TGFR: Thank Goodness For Removal

The Minnesota Supreme Court’s recent rejection of federal pleading standards reaffirms the value that federal removal has for employers.  Here’s what employers need to know about federal removal:

When Is Removal Allowed?  Under federal law, any civil action filed in a state court may be removed to federal district court provided that the federal court has “original jurisdