] does not operate any program promoting DEI that violates any applicable Federal anti-discrimination laws” going forward.

The Bottom Line

The full effect of the EO is yet to be determined as we wait for additional information and guidance from the Trump administration. For now, we know that affirmative action and related certification obligations as to gender and race/ethnicity no longer exist.

In contrast, because covered federal contractors/subcontractors’ affirmative action-related obligations with respect to protected veterans and individuals with a disability are based on federal Acts (i.e., the Vietnam Era Veterans’ Readjustment Act of 1974 and Section 503 of the Rehabilitation Act of 1973), the requirements imposed by those Acts and their implementing regulations presumably remain. Additionally, employers must still comply with and file EEO-1, VETS-4212, and state reporting obligations to date.

Though the EO may be challenged, and a lot of questions remain at this point (including the impact of the EO on state contactors’ ability to comply with state affirmative action-related requirements), federal contractors and subcontractors (and other employers) should review their DEI policies and practices for compliance now with existing law and consult their Felhaber attorneys for guidance.

The post President Trump Revokes Affirmative Action and Other Requirements in Government Contracting appeared first on Felhaber Larson.

On November 15, 2024, less than 60 days before the second salary increase was scheduled to take effect, the judge granted summary judgment against the U.S. Department of Labor, ruling that the agency’s increase to the minimum salary level in the 2024 Rule exceeded its statutory authority. As a result, the 2024 Rule—originally announced in April and which sought to raise the compensation thresholds for overtime eligibility—has been struck down on a nationwide basis.

The 2024 Rule

The 2024 Rule introduced a two-phase approach to raising the minimum salary threshold under the FLSA’s overtime regulations. The first phase, which took effect on July 1, increased the minimum salary to $43,888 per year (or $844 per week). The second phase, originally scheduled for January 1, 2025, would have raised the threshold further to $58,656 per year (or $1,128 per week). In addition, the 2024 Rule included provisions for automatic updates to the minimum salary level every three years. To be in compliance with the rules, the first phase increase should have taken place on July 1, 2024.

In tossing the 2024 Rule, the Texas judge found that the new salary threshold “effectively eliminates” consideration of whether an employee performs bona fide executive, administrative, or professional duties, replacing the traditional test with what amounted to a “salary-only” approach. This ruling follows a previous decision by the Eastern District of Texas Judge in June, which blocked the application of the first phase of the 2024 Rule to public employers in Texas. The latest ruling extends the block nationwide.

Bottom Line

With the 2024 Rule now blocked in its entirety, the salary threshold set by the 2019 regulations—$35,568 per year ($684 per week)—remains in effect. What are next steps for employers?

• Have you communicated the salary increases to your employees as one-step or two?
• If you’ve only given the increase required by July 1, 2024, can you hold back on the second increase? The answer is yes but be prepared to explain why the second increase will not occur.
• Can you take-back the increase that went into effect on July 1, 2024? In answering yes to this question, keep in mind that just because an employer could rescind the increase, doesn’t mean it should. What is the message to employees who were given a salary increase only to have it taken away?
• For employers with employees in New York, Colorado, California and other states, consider state laws regarding salary levels which are higher than the salary threshold set by the 2024 DOL rules.

It remains to be seen whether President-elect Trump will seek to raise this threshold during his next term, but it is unlikely that his incoming administration will appeal this decision in favor of the 2024 Rule.

Any questions? Employers can consult with their trusted Felhaber attorneys for guidance.

The post Texas Federal Court Blocks FLSA Overtime Rule Nationwide appeared first on Felhaber Larson.

In Minnesota, eligible employees have the right to take time off work to vote.   The laws grant employees the right to time off from work on Election Day in order to go to their polling place, cast their ballot, and return. If the time needed to vote falls within an employee’s scheduled work hours, employers are required to pay for this time.  The Minnesota Secretary of State’s Office takes the position employers cannot mandate that employees use personal or vacation leave for voting.

What can employers ask of their employees? While employers can request advance notice of when employees will be absent to vote, they should also encourage employees to coordinate their absences to reduce disruptions in the workplace. So long as employers do not interfere with employees’ right to vote, it can also talk with employees about voting during their non-working time if the polls are then open.

To summarize, employers must allow employees the necessary time off to vote and compensate them if it occurs during scheduled work hours. A violation of this law is a misdemeanor.

For those in states other than Minnesota, similar laws exist. For instance:

• Iowa: Employees may take up to two consecutive hours of paid leave if they lack two consecutive hours outside of their scheduled work hours during polling times. Written requests for this leave must be made before Election Day.
• North Dakota: Employers are encouraged, but not required, to give employees time off to vote if their hours conflict with polling times. There is no requirement to pay for this time.
• South Dakota: Employees can take up to two consecutive hours of paid leave if they don’t have two consecutive hours outside of work hours during polling times. The law does not specify whether employees must provide notice to receive this paid time off.

Bottom Line

It’s crucial for employers to prepare for and comply with these laws on Election Day, ensuring employees can exercise their voting rights while minimizing workplace disruptions. Employers with questions should consult their trusted Felhaber attorneys for guidance.

The post Upcoming Election Day: What Employers Need to Know About Employees’ Voting Rights appeared first on Felhaber Larson.

“Stay-or-pay” provisions refer to those that require an employee to pay the employer if the employee separates from employment within a certain timeframe. They include various types of cash payments that are tied to a mandatory stay period, such as training repayment agreement provisions (TRAPs), educational repayment contracts, quit fees, damages clauses, and sign-on bonuses. According to GC Abruzzo, stay-or-pay provisions, like noncompete agreements, restrict employee mobility by increasing employee fear of termination for engaging in protected Section 7 activity and making resigning from employment financially difficult or untenable. As such, the GC argues these provisions should be considered presumptively unlawful unless an employer can demonstrate the following under a new burden-shifting framework:

The agreement…

• Is voluntarily entered into in exchange for a benefit, meaning accepting the provision must be optional and employees must not suffer an undue financial loss or adverse employment action if they decline;
• Has a reasonable and specific repayment amount, or one that is no more than the cost to the employer of the benefit conferred, the amount of which is specified up front;
• Has a reasonable “stay period,” which is fact-specific and must be determined on a case-by-case basis (however, greater costs may be associated with a greater stay period, and vice versa); and
• Does not require repayment if an employee is terminated without cause. Specifically, the agreement must state that the employee will not owe the debt if they are terminated without cause.

Although there is apparently a sixty day period to “cure” existing provisions that do not comply with this proposed framework, the GC intends to seek “make whole” remedies against employers who maintain noncompliant noncompete or stay-or-pay provisions.

The Bottom Line

 While the NLRB has not adopted the GC’s proposed standards for noncompete agreements and stay-or-pay provisions, GC memoranda guide enforcement by Regional Offices and are afforded some weight by the Board, as evidenced by decisions like Stericycle in which the Board has adopted the GC’s proposed reasoning. In the wake of GC Memorandum 25-01, employers can expect Regions to issue and pursue complaints that these provisions violate Section 7 of the NLRA.

The post NEW NLRB General Counsel Memo Highlights Potential New Enforcement Over “Stay or Pay” Arrangements appeared first on Felhaber Larson.

NLRB General Counsel’s 2023 Memorandum

Back in May of 2023 the NLRB General Counsel issued Memorandum 23-08 (“GC Memo”) which focused on the legality of non-compete agreements under the NLRA.   The GC Memo takes the position that, with few exceptions, non-compete agreements should be deemed unlawful because they can “chill” employees from engaging in activities protected under Section 7 of the NLRA. Section 7 guarantees employees, whether unionized or not, the right to organize, bargain collectively, and participate in other concerted activities for mutual aid or protection.

The GC Memo emphasized that non-compete agreements could deter employees from leaving their jobs to seek better working conditions, organizing or joining unions, or even discussing job opportunities with competitors—all actions protected by the NLRA. While the memo primarily targeted non-compete agreements, it left open questions regarding the status of non-solicitation agreements, which employers often pair with non-competes to protect their business interests.  Generally speaking, non-solicitation provisions prohibit employees from “soliciting” or “recruiting” their other co-workers for a different employer.

Testing the Waters

The impact of the GC Memo became clearer with a case brought against a medical clinic and spa by the NLRB’s Cincinnati regional office. This case, initially filed in late 2023, culminated in a significant settlement later that year.

The consolidated complaint, issued in September 2023, alleged numerous violations, including the maintenance of unlawful confidentiality, non-disparagement, non-compete, non-solicitation, and training repayment provisions. The employer’s policies required employees who left their positions within the first twelve months to pay up to $75,000 in training costs and prohibited them from practicing aesthetic services within a twenty-mile radius for 24 months after termination. The complaint also alleged that the employer instructed employees not to discuss their terms and conditions of employment, including individual employment contracts, bonuses, and evaluations; unlawfully enforced its non-disparagement and training repayment provisions; and unlawfully discharged and withheld benefits from employees.

The case was resolved when the employer agreed to a comprehensive settlement. Under the terms of the settlement, the employer consented to rescind the unlawful policies, cease demands for training repayments, and pay over $25,000 in monetary relief to two employees who had been affected by the unlawful discharge and withholding of benefits. Additionally, the employer was required to post a remedial Notice to Employees across all its U.S. facilities and on its Slack messaging application, informing employees of their rights under the NLRA.

Cementing the New Standard

The NLRB’s opposition to non-solicitation agreements reached a new milestone with the recent decision in the case of J.O. Mory, Inc. In this case, a NLRB administrative law judge (ALJ) found that, under the NLRA, specific non-compete and non-solicitation provisions in an employee’s contract were unlawful for employees who were not supervisors or managers. The decision is significant because it applied the NLRB’s new Stericycle framework, which evaluates work rules from the perspective of an employee who is economically dependent on their employer.

The ALJ ruled that the non-solicitation provisions, along with other restrictive covenants in the employment agreement, could “chill” employees from engaging in protected activities because the provisions were overly broad. The ALJ, however, did not conclude that non-competition and non-solicitation restrictions are generally unlawful under the NLRA. The ALJ ordered the employer to rescind these provisions and notify current and former employees that they were no longer enforceable. The provisions were:

• a non-solicitation provision intended to prevent “pirating” by prohibiting employees during their employment and for twenty-four months after separation from “solicit[ing], encourag[ing], or attempt[ing] to persuade any other employee of [the] Employer to leave the employ of [the] Employer”;
• a non-competition provision that prohibited former employees for twelve months following separation from “directly or indirectly” engaging in or working for “any other business similar or competitive with [the] Employer’s business”; and
• a provision that required the employee to report “any and all offers or solicitations of employment that [the] Employee may receive from third-parties” and that did not include a limitation for union or other protected activity.

This decision upheld many of the concerns raised in the GC Memo and the Cincinnati complaint, providing an example of how the NLRB’s positions are being translated into real-world legal outcomes. It is important to note that the ALJ’s decision is not final for now. The case is still pending on appeal before the Board in Washington, D.C. which has yet to issue a decision.

The Bottom Line

The developments above reflect a broader trend within the NLRB: a growing intolerance for restrictive covenants that limit employees’ rights under the NLRA. While the full legal impact of these actions is still unfolding, it is clear that the NLRB is charting a course toward more aggressive regulation of non-solicitation and non-compete agreements.

For employers, these developments are a clear signal to re-evaluate their use of such agreements.  Although true non-complete agreements are now banned in Minnesota (eff. July 1, 2023), non-solicitation agreements are commonly used.   As the NLRB continues to advance its enforcement agenda, it is likely that more cases will emerge challenging the legality of these agreements.

The post The NLRB’s Expanding Scrutiny of Non-Solicitation Agreements appeared first on Felhaber Larson.

We previously reported about this lawsuit in mid-July when the same federal judge issued a preliminary injunction against the FTC Non-Compete Rule.  However, at the preliminary injunction stage, the federal judge declined to issue a nationwide preliminary injunction and, instead, limited the injunction to only the named plaintiffs in that lawsuit.  This narrow decision did little to allay the concerns of businesses with non-competes who were facing a September 4, 2024 effective date of the FTC Non-Compete Rule, which included an obligation that employers needed to provide their employees written notice that their non-competes would have been no longer enforceable.

In the August 20th ruling, the Texas federal judge held that the FTC lacked the statutory authority to issue the Non-Compete Rule and that it was arbitrary and capricious.  Importantly, the federal judge rejected the FTC’s argument that the relief should be limited to only the named plaintiffs.  Instead, the judge held that the Administrative Procedures Act requires the FTC Non-Compete Rule to be “set aside” in its entirety on a nationwide basis. Therefore, “[t]he Rule shall not be enforced or otherwise take effect on its effective date of September 4, 2024 or thereafter.”

It is expected that the FTC will appeal the decision to the Fifth Circuit and it may eventually end up before the U.S. Supreme Court.  However, at this point, the FTC Non-Compete Rule will not become effective on September 4, 2024.  Please remember that Minnesota’s restrictions on non-competes remains in effect and details regarding that law can be found here.

The post Texas Federal Court Blocks FTC Non-Compete Ban Nationwide appeared first on Felhaber Larson.

This rule has faced numerous legal challenges across the country. On July 3, 2024, a Texas federal judge issued a preliminary injunction against the rule, suggesting that the plaintiffs would likely succeed in proving that the FTC exceeded its authority. However, this injunction was limited to the specific plaintiffs involved in that case and did not apply nationwide.

Following that decision, the odds seemed to favor that other challenges to the Final Rule would be decided similarly, with other federal judges either enjoining the Final Rule outright or on a limited basis as the Texas judge did. However, a Pennsylvania federal district court judge issued a surprising endorsement of the Final Rule by denying a request for a temporary injunction in a similar lawsuit filed against the FTC.

Contrary to the Texas ruling, on July 23, 2024, Judge Kelley Brisbon Hodge of the Eastern District of Pennsylvania ruled that the plaintiffs had not demonstrated they would suffer irreparable harm without an injunction. Additionally, she reasoned that the FTC acted within its authority under the FTC Act, which empowers the agency to prevent unfair methods of competition, including through prospective rulemaking. Judge Hodge concluded that the FTC Act expressly empowers the FTC “to make rules and regulations for the purpose of carrying out the provisions” of the statute, which include “prevent[ing]…unfair methods of competition.” Since the FTC Act grants the FTC the authority to “prevent” unfair competition, Judge Hodge reasoned that this delegation must necessarily include the authority to make prospective rules intended to effectuate that purpose, such as the Final Rule banning non-compete agreements.

The Final Rule’s effective date of September 4, 2024, is quickly approaching. The Texas court is expected to make a final ruling by August 30, 2024, which isn’t likely to include a nationwide injunction. Meanwhile, appeals of the Pennsylvania and Texas decisions are likely but will take time to play out.

This recent development does not provide clarity to employers as they prepare to comply with the FTC’s Final Rule. As such, employers should continue to:

• Evaluate Risk Tolerance: Consider the possibility of needing to comply with the ban and develop a structured compliance strategy.
• Consider Legal Challenges: Filing their own legal challenges may be prudent.
• Strategize Compliance: Different strategies may be needed for the ban on new non-competes versus the notification requirement for existing agreements. It may be wise to wait before notifying employees until there is more legal clarity.
• Seek Legal Counsel: The future of this FTC Non-Compete Rule is uncertain and confusing, to say the least. Businesses should contact their legal counsel at Felhaber to determine how they should proceed.

The post Pennsylvania Court Declines to Enjoin FTC’s Non-Compete Ban: What Employers Need to Know appeared first on Felhaber Larson.

However, in an unfortunate twist for employers across the country, the court declined to grant nationwide preliminary injunctive relief, opting instead to limit its injunction to the specific plaintiffs in the lawsuit. The court indicated that it intends to issue a final ruling by August 30, 2024—days before the non-compete ban is scheduled to take effect on September 4.

What Issues Did the Court Consider and How Did It Rule?

As we have previously reported, the FTC’s final rule bans nearly all employee non-competes, including existing ones, and requires employers to notify all affected employees that their existing non-competes are no longer enforceable. The Texas federal court in Ryan LLC v. Federal Trade Commission considered the first legal challenge filed against the ban and was tasked with deciding whether to enjoin (pause enforcement of) the ban on a preliminary basis. In Ryan, the court held that the plaintiffs satisfied all three requirements for a preliminary injunction:

1. Likelihood of Success on the Merits: The court found that the plaintiffs established a likelihood of success in their key arguments:
   • The FTC lacks the statutory authority to issue substantive rules defining unfair methods of competition, including the ban on non-competes.
   • The FTC’s action was arbitrary and capricious under the Administrative Procedure Act (APA), 5 U.S.C. §§ 551–559.
2. Irreparable Harm: The court found that the plaintiffs would suffer immediate financial injury and nonrecoverable costs if the ban was to take effect, including invalidating current non-competes, increased risk of departing workers taking intellectual property, and signaling to competitors that poaching is permissible.
3. Balance of Equities and Public Interest: The court balanced the equities in favor of the plaintiffs, holding that an injunction would maintain the status quo and prevent substantial adverse economic impact without harming the FTC.

Limited Scope of the Injunction

Despite the ruling, the court declined to grant a nationwide injunction, limiting the relief to the specific plaintiffs in Texas. Therefore, employers still need to evaluate their risk tolerance and compliance strategies as the September 4 effective date approaches. The court indicated that nationwide relief was not necessary for the plaintiffs to receive complete relief at this preliminary stage and based on the judges reasoning, nationwide relief does not seem likely in August by the Texas court.

What Comes Next?

The Texas court’s ruling casts serious doubt on the enforceability of the FTC’s Non-Compete Rule, but with the scope of the injunction limited to only the plaintiffs, the battle is far from over. All eyes are now on a separate challenge pending in the Eastern District of Pennsylvania (ATS Tree Services, LLC v. The Federal Trade Commission), where the court has indicated it will issue its decision by July 23. Even if the decision in ATS Tree Services does not lead to a broader injunction against the FTC’s rule (which seems likely due to the plaintiff-specific relief sought in that case), a second decision holding that the FTC’s Non-Compete Rule is likely unenforceable will further undermine the Non-Compete Rule and will hopefully result in others (including the FTC) to act to delay the effective date of the Rule.

Additionally, as the final decision in Ryan and the Pennsylvania court’s decision will be issued just a few months before the 2024 presidential election, the election could significantly influence the direction of the FTC with respect to non-compete agreements and the Non-Compete Rule if there is an administration change even though the FTC’s current stance signals continued scrutiny and potential action against such agreements.

How Should Employers React?

The proposed FTC regulations are not the most recent or significant development regarding the legality of non-compete agreements. For example, last year Minnesota banned employers from entering into new non-compete agreements. The National Labor Relations Board has also taken steps to use its authority to limit the enforceability of non-competes.

As of now, only the employers in Texas who received injunctive relief are protected against the FTC’s non-compete ban taking effect on September 4. Accordingly, all other employers should:

• Evaluate Risk Tolerance: Consider the possibility of needing to comply with the ban and develop a structured compliance strategy.
• Consider Legal Challenges: Filing their own legal challenges may be prudent.
• Strategize Compliance: Different strategies may be needed for the ban on new non-competes versus the notification requirement for existing agreements. It may be wise to wait before notifying employees until there is more legal clarity.
• Seek Legal Counsel: The future of this FTC Non-Compete Rule is uncertain and confusing, to say the least. Businesses should contact their legal counsel at Felhaber to determine how they should proceed.

The post Texas Federal Court Enjoins Enforcement of FTC Non-Compete Ban But Declines to Impose Nationwide Injunctive Relief appeared first on Felhaber Larson.

Under the prior version of ESST, employers that had more generous paid time off policies, for example, PTO policies providing benefits beyond the minimum hours required by the ESST statute, were not required to comply with the ESST statute (including notice, documentation, and protection from retaliation) for any leave benefits which were more than the 48 hours (or 80 hours in a subsequent year) minimums required by the ESST statute.

According to the 2024 amendments to the ESST statute, however, this is no longer the case. The amended statute provides that “[a]ll paid time off and other paid leave made available to an employee by an employer in excess of the minimum amount required in section 181.9446 for absences from work due to personal illness or injury, but not including short-term or long-term disability or other salary continuation benefits, must meet or exceed the minimum standards and requirements provided in sections 181.9445 [which includes the statutory ESST definitions and the statutory mandated use of ESST] …” except for the accrual rates under the ESST statute.

What does this even mean? Originally (and this was the wishful thinking part), we hoped that this amendment only required employers to “protect” additional PTO beyond the minimum ESST requirements to employee use of PTO for their own “personal illness or injury.” (That’s a reasonable interpretation, isn’t it, given that’s actually what the statute says?) In other words, the expansion of the statute did not apply to taking PTO for ESST reasons other than for the employee’s own illness or injury.

Sadly, this was wishful thinking on our part. The Minnesota Department of Labor and Industry (DOLI) is taking a broader view of the amendments, and it appears to be the DOLI’s position that the additional PTO can be used for any of the reasons covered by the ESST statute. In a recent update to the DOLI website, DOLI described the amendment follows:

If an employer provides employees with paid time off (PTO) or other paid leave that is more than the amount required under the ESST law for absences due to personal illness or injury, the additional PTO must meet the same requirements as the ESST hours, other than the ESST accrual requirements. For example, if an employee receives 50 hours of PTO in addition to the minimum requirement of 48 ESST hours per year, the employer must follow the ESST requirements about notice, documentation, anti-retaliation, replacement workers and more for the PTO hours in addition to the ESST hours.

https://dli.mn.gov/sick-leave-changes

So, what does this really mean? If the DOLI is intending to interpret the amendment broadly to require all PTO to be eligible for use as ESST, this means that employees may use PTO (even though it may be well in excess of the ESST statutory minimums) for any of the multiple reasons covered by the ESST statute. For example, an employee receives 120 hours of PTO on their anniversary in addition to PTO time granted the previous year, the employee may use the 120 hours of PTO for vacation or for any reason covered by the ESST statute.

Are there any exceptions to the use of PTO under the revised ESST statute? According to the amendment, for any PTO accrued prior to January 1, 2024 (the effective date of the ESST statute), “an employer may require an employee who uses such leave to follow the written notice and documentation requirements in the employer’s applicable policy or applicable collective bargaining agreement” under any [PTO] rules which existed before January 1, 2024. In other words, employer documentation requirements (such as requiring doctor’s note or 24 hours’ notice) would apply only to time that accrued prior to 2024 and only if those requirements existed prior to January 1, 2024.

Does this mean that all PTO plans are a free-for-all? Not necessarily, or maybe better said, not quite. Since PTO time over and above ESST minimum requirements can be used for any ESST reason, it follows that an employer can require employees to comply with the ESST rules, including advance notice, if possible, and requirements for following company call-in procedures.  This is likely small solace because what this amendment also means is that employers who provide generous amounts of PTO will have a far more difficult time holding employees accountable for unpredictable, missed work as employees can easily claim that such absences are protected by ESST.

It is also important to note that with respect to PTO use that is solely for rest and relaxation (i.e., a vacation), it is likely that employers will still be allowed to use and enforce any existing rules they may have about request and approval of PTO used for vacation if it’s clearly defined in the PTO policy.

Bottom Line

For employers who provide more generous amounts of PTO than the minimum requirements of ESST, it may be time to consider whether you want to make changes to those policies to limit the impact of the changes to more generous policies. For example, an employer could consider dividing a generous PTO policy into sick time (subject to ESST) and vacation time (not subject to ESST).

If it’s possible to divide up an employer’s PTO plan into pre-2024 versus post-2024 accrual, an employer can impose whatever notice or documentation requirements existed before January 1, 2024. If that is not possible, then the new provisions effective January 1, 2025, will apply.

Short of changing your PTO plan or divvying it up into pre-2024 and post-2024 accrual, effective January 1, 2025, employers will be required to allow all PTO to be used for any reason covered by the ESST statute under DOLI’s interpretation of the most recent amendment.

The post It Was Wishful Thinking On Our Part… appeared first on Felhaber Larson.

The Case 

The case arose when a long-time employee was let go as a result of a business unit reorganization and replaced by a black woman. Subsequently, the employee sued his former employer under the MHRA.  During his employment, the employee reported to executives based in Minnesota. However, he lived and worked in Kansas. The employee had previously traveled to Minnesota about four times a year as part of his employment but began traveling less in 2017. His last business trip to Minnesota was in November 2019. The employee regularly traveled for work to places other than Minnesota in 2020 and 2021 prior to his termination.

Of relevance, the MHRA protects an “employee” from discrimination. The statute defines “employee” as “an individual who is employed by an employer and who resides or works in the state.” Therefore, to resolve the current dispute, the court needed to determine whether the employee “works in” Minnesota.  In doing so, the court relied on Kuklenski v. Medtronic USA, Inc., which considered the same question. In Kuklenski, the Court held that “to work in [Minnesota] . . . [workers] must perform duties of [their] jobs within the limits, bounds, or area of Minnesota,” and that the MHRA “requires at a minimum some physical presence within the geographic boundaries of the State of Minnesota.” Additionally, the court noted that a worker’s past presence in the state is not enough to warrant the MHRA’s protection. Here, because the employee had not been to Minnesota for twenty months immediately preceding his termination, the court determined he was not an employee covered by the MHRA and dismissed his MHRA claims. The employee’s past presence in Minnesota did not change this conclusion.

The court noted that this determination will ultimately occur on a spectrum. At one end is the case where the employee traveled to Minnesota on a single occasion 20 years ago – this worker is not protected by the statute. On the other end, is the employee who has worked in an office in Minnesota every single day for the past 20 years but happens to be on a business trip in New York when terminated – this worker is protected. There will be many situations that exist in the middle of the spectrum, and close calls will need to be determined by juries.

Finally, the court considered the implications of the choice-of-law clause in the employment agreement, which stated that Minnesota law governed. Although the employee argued that this clause allowed him to bring an action against under the MHRA irrespective of whether he was an employee, the court disagreed. It determined that choice-of-law clauses direct the courts to apply the requested state law when said laws are applicable. Stated differently, the choice-of-law clause in the employee’s employment agreement could not compel the court to apply the MHRA—an inapplicable state law—simply because the clause requests that that Minnesota state law be applied.

Bottom Line

Minnesota employers with remote workers living and working in other states should make note of two important takeaways. First, Walton indicates that the worker’s location—not the employer’s—is the relevant factor in determining whether a worker works in the state, and that past presence in the state might not be enough for the protections of the MHRA to extend to the employee. Second, employers should also make note of the limitations the court imposed on choice-of-law clauses in employment agreements.

The post Minnesota Federal District Court Rules That the MHRA Does Not Apply to Workers Who Do Not Work in Minnesota at the Time of Termination appeared first on Felhaber Larson.

The below information is a high-level summary of the legislative changes.  We are hosting a Webinar on Friday, June 14 from 8:30 – 11:00 a.m. to discuss the Minnesota legislative changes in more detail, and we will be discussing several other recent changes at the federal level. This includes the new FLSA rule on exempt employees and salary thresholds and the FTC’s non-compete ban.  The Webinar is free, you can earn 2.25 hours of continuing education credits, and it will be well worth your time to attend.  More information can be found here. We look forward to seeing everyone there.

Earned Sick and Safe Time Changes

The 2024 Minnesota legislature passed a number of changes to the ESST law.  These changes merit close review and given the number of changes, we have separately reported on them here.

Salary Ranges Required in All Job Postings

Starting January 1, 2025, Minnesota law requires employers to disclose salary ranges in all job postings.  The law requires an employer to disclose in every job posting the “starting salary range” and “a general description of all of the benefits and other compensation (i.e., health, retirement benefits) to be offered to a hired applicant.”  Salary range means “the minimum and maximum annual salary or hourly range of compensation, based on the employer’s good faith estimate” for the position.  The salary range cannot be open-ended (i.e., “$75,000 +”) and, if the employer does not want to post a range, then they must list a fixed pay rate.  The law does not compel employers to have a written job posting whenever it needs to hire someone.  Instead, it just requires a salary range if the employer decides to have a job posting.  Importantly, the term “employer” only includes companies who employ more than 30 employees in Minnesota, so small employers under that threshold are exempted from this law.

Restrictive Covenants in Service Contracts

Following on the heels of MN’s non-compete ban enacted last year, the Minnesota legislature passed a law that bans restrictive covenants in service contracts.  The law prohibits an agreement between a customer and a “service provider” that restricts or prohibits the customer from soliciting or hiring any employees of the service provider. The law becomes effective July 1, 2024, and only applies to agreements entered into after that date.

Examples of these types of service contracts include a daycare provider that requires all of their families to enter into an agreement that prohibits families from directly hiring their employees as nannies.  Or accounting firms, IT providers, consulting companies, or other service providers that require their customers to agree to not hire their employees to work directly for the customer in an in-house position. All of these types of restrictions are now prohibited in Minnesota except for pre-existing agreements which are grandfathered in.

Definition of “Disability,” “Discriminate,” and “Familial Status” Expanded Under Minnesota Human Rights Act (MHRA)

The definition of “disability” under the MHRA has historically been defined as “any person who (1) has a physical, sensory, or mental impairment which materially limits one or more major life activities; (2) has a record of such an impairment; or (3) is regarded as having such an impairment.”  The Minnesota legislature added a fourth category: a person who “has an impairment that is episodic or in remission and would materially limit a major life activity when active.”

The term “discriminate” has been defined as to “segregate or separate and, for purposes of discrimination based on sex, it includes sexual harassment.”  Under the new law, harassment is no longer limited to “sexual harassment,” which expands the scope of “discriminate” to include any harassment made due to any other protected class (race, religion, age, disability, etc.).

The definition of “familial status” has been limited to situations where “one or more minors” are domiciled with the minor’s parents or guardians.  The definition has been expanded to include certain categories of adults – “[F]amilial status also means residing with and caring for one or more individuals who lack the ability to meet essential requirements for physical health, safety, or self-care because the individual or individuals are unable to receive and evaluate information or make or communicate decisions.”

Each of these changes is effective August 1, 2024.

Additional Penalties and Remedies Under the MHRA

Employers have long been subject to compensatory damages (lost wages, emotional distress damages, etc.) and attorneys’ fees if found to have violated the MHRA. The amended statute states that a “court shall order” a party who violates the MHRA “to pay a civil penalty to the state” in addition to other damages available to the aggrieved party. In addition, if a party has engaged in an “unfair discriminatory practice,” the court “shall” award to the aggrieved party “compensatory damages, including mental anguish and suffering, in an amount up to three times the actual damages sustained.”  The statute also recognizes the availability of punitive damages and no longer caps them at $25,000.  In addition to monetary remedies, a court may also order equitable relief, including “the hiring, reinstatement, or upgrading of an aggrieved party who has suffered discrimination, with or without back pay.”

These changes are also effective August 1, 2024.

Religious Organizations Exempted From Certain Aspects of the MHRA

The MHRA has a provision that provides religious organizations certain exemptions under the MHRA, including being able to “give preference to persons of the same religion or denomination” in hiring.  The Minnesota legislature has expanded the scope of this exemption to be consistent with the First Amendment and the ministerial exception recognized by the U.S. Supreme Court in the Hosanna Tabor and Our Lady of Guadalupe decisions.  The amended version of the statute continues to allow religious organizations to give religious preference when hiring.  But it also states that religious organizations are not prohibited from “taking any action with respect to education, employment, housing and real property, or use of facilities” when such action is made consistent with the organization’s religious beliefs.  These new provisions only apply to non-profit religious organizations, including religious schools, and does not apply to “secular business activities engaged in” by the religious organization that is “unrelated to [its] religious and educational purpose.”

Additional Penalties and Liability for Misclassifying Employees

Minnesota has had an employee misclassification statute on the books for years which generally prohibits employers from misclassifying employees as independent contractors.  However, the law has been significantly amended with an eye towards enforcement and penalties.

First, if an “owner, partner, principal, member, officer, or agent” of a company “knowingly or repeatedly engaged” in misclassification of employees, then that person may be held personally liable.

Second, the new statute allows for compensatory damages to the individual who has been misclassified, which may include supplemental pay, overtime, shift differentials, vacation pay, sick pay, health insurance, life or disability insurance, retirement plans, Social Security and Medicare, and any other costs and expenses incurred by the individual resulting from the failure to have been classified correctly.

Third, the new statute allows for a penalty of up to $10,000 for each individual the company failed to classify as an employee, a $10,000 penalty for each statutory violation, and a $1,000 per-day penalty for any person who “delays, obstructs, or otherwise fails to cooperate with the commissioner’s investigation.”

Changes to Minnesota’s Cannabis and Drug and Alcohol Testing Laws

There were a number of relatively minor changes to DATWA.  They include allowing employers to use “oral fluid tests” (i.e. saliva tests) for cannabis, drug, and alcohol screens when otherwise allowed under the statute. The oral fluid tests can be administered at the employer’s place of business, which prevents employees having to go off-site to a testing facility.

DATWA originally allowed reasonable suspicion testing if an employer had a reasonable suspicion that an employee “is under the influence of drugs or alcohol.”  When recreational marijuana was legalized during the 2023 legislative session, there were a number of changes to DATWA to reflect that. However, the legislature did not amend the reasonable suspicion language to include cannabis.  That has now been corrected and an employer may require testing if it has a reasonable suspicion that the employee “is under the influence of drugs, cannabis, or alcohol.”

Minnesota Paid FMLA

Minnesota’s Paid FMLA statute is set to go into effect on January 1, 2026.  The legislature passed a number of changes to the statute, many of which address procedural issues with how the State will operate the system.

There are a few noteworthy changes for employers.

First, DEED is required to notify all employers within five business days if an employee has submitted a claim for benefits.

Second, intermittent use of paid FMLA “must be taken in increments consistent with the established policy of the employer” provided that the policy permits minimum increments of at most one calendar day.

Third, if an employer provides an employee with “wage replacement during an absence,” and if those supplemental benefits and paid FMLA leave benefits exceed the employee’s usual salary, then the employee will be required to return the excess to the employer.

Fourth, for employees who are eligible for both disability benefits and paid FMLA, the disability insurance benefits “may be offset by family and medical leave benefits paid to the employee” by the State. However, such offset must be “pursuant to the terms” of the disability policy. Therefore, employers should review their disability policies and make sure there is language allowing offset to prevent the employee from receiving more in disability and paid FMLA benefits than their normal compensation.

Fifth, the original version of the statute states that an applicant is not eligible to receive paid FMLA benefits if they are receiving severance pay. That provision has been deleted from the statute.

Benefit Continuation During Pregnancy-Related Leave and Parenting Leave

If an employee is provided a leave of absence as a form of pregnancy accommodation under Minn. Stat. 181.939, Subd. 2, or is provided pregnancy and parenting leave under Minn. Stat. 181.941, the employer must now maintain health insurance coverage during the leave period. However, the employee “must continue to pay any employee share of the cost of the benefits.”  This change is effective August 1, 2024.

Prenatal Appointments Cannot Be Counted Against 12-Week Pregnancy and Parenting Leave

If an employee needs to attend prenatal care medical appointments, that time away from work cannot be counted against the twelve weeks of “pregnancy and parenting leave” that employers are required to provide to all employees.

Service Animals in Public Places

Minnesota law previously prohibited hotels, restaurants, or other public places from preventing “a blind or deaf person or a person with a physical or sensory disability from taking a service animal into the public place.”  This terminology has been simplified and expanded so that it applies to any “person with a disability” who uses a service animal.  This arguably expands who can use a service animal at public places by including those who did not fit the original definition but still have a disability.

Right to Review Personnel Record

Employers are likely familiar with the Minnesota statute that provides current and former employees the right to review their personnel record upon request. The statute had defined “employer” as those companies that have 20 or more employees.  That definition has changed to “one or more employees,” so all employers in Minnesota are now under the purview of the personnel record statute.

The post Minnesota 2024 Legislative Update appeared first on Felhaber Larson.

Earnings Statements and Records

Many employers invested considerable time, energy and expense to report available and used ESST hours on employees’ paystubs.   The law has been changed to make it “easier” to report this information.

Specifically, at the end of each pay period, an employer must provide in writing, or electronically, information stating the employee’s current amount of ESST available for use and the number of hours used during the pay period.

Employers may choose a “reasonable system” for providing this information which includes reporting on earning statements (which was previously required) or by providing access to electronic system with the information (along with the requirement that an employer-owned computer with a printer must be available).    ESST records must be kept for three years and be available for inspection upon demand by MN-DOLI.

This change is effective immediately.

Changes to “Rate of Pay”

Employers were particularly frustrated with how ESST was paid.  Under the prior ESST statute, ESST was required to be paid “at the same hourly rate as the employee earns from employment.”  This meant that shift differentials and holiday pay rates arguably needed to be paid on ESST-qualifying hours.

As amended, the ESST statute requires ESST to be paid at the employee’s “base rate.”  The “base rate” is defined to mean:

1. 1. for employees paid on an hourly basis, the same rate received per hour of work;
   2. for employees paid on an hourly basis who receive multiple hourly rates, the rate the employee would have been paid for the period of time in which leave was taken;
   3. for employees paid on a salary basis, the same rate guaranteed to the employee as if the employee had not taken the leave; and
   4. for employees paid solely on a commission, piecework, or any basis other than hourly or salary, a rate no less than the applicable local, state, or federal minimum wage, whichever is greater.

The amended statute also makes clear that “base rate” does not include: “commissions; shift differentials that are in addition to an hourly rate; premium payments for overtime work; premium payments for work on Saturdays, Sundays, holidays, or scheduled days off; bonuses; or gratuities . . . .”

This change to the ESST law is effective immediately.

Exclusions Certain Workers

The existing 80-hour threshold for “employee” status has been changed to include a person who is “anticipated” by the employer to perform work in Minnesota for at least 80 hours in a year.     The new definition of employee also excludes volunteer firefighters, elected officials, and certain farm employees (who work less than 28-days per year).

This change to the ESST law is effective immediately.

Documentation May Be Required After Three Consecutive “Scheduled” Absences

The amended ESST law provides that an employer may require documentation substantiating an employee’s absence if the employee uses ESST “for more than three consecutive scheduled work days . . . .”

This change to the ESST law is effective immediately.

Funeral Leave Is Added

A new, permitted use of ESST includes the need to make arrangements for or to attend a funeral service or memorial, or address financial or legal matters that arise after the death of a family member.

This change to the ESST law is effective immediately.

15-Minute Increments for ESST Use

When the ESST law was first passed in 2023, ESST could be used in the “smallest increment of time tracked by the employer’s payroll system.”  For most employers, this meant that non-exempt workers could use ESST in as little as one or seven-minute increments.

As amended, the ESST statute makes clear that ESST may be used in the “same increment of time for which employees are paid, provided an employer is not required to provide leave in less than 15-minute increments nor can the employer require use of earned sick and safe time in more than four-hour increments.”

This change to the ESST law is effective immediately.

Weather/Emergency Event Exception

Certain employees, i.e., those whose jobs entail or may entail responding to weather events and public emergencies, are excepted from ESST use for similar reasons.

Effective January 1, 2025, More Generous Time Off Programs Are Impacted by ESST

From our perspective, the most significant and substantive change to ESST relates to time off programs that provide benefits to employees that exceed the minimum ESST requirements.

Under the prior law, employers that had more generous paid time off policies were not required to comply with the ESST statute (including documentation and protection from retaliation) for leave that is more than the 48 hours (or 80 hours) minimum.

Under the amended statute, which is effective January 1, 2025, all employer-provided leave will be converted into protected ESST time – even if the paid leave exceeds 48 or 80 hours – provided that the employee uses the time for the employee’s own “personal injury or illness.”  Here is the text of the amendment:

No Effect on more generous sick and safe time policies.

(a) Nothing in sections 181.9445 to 181.9448 shall be construed to discourage employers from adopting or retaining earned sick and safe time policies that meet or exceed, and do not otherwise conflict with, the minimum standards and requirements provided in sections 181.9445 to 181.9448. All paid time off and other paid leave made available to an employee by an employer in excess of the minimum amount required in section 181.9446 for absences from work due to personal illness or injury, but not including short-term or long-term disability or other salary continuation benefits, must meet or exceed the minimum standards and requirements provided in sections 181.9445 to 181.9448, except for section 181.9446. For paid leave accrued prior to January 1, 2024, for absences from work due to personal illness or injury, an employer may require an employee who uses such leave to follow the written notice and documentation requirements in the employer’s applicable policy or applicable collective bargaining agreement as of December 31, 2023, in lieu of the requirements of section 181.9447, subdivisions 2 and 3, provided that an employer does not require an employee to use leave accrued on or after January 1, 2024, before using leave accrued prior to that date.

Under the amendment, employer documentation requirements (such as requiring doctor’s note or 24 hours’ notice) would apply only to time that accrued prior to 2024 and only if those requirements existed prior to January 1, 2024.

Again, this amendment is effective on January 1, 2025.

Bottom Line

In light of the foregoing changes to the ESST laws, it is important to “dust off” your ESST policies to ensure compliance with these new legal requirements.

For employers who provide generous amounts of sick time or PTO, it may be time to make changes to those policies to limit the impact of the changes to more generous policies on January 1, 2025.  For example, an employer could consider dividing a generous PTO policy into sick time (subject to ESST) and vacation time (not subject to ESST).

We will continue to monitor this development.

The post 2024 Amendments to the Minnesota ESST Statute appeared first on Felhaber Larson.

PWFA Refresher

The PWFA requires employers to provide reasonable accommodations to qualified employees (including applicants) with “known limitations” related to, affected by, or arising out of pregnancy, childbirth, or related medical conditions, unless the accommodation will cause an undue hardship.

Under PWFA and its implementing regulations, the term “related medical conditions” is defined as “medical conditions which relate to, are affected by, or arise out of pregnancy or childbirth, as applied to the specific employee or applicant in question, including, but not limited to, termination of pregnancy, including via miscarriage, stillbirth, or abortion,” among many other conditions.

Nature of the Lawsuit Against the EEOC

The states challenging PWFA’s final regulations take issue with the scope of PWFA’s final regulations, which require an employer to provide reasonable accommodations (absent an undue hardship) for pregnancy related medical conditions, which expressly includes “termination of pregnancy,” including via “abortion.” Calling the final regulations an “unprecedented and unlawful abortion-accommodation statute,” the challenging states are seeking to invalidate the final regulations.

The challenging states cite to the U.S. Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization, which held that states have legitimate interests in regulating abortion, including “respect for and preservation of prenatal life at all stages of development.”  The challenging states argue that the EEOC’s final regulations “vitiate” theses interests by requiring states to “facilitate elective abortions they have chosen to proscribe or else face federal lawsuits for money damages and injunctive relief.”

The challenging states are asking the Court to stay the effective date (June 18, 2024) of the final regulations pending judicial review, to enjoin the EEOC’s enforcement of the final regulation’s “abortion-accommodation mandate,” and to declare the “abortion-accommodation mandate” unlawful.

EEOC’s Position

While the EEOC has not yet answered the Complaint filed by the challenging states, the EEOC did address the public comments that were submitted in response to the proposed regulations on the issue of including abortion in the definition of a pregnancy related medical condition.  The EEOC indicated, among other comments, that PWFA is a workplace anti-discrimination law that does not regulate or mandate the provision of abortion services or mandate when and under what circumstances an abortion is permissible.

Bottom Line

Minnesota is not one of the states challenging the lawfulness of the final regulations.  Nevertheless, any stay of the effective date of the final regulations or injunction of the abortion-accommodation portion of the final regulations, will have an impact on Minnesota employers with 15 or more employees subject to PWFA.  Felhaber will continue to monitor the lawsuit as it progresses and provide updates where appropriate regarding the implementation and scope of PWFA’s final regulations.

The post Immediate Legal Action – 17 States Commence Lawsuit Seeking to Enjoin Implementation of the Final Regulations Implementing the Pregnant Workers Fairness Act appeared first on Felhaber Larson.

What is a “noncompete”?

The rule defines “non-compete clause” as “a term or condition of employment that prohibits a worker from, penalizes a worker for, or functions to prevent a worker from (A) seeking or accepting work in the United States with a different person where such work would begin after the conclusion of the employment that includes the term or condition; or (B) operating a business in the United States after the conclusion of the employment that includes the terms or condition.” It further defines “term or condition of employment” as including but not limited to “a contractual term or workplace policy, whether written or oral.”  Notably, non-solicitation of an employer’s clients or employees is not explicitly included in the definition of “non-compete clause.”

Employers should pay particular attention to the phrase “functions to prevent” in the above definition. As used here, it means that any term or condition that is so broad or onerous as to effectively (although maybe not explicitly) prohibit or penalize a worker from accepting other work or starting a new business after the conclusion of their employment will be considered a non-compete clause. A term that “functions” in such a way will be unenforceable against the worker. Per the comments to the rule, this scenario may arise if a non-disclosure or non-solicitation provision is so broad that it functions as a noncompete. Accordingly, it will be important for employers to review all of their existing employment agreements with post-employment restrictions.

When does the rule go into effect and what must an employer do?

The rule goes into effect 120 days after it is published in the Federal Register.

By the effective date, employers are required to notify workers that it is an unfair method of competition to enforce or attempt to enforce a non-compete clause, and that by the effective date the worker’s non-compete clause will not be, and cannot be, legally enforced against them. The notice must identify the person who entered into the non-compete clause with the worker. The notice can be delivered to the worker in one of four ways: (1) on paper delivered by hand to the worker; (2) by mail at the worker’s last known personal street address;  (3) by email at an email address belonging to the worker, including the worker’s current work email address or last known personal email address; or, (4) by text message at a mobile telephone number belonging to the worker. The notice must be clear and conspicuous. The FTC also states that mass communication, such as a mass email to current and former workers, is appropriate.

The rule contains model language for employers to use when notifying their workers. And while it does not appear that an employer must use this exact language, the rule contains a safe harbor provision which states that by following the model language the employer will comply with the rule.

Does this apply to all workers and all noncompetes?

No, there are a few exceptions to the rule.

First, the rule does not apply to current non-compete clauses for senior executives. With respect to senior executives, the rule only affects non-compete clauses entered into after the effective date of the rule. A senior executive is a worker who (1) was in a policy-making position; and (2) received a total annual compensation of at least $151,164 in the preceding year or its equivalent when annualized if the worker was employed during only part of the preceding year.

Second, the rule does not apply to a non-compete clause entered into pursuant to the sale of a business entity, the sale of the person’s ownership interest in a business entity, or the sale of substantially all of a business entity’s operating assets.

Finally, the rule does not apply where a cause of action related to a non-compete clause accrued prior to the effective date. In other words, if a worker violates his or her noncompete prior to the effective date of the rule, the employer can still pursue appropriate remedies for that violation even once the rule is in effect.

What about State laws?

The rule does not exempt any person from complying with state statutes and regulations regarding noncompetes. Nor does the rule limit a party’s authority or rights to bring a claim under state common law, antitrust law, and consumer protection law. However, the rule supersedes state laws to the extent that such laws would permit or authorize a person to engage in conduct that the rule deems unlawful.

Legal challenges are already here.

Merely one day after the final rule was announced, the FTC was sued by the US Chamber of Commerce and several other business groups seeking to invalidate the rule. A complaint filed in a Texas federal court alleges that the FTC lacks authority to issue rules defining unfair methods of competition. Felhaber will be monitoring this lawsuit and any other challenges to the rule that may arise. Stay tuned for more updates.

Bottom Line

Despite the pending legal challenge, employers should review their existing noncompete agreements and prepare to issue a notice to their workers. Employers should also review any current non-solicitation, non-disclosure, and other restrictive agreements because, if written broadly enough, such agreements may be unenforceable under the new rule. While this may seem like a daunting task, members of Felhaber’s labor and employment group are available and ready to help navigate this changing legal landscape.

The post Federal Trade Commission Issues Final Rule Banning Noncompetes appeared first on Felhaber Larson.

The current salary threshold for executive, administrative, professional, computer, and outside sales employees is $684 per week ($35,568/year).  Effective July 1, 2024, that figure will increase to $844 per week ($43,888/year).  Then, on January 1, 2025, that figure will jump to $1,128 per week ($58,656/year).  For highly compensated employees, the final rule requires an annual salary of $132,964 by July 1, 2024, which will increase to $151,164 on January 1, 2025.  The final rule also includes a mechanism where all of these salary thresholds will automatically increase once every three years beginning on July 1, 2027.

This is a significant change to the FLSA exemption requirements and undoubtedly will result in more workers being classified as non-exempt and subject to overtime pay.  Bloomberg law anticipates that the change may impact 3 to 4 million workers.  While we expect lawsuits will be filed in an attempt to stop the final rule, the July 1 deadline is quickly approaching.  All organizations should review their employee roster and determine which positions and employees will be affected by the updated salary threshold and plan accordingly.  As always, Felhaber’s team of employment attorneys stands ready to speak with you about these changes and the impact on your organization.

The post Breaking: DOL Issues Final Overtime Rules appeared first on Felhaber Larson.

PWFA’s Reasonable Accommodation Requirement

PWFA requires employers to provide reasonable accommodations to qualified employees (including applicants) with “known limitations” related to, affected by, or arising out of pregnancy, childbirth, or related medical conditions, unless the accommodation will cause an undue hardship. PWFA greatly expands what an employer was previously required to accommodate as it relates to pregnancy-related accommodations.

Under PWFA, a “known limitation” is defined as a “physical or mental condition related to, affected by, or arising out of pregnancy, childbirth, or related medical conditions” whether or not the condition meets the definition of a “disability” under the Americans with Disabilities Act (“ADA”). That is, an employee can be entitled to a reasonable accommodation for a known limitation relating to pregnancy, childbirth, or related medical conditions, even if the limitation is not otherwise a “disability.”

An employee is “qualified” if they, “with or without reasonable accommodation, can perform the essential functions of the employment position.” Importantly, however, unlike accommodations for disabilities under the ADA, PWFA allows an employee to be “qualified” even if they cannot perform one or more essential functions of the job if the inability to perform the essential function(s) is “temporary,” the employee could perform the essential function(s) in the “near future,” and the inability to perform the essential function(s) can be reasonably accommodated.

The Final Regulations

The final regulations go into great detail regarding implementation of PWFA and provide numerous examples for reference.  While this article identifies some of the key takeaways from the final regulations, it does not exhaustively identify every regulation or example.

What is a “known limitation”?

Under the final regulations, a “known” limitation is one that has been communicated to an employer.  A “limitation” can include: (1) an impediment or problem that may be modest, minor and/or episodic; (2) a need or problem related to maintaining the employee’s health or the health of the pregnancy; or (3) seeking health care related to pregnancy, childbirth, or a related medical condition itself.

An employee is “qualified” even if unable to perform the essential functions of the position.

Under the ADA, an employee is no longer considered a “qualified employee” requiring reasonable accommodation if the employee, with or without reasonable accommodation, cannot perform the essential functions of the position.

As articulated in the final regulations, PWFA differs from the ADA in its clarification that an employee can still be “qualified” even if an employee is unable to perform one or more of the essential functions of their position if the inability to do so is (1) “temporary,” (2) the employee could perform the essential functions “in the near future,” and (3) the inability to perform the essential functions can be reasonably accommodated. 

“Temporary” is defined as “lasting for a limited time, not permanent, and may extend beyond ‘in the near future.’”  With respect to pregnancy, “in the near future” is generally within forty weeks.  However, whether an employee can perform the essential functions of the position “in the near future” in situations other than pregnancy, must be analyzed on a case-by-case basis.

With respect to whether the inability to perform the essential functions of the position can be “reasonably accommodated,” the regulations provide suggested ways a temporary suspension of essential functions can be reasonably accommodated. Depending on the position, the essential functions may be temporarily suspended (with or without reassignment to someone else) and the employee:

• • Continues to perform the remaining functions of the job;
  • May be assigned other tasks to replace the essential functions;
  • May perform the functions of a different job to which the employer temporarily transfers or assigns them; or
  • May participate in the employer’s light duty or modified duty program.

The regulations reiterate that employers are going to need to consider more than one alternative to identify potential reasonable accommodations that do not create an undue hardship when a qualified employee is temporarily unable to perform the essential functions of the position.

What are “reasonable accommodations”?

The regulations identify several specific examples of possible reasonable accommodations:

• • Frequent breaks
  • Sitting/standing
  • Schedule changes
  • Part-time work
  • Paid and unpaid leave
  • Telework
  • Parking
  • Light duty
  • Making existing facilities accessible or modifying the work environment
  • Job restructuring
  • Temporarily suspending one or more essential functions
  • Acquiring or modifying uniforms, equipment, or devices
  • Adjusting or modifying examinations or policies

The regulations also identify modifications that “in virtually all cases” will be found to be reasonable accommodations that do not pose an undue hardship:

• • Carrying or keeping water near and drink, as needed;
  • Taking additional restroom breaks, as needed;
  • Allowing an employee whose work requires standing to sit and whose work requires sitting to stand; and
  • Taking breaks to eat and drink, as needed.

What constitutes an “undue hardship”?

Generally, the undue hardship analysis will remain the same as it has been under the ADA, with one important distinction.  Because PWFA provides that an employer may have to accommodate an employee’s temporary inability to perform one or more essential functions of the position, the regulations identify additional factors to consider in determining whether a temporary suspension of one or more essential functions causes an undue hardship:

• • Consideration of the length of time the employee will be unable to perform the essential functions;
  • Whether there is work for the employee to accomplish;
  • The nature of the essential functions, including frequency;
  • Whether the employer has provided other employees in similar positions who are unable to perform the essential functions of their positions with temporary suspensions of those functions and duties;
  • If necessary, whether there are other employees, temporary employees, or third parties who can perform or be temporarily hired to perform the essential functions in question; and
  • Whether the essential functions can be postponed or remain unperformed for any length of time and, if so, for how long.

Can an employer request documentation to support an accommodation request?

An employer is not required to seek supporting documentation from an employee who requests an accommodation. If the employer does, it can only do so if it is reasonable to require documentation under the circumstances in order for the employer to determine whether the employee has a physical or mental condition related to, affected by, or rising out of pregnancy, childbirth, or related medical conditions and needs a change or adjustment at work.

The regulations identify situations where it is not reasonable to request documentation:

• • When the limitation and need for reasonable accommodation are obvious (i.e., when the employee is obviously pregnant);
  • When the employee has already provided sufficient information to substantiate that the employee has a known limitation and that a change or adjustment at work is needed;
  • When the employee is pregnant and the reasonable accommodation is one of the four accommodations that will be deemed reasonable in “virtually all cases”; and
  • When the limitation for which the accommodation is needed involves lactation or pumping.

Even when a request for documentation is reasonable, any such request must be limited to “reasonable documentation.”  “Reasonable documentation” is defined as documentation that is sufficient to confirm (1) the physical or mental condition; (2) that the condition is related to, affected by, or arising out of pregnancy, childbirth, or related medical conditions; and (3)  and that a change or adjustment at work is needed.

What are the prohibited practices under the regulations?

Under PWFA, it is unlawful for an employer to:

1. 1. Not make reasonable accommodations to the known limitations related to the pregnancy, childbirth, or related medical conditions of a qualified employee, absent undue hardship;
   2. Require an employee affected by pregnancy, childbirth, or related medical conditions to accept an accommodation other than a reasonable accommodation arrived at through the interactive process;
   3. Deny employment opportunities to an employee if the denial is based on the need or potential need of the employer to make reasonable accommodations to the known limitations related to pregnancy, childbirth, or related medical conditions;
   4. Require an employee to take leave, whether paid or unpaid, if another reasonable accommodation can be provided to the known limitations related to the pregnancy, childbirth, or related medical conditions of the employee, absent an undue hardship;
   5. Take adverse action in terms, conditions, or privileges of employment against an employee on account of the employee requesting or using a reasonable accommodation.

Importantly, the regulations also indicate that:

• • An unnecessary delay in responding to a reasonable accommodation request could constitute a violation of PWFA; and

• • An employer cannot justify the denial or delay of a reasonable accommodation based on an employee failing to provide supporting documentation unless the supporting documentation is reasonable under the circumstances.

Bottom Line  

The final regulations are a good resource for understanding the scope of PWFA and contain numerous examples and illustrations for reference.  This is particularly important given the implementation of PWFA will broaden an employer’s obligation to permit reasonable accommodations beyond prior legal requirements.

Employers should revisit their pregnancy-related accommodations policies.  To the extent such policies are based on the ADA, they will likely need to be revised to comply with PWFA and its implementing regulations.

Note, the PWFA does not replace federal, state, or local laws that are more protective of employees affected by pregnancy, childbirth, or related medical conditions. Minnesota law requires employers provide reasonable accommodations to employees “for health conditions related to pregnancy or childbirth,” unless the accommodation will cause an undue hardship on the operation of the employer’s business.  Minnesota’s pregnancy accommodation statute applies to employers with one or more employees, while PWFA applies to employers with 15 or more employees.

The post EEOC Publishes Final Regulations Implementing Pregnant Workers Fairness Act appeared first on Felhaber Larson.

The purpose of the revised rule is to clarify specifically three things:  1) the representative(s) authorized by employees may be an employee of the employer or a non-employee third-party; 2) employee’s options for third-party representation during OSHA inspections are not limited to persons with formal credentials, such as an industrial hygienist or safety engineer, as limited by the original rule; and 3) a third-party representative authorized by employees may be reasonably necessary to the conduct of an effective and thorough physical inspection of the workplace by virtue of their knowledge, skills or experience. This can include, for example, technical knowledge or practical experience about the processes and hazards present in the workplace, or language in communication skills that facilitate the gathering of information from employees.

Under this rule, the Compliance Safety and Health Officer has the ultimate authority to determine whether good cause has been shown why a third-party representative is reasonably necessary to the conduct of an effective and thorough inspection.  The rule does not provide any specific guidance or criteria or even a defined process for compliance officers to follow in making their determination other than referring to whether the representative’s knowledge, skills, or experience, including relevant language or communication skills, would make a positive contribution to the inspection.  The third-party representative must be found to aid the inspection in a variety of ways including explaining equipment processes or operations, policies, and procedures, but may not disrupt or interfere with a fair and orderly inspection.

Minnesota has an OSHA approved state plan.  Under 29 CFR § 1953.5(a)(1), where a federal program change is a new permanent standard or more stringent amendment to an existing permanent standard, a state shall pass a state standard adopting the new standard within six months of the effective date of the new federal standard.  Minnesota will need to pass a new rule adopting, at minimum, the federal OSHA standard.

EMPLOYER RESPONSE TO NEW RULE

In anticipation of the effective date of the federal rule and the Minnesota rule to follow shortly, employers should revisit policies and procedures that instruct on how to receive OSHA inspectors who wish to gain access to the job site and how management should respond to a non-employee third-party designated as the employee representative during an inspection. For instance, employers must be prepared to analyze whether there is an argument that good cause has not been shown that an outside third-party employee representative is reasonably necessary for an effective investigation and articulate an objection to the compliance officer. Also, short of refusing to allow an objectionable third-party representative on the employer’s presence, employers should have procedures in place to ensure that any employee representatives are staying within the scope and purpose of their presence during the inspection. Employer representatives must ensure that employee representatives are not exhibiting behaviors that interfere with a fair and orderly inspection like taking unauthorized photographs or participating in union solicitation activity.  The employer needs to be prepared to lodge an objection to that activity to the compliance officer.  In addition, procedures need to be put in place to ensure that the employee representatives are not gaining access to areas containing trade secrets.

While it is concerning that the inclusion of non-employee third-party employee walkaround representatives is within the sole discretion of the compliance officer with no defined process to guide their determination, employers must be prepared to monitor the activities of the walkaround representatives to ensure that there are no disruptive behaviors that may interfere with the inspection. In anticipation of these potential problems, employers must be prepared to work with the inspector to make sure that the walkaround representative’s role is being performed, which is only to aid in the inspection.

Employers should try to “stay in loop” in the employee’s process for choosing their walkaround representative. One way to stay in the loop in this process may be through an active safety committee in which it can be encouraged that the employee walkaround representative be chosen or at the very least openly discussed within the safety committee. While employers may not have a choice or a say in the selection of a walkaround representative, there will be transparency regarding potential choices and plans may be made to respond to the walkaround choice if it becomes an issue.

BOTTOM LINE

OSHA’s new rule should not be interpreted as an invitation to unions to ramp up organizing activities under the guise of participation in OSHA inspections. Under the revised § 1903.8(c), the presence of third-party representatives during OSHA walkarounds is only for the purpose of aiding in the inspection. Specifically, the compliance officer must determine whether good cause is shown that participation by the third-party representative is reasonably necessary to aid in an effective inspection of the workplace by virtue of their knowledge, skills, or experience. The presence of a third-party representative cannot be disruptive to or interfere with a fair and orderly inspection.

While it is likely that unions may perceive this rule as an opportunity to ramp up organizing activities, the compliance officer continues to have the authority to deny the right of accompaniment if the conduct of the representative interferes with a fair and orderly inspection. In other words, if a union representative engages in behavior disruptive to the inspection, such as distribution of union literature or failing to comply with the ground rules of the inspection, the compliance officer may exclude the individual from further participation in the inspection. Before agreeing to the presence of non-employee third-party representatives, particularly non-employee union officials, it is important for employers to have an explanation as to what knowledge, skills, or experience the proposed third-party has that will aid in the inspection.

The post Let’s Go For A Walk: OSHA Revises Its Worker Walkaround Rule For Inspections appeared first on Felhaber Larson.

Recently, the DOL’s Wage and Hour Division took some final steps in connection with the administrative regulatory process, which strongly suggests the agency is poised to release the rule – and soon. What we don’t know is whether and to what extent the proposed rule changed as a result of the tens of thousands of responses the DOL received during the proposed rule’s comment period. The initial draft of the rule set an effective date sixty days from publication, and that may change too.

Bottom Line

What this all means is that employers may be forced to contend with a new set of (very different) minimum salary requirements within approximately the next ninety days. Fasten your seatbelt …  and stay tuned.

The post Changes to Salary Basis Thresholds May Be Coming Soon appeared first on Felhaber Larson.

The U.S. Chamber of Commerce, among other industry groups, challenged the New Rule.  They claimed the NLRB exceeded its authority when it created the New Rule because it was contrary to settled law on joint employment status and because the NLRB’s actions were allegedly “arbitrary and capricious.”    Although the Court spent considerable time tracing the history of joint employment law, the NLRB’s current rule, and the New Rule, the Court’s analysis focused on specific components of New Rule.   Namely, the provisions which relate to an alleged joint employer’s potential ability to control certain terms of the employment relationship — regardless of whether the control is actually exercised.  The Court held the NLRB placed too much emphasis on these “potential control” factors.   In striking down the New Rule, the Court’s order also has the effect of reinstating the NLRB’s current rule (which the NLRB attempted to invalidate vis-à-vis the New Rule).

Bottom Line

At this point, it is unclear whether the NLRB will appeal the Federal District Court’s ruling.   What we do know is that the NLRB’s current rule will remain in effect, for now.

The post NLRB’s Joint Employment Rule Vacated by Federal Court in Texas appeared first on Felhaber Larson.

In mid-2023, the Board issued a decision, Stericycle, 372 NLRB No. 113 (2023), wherein it adopted a new standard related to employer policies.   In short, the Board determined that if an employer rule or policy has a reasonable tendency to chill employees from exercising their rights, it is presumptively unlawful. Although the employer has the ability to prove a defense, this new employee-friendly standard grants the Board broader authority to attack employer policies.

The Felhaber firm has been carefully monitoring the Board’s enforcement activities.   Unfortunately, we are seeing an increased number of citations.  In a recent example, the Board faulted an employer for maintaining a wage disclosure policy that tracked almost identically the requirements of Minnesota Statutes Section 181.172.     Nonetheless, and despite the existence of the Minnesota law, the Board found that certain statements in the policy violated the federal National Labor Relations Act.

Unfortunately, we expect the Board will continue to aggressively scrutinize employer policies.   We are encouraging our clients to contact a member of the labor and employment group to discuss the impact of Stericycle and to review and revise (as necessary) certain employment policies.

The post E-Alert: NLRB Development appeared first on Felhaber Larson.

Note:  How time flies. We first reported on this issue back in October 2022 when the DOL released its proposed rule.  In that post, we discussed some of the (we think interesting) historical underpinnings and context surrounding these issues.  See article here.  

Back to the DOL’s final rule.  It is important to note that it applies only to the FLSA.  That is, for determining whether a worker is entitled to the protection under the wage and hour laws.   Be aware there are other tests and rules to determine independent contactor status depending on the context. For example, the federal Internal Revenue Service has its own rules and regulations for determining the applicability of employee payroll tax withholdings.  Therefore, when determining independent contractor status overall, it is not just about applying one set of rules.

The DOL describes the new rule as “a totality-of-the-circumstances economic reality test” where “no single factor or group of factors is assigned any predetermined weight.”   The primary focus of the analysis is whether the worker is economically dependent on the person or business that is providing the work.

The final rule adopts the following six factors to analyze employment or independent contractor status under the FLSA:

1. opportunity for profit or loss depending on managerial skill;
2. investments by the worker and the potential employer;
3. degree of permanence of the work relationship;
4. nature and degree of control;
5. extent to which the work performed is an integral part of the potential employer’s business; and
6. skill and initiative.

To reiterate, no one factor is determinative and the agency leaves open the possibility that other factors may shed light on whether the worker is in business for themselves versus being dependent on the alleged employer.   The rule provides detailed information regarding the application of each of these six factors.

Bottom Line

Regardless of whether the DOL’s rule will face legal challenges (as noted, it likely will), this development serves as an important reminder to review your independent contractor relationships and undertake a risk assessment.  As the DOL’s new rule makes clear, independent contractor analyses are factually intense.   The facts of any given situation often do not fit neatly within the tests which, in turn, requires judgment calls.   Members of our employment and labor group have the skill and expertise to help you navigate these murky issues.

The post U.S. DOL Announces Its Final Rule on Employee / Independent Contractor Status appeared first on Felhaber Larson.

How has the workplace changed since you started out?  It’s no longer the fun, free-wheeling place we used to work. All these laws and regulations have really stifled our creativity and our productivity.

Can you give me an example?  I can give you hundreds.  For instance, they don’t let us drink in the workshop anymore, In the old days, the smell of peppermint schnapps hung over the place and after a pop or two, everybody would just start coming up with all these ideas for new toys and gifts.  That’s how we came up with Barbie, Beanie Babies, Lego – you name it.

How about “The Little Junior’s Home Surgery Kit”?  Well (chuckling), they weren’t all great ideas but that’s how the creative process works sometimes.  Anyway, that was a Marketing Department issue.  They are the ones who dropped the ball on that.

What other changes have there been?  Lots of emphasis on employee health and fitness.  Some time ago they took all the free sugar plums and candy canes out of the shop and replaced them with chia seeds and jicama sticks. How are you going to keep up with the insane production schedule around here if you can’t keep that sugar rush going?

And you can’t smoke anywhere on the premises – Santa has been a real Grinch ever since he had to give up that pipe.

It sounds like you don’t really approve of employee wellness programs.  Don’t talk to me about wellness.   After Santa lost 80 pounds on his program, they ended up laying off Donder and Blitzen because they no longer needed as many reindeer to haul him around.  Not a lot of wellness for those two, was there?

You don’t think employee health and safety are important?  Sure, but there has to be some sort of balance.  I mean, we had been doing things the same way for a long time and were pretty successful at it, I’d say.  Then one day, OSHA came in and said that we needed better lighting and navigation equipment if we were going to go out on foggy Christmas Eves.  Next thing you know, Rudolph’s out of a job and trying to catch on as one of those signal guys on the airport runway.

Has the workplace culture changed?  You bet.  First of all, a lot of folks never even come in.  They all claim to be “working from home” (Frank made little air quote gestures with his fingers as he said this).  You ever try having a Zoom meeting with a bunch of elves?  You can’t even see them over the tops of their desks, you just hear their squeaky little voices.  And Frosty never attends.  He says that his computer freezes up, but people tell me they’ve seen him drinking frozen daiquiris at the bar when the meetings are going on.

And we don’t ever have Christmas parties anymore, not since that candy cane incident with Dottie in Accounting.  Now, we just have to do annual harassment training.

It sounds like you are looking forward to leaving.  What are your plans?  I’m going to stick it out through these last few days and then I’m off for a better climate.  I bought a little place in International Falls where I’m told it’s much warmer than here.

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Frequently Asked Questions (addressing the significant provisions of ESST): 

• What is ESST and When Do I Need to Comply?

Effective January 1, 2024, Minnesota’s ESST entitles covered employees to earn paid sick leave for a wide variety of personal and family-related purposes every  year.

• Who are Covered Employees?

1. 1. 1. All employees (including part-time and temporary employees) who work for a Minnesota employer for at least 80 hours, in Minnesota, in a year, are covered.  Employees who work out of state for a Minnesota employer are not covered.
      2. Federal employees and independent contractors are not covered.
      3. Unless there is a contract stating otherwise, temporary employees supplied by a staffing agency are considered employees of the agency and the agency is responsible for ESST obligations.
      4. Certain individuals employed by an air carrier as a flight deck or cabin crew member are not covered.
      5. Building and construction industry employees who are represented by building and construction trades labor organization are not covered if a valid waiver of ESST requirements is provided in a collective bargaining agreement.

• How do Employees Accrue and Carry Over ESST?

Employers must provide each employee working in Minnesota with one hour of ESST for every 30 hours worked, with the ability to accumulate 48 hours each year. Employers may choose to grant more hours. ESST hours accrue on all hours worked, including overtime hours, unless the employee is exempt from earning overtime compensation.

Exempt employees are presumed to work 40 hours a week for the purposes of ESST accrual. If there is clear evidence an exempt employee’s regular work week is less than 40 hours, ESST may accrue based on that employee’s actual regular work week.

Employees may carry over any unused ESST from year to year, but employers may cap the number of hours accrued at 80. Employers can choose to frontload ESST as an alternative to carry over (see below).

ESST hours are calculated and reported based on hours worked. The amounts accrued and available for use, in addition to amounts used each pay period, must be listed on the employee’s earnings statement/paystub.

• How Does an Employer Front Load ESST and How Does it Affect Carryover?

Instead of allowing employees to accrue ESST, employers may adopt a frontloading approach whereby the employer provides an employee with a lump sum of ESST at the beginning of each year or the commencement of employment. Employers who use the frontloading approach are not required to allow employees to carry-over unused ESST at the end of the year. Under this approach, employers have two options:

1. 1. Front loading with pay out and no carryover. Employers provide 48 hours of ESST to an employee, and it is available for immediate use at the start of the year. Any unused ESST hours are paid out at the end of the accrual year* at the employee’s hourly rate.
   2. Front loading with no pay out and no carryover. A minimum of 80 hours of ESST is provided to an employee and made available for immediate use at the start of each year. *The ESST hours the employee did not use are not paid out at the end of the accrual year.

*A “year” means any consecutive 12-month period as determined by an employer and communicated to employees (e.g., calendar year, 12 months based on employee’s work anniversary, or fiscal year).

• How Can Employees Use ESST?

Employees can use ESST for any one of the following reasons:

1. 1. To address an employee’s mental or physical illness, treatment, or preventative care;
   2. To care for a family member’s mental or physical illness, treatment, or preventative care;
   3. For absences related to domestic abuse, sexual assault, or stalking of the employee or a family member;
   4. Time needed when an employee’s workplace closes due to weather or other public emergency or when an employee must care for a family member whose school or place of care has been closed due to weather or public emergency;
   5. When the employee is unable to work or telework because the employer prohibits them from going to work because of health concerns related to the potential transmission a communicable illness related to a public emergency; because the employee is seeking or awaiting results of a diagnostic test for, or a medical diagnosis of, a communicable disease related to a public emergency when the employee has been exposed to the communicable disease or the employer has requested the test or diagnosis;
   6. When it has been determined by a health authority or health care professional that the employee or a family member is at risk of infecting others with a communicable disease.

**The definition of “family member” is quite extensive under ESST state law and includes any individual “related by blood or whose close association with the employee is equivalent of a family relationship.” Employees may also designate one individual annually who will be considered a “family member” for purposes of ESST.

• What Notice of Leave and Documentation Must an Employee Give an Employer?

An employer may only require notice of the need to use ESST leave if the employer has a written policy with reasonable procedures for doing so and provides that policy to employees. If the need for ESST leave is foreseeable, an employer may require up to seven days’ advance notice. If the need is unforeseeable, an employer may require notice of the need for leave as soon as practicable.

Employers may require reasonable documentation regarding the need for ESST leave when an employee uses ESST leave for more than three days in a row. Reasonable documentation includes a signed statement from a health care professional or if documentation cannot be obtained in a reasonable time or without added expenses, then the employee may provide a written statement indicating the employee is using ESST leave for a qualifying purpose. The statute also specifies documents related to ESST leave used for other reasons. An employer is specifically restricted from requiring an employee to disclose details related to domestic abuse, sexual assault, or stalking or the details of the employee’s or the employee’s family member’s medical condition.

• What Notice of Leave and Posting Must an Employer Follow?

Minnesota’s ESST law contains many recordkeeping and notification requirements for employers. Employers will need to notify employees in writing, at the start of employment or on January 1, 2024, whichever is later, of their earned sick and safe leave rights. Although the Department of Labor’s website states a sample employee notice is forthcoming, it has not yet been published. (See here).

Under ESST, employers must provide written notice that contains various mandatory elements.

• What Recordkeeping Must an Employer Follow?

In addition to the notice requirements above, there are additional recordkeeping requirements. At the end of each pay period, employers must provide each employee with an earning statement, either in writing or by electronic means, that includes, among other statutorily required content, (a) the total number of ESST hours accrued and available for use, and (b) the total number of ESST hours used during the pay period.

Employers must retain records documenting, among other information, hours worked by employees and hours of ESST taken by employees. It appears that records will need to be maintained for at least three years in addition to the current calendar year.

• How Do ESST’s Anti-Retaliation Provisions Work? 

An employer may not discharge, discipline, penalize, interfere with, or otherwise retaliate against an employee for asserting earned sick and safe leave rights, for requesting an earned sick and safe leave absence, or pursuing associated remedies.

Further, employers may not factor in any employee’s use of earned sick and safe leave into any attendance point system. ESST related absences are, therefore, “protected” similar to how employers treat FMLA under federal law.

Next Steps

• • Employers that have a paid sick time or PTO policy should review it to ensure it meets the requirements of Minnesota’s new ESST law and includes the mandatory elements and required information.
  • Employers that do not have a paid sick time or PTO policy should start planning and adopting written policies.
  • Employers should coordinate with their payroll providers to ensure they can provide the necessary information on the statement of earnings.

Bottom Line

Preparing for ESST takes time, planning, and careful consideration in light of employers’ existing sick time and/or PTO programs. With the compliance deadline looming, now is the time to get moving. Stay tuned for Part 2 of this series focusing on strategy, nuances under the law, and implementation.

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The EEOC first released its proposed guidance on workplace harassment for public comment in 2017, however it was not considered ‘finalized’. This most recent updated proposed guidance reflects notable changes in the law, including discrimination based on gender orientation and sexual identity and recent social justice developments such as the #MeToo movement.

Here are some of the pertinent the components which provide guidance and insight for employers:

• • Anti-Harassment Policies and Procedures. The proposed guidance outlines ways that employers can develop anti-harassment policies, processes, and training as well as implementation. There are additional examples of an employer’s actions that can weigh both for and against a finding of an effective anti-harassment program.
  • Conducting Internal Investigations. The proposed guidance reinforces previous EEOC guidance regarding an employer’s duty to investigate harassment claims internally. However, it additionally notes that an investigation will be considered adequate if it “arrives at a reasonably fair estimate of truth” and is completed by an impartial party free from influence by the alleged harasser. The EEOC will assess the employer’s investigation and subsequent corrective actions based on how the employer utilized the “arsenal of incentives and sanctions” available to it to address the complained of harassment.
  • Systemic Harassment in the Workplace. The proposed guidance recommends that employers retain records of all harassment complaints and investigations in order to best identify patterns of harassment. According to the EEOC, retention of these records can help employers to further improve their harassment prevention measures and training to the extent that employers recognize patterns of practice. It should be noted that the proposed guidance emphasizes employers’ requirement to adopt remedies to address the pattern and practice of harassment rather than just individual complaints.
  • The EEOC Will Likely Pursue More Nuanced Legal Theories. There are a number of instances which suggest the EEOC will pursue more nuanced legal theories. For example, the guidance addresses “associational discrimination,” which has not previously garnered much attention. According to the EEOC, an individual can be harassed because the employee associates with someone in a different protected class or harassed because the complainant associates with someone in the same protected class. Such association may include, but is not limited to, close familial relationships, such as marriage, or close friendship with another individual belonging to a protected group. As another example, the EEOC indicates an individual may be able to establish a hostile work environment in situations where the employee’s job was merely “more difficult” because of the offending conduct. Examples like this suggest there will be an on-going push to expand legal theories and related remedies.

Key Takeaways:

• • Focus on Sexual Harassment. The proposed guidance reflected on updated statistics which place renewed focus on sexual harassment at work. Specifically, the guidance cites a 2021 Associated Press poll which reflected that, while only 35% say sexual misconduct is a very serious problem in the workplace (down from 56% in 2017), 54% say the recent attention to the issue has made them more likely to speak out if they were a victim of sexual misconduct, as well as 58% saying they are more willing to speak out if they were to witness it happening. The guidance also refers to a June 2016 report from the Commission’s Select Task Force on the Study of Harassment in the Workplace, which acknowledged that the severity of harassment may be enhanced if a complainant has reason to believe that the harasser is insulated from corrective action – i.e., where the alleged harasser was a highly valued employee, or the employer has previously failed to take appropriate corrective action in similar circumstances.
  • Emerging Issues Regarding Online Harassment. While the proposed guidance primarily addresses work-related incidents, the EEOC also discussed emerging issues outside of the office such as virtual or online harassment. Given the abundance of digital technology and the advent of social media (and its role in the workplace), the proposed guidance sheds light on the increased likelihood that electronic communications can contribute to a hostile work environment.
  • Updates on Protected Characteristic Standard. Utilizing recent EEO cases, the proposed guidance provides over a dozen detailed examples which address specific factors used to assess  workplace harassment.
  • Clarifications on the Severe-or-Pervasive Standard.  The proposed guidance purports to clarify that the “severe-or-pervasive” standard takes a “middle path” that requires the conduct to be more than merely offensive but does not require that the conduct caused psychological harm.  
  • Single Incidents and Hostile Work Environments. While the proposed guidance provides a number of examples that relate to systemic or repeated incidents of harassment, it also provides examples of conduct that courts have recently found sufficiently severe to establish a hostile work environment based on a single incident.

Bottom Line

As of October 2, 2023, the EEOC invited the public to submit its comments to the proposed guidance. The comment period will remain open until November 1, 2023, and can be found here.

Although the EEOC’s guidance does not have the force of the law, and therefore may be rejected by the court system, employers should nevertheless be aware of how the EEOC may evaluate and apply the law to various fact patterns. In that regard, this new guidance is useful in anticipating issues and the EEOC’s likely approach.

For questions about this new proposed guidance or other concerns regarding harassment in the workplace, please contact a member of our Labor & Employment Practice Group.

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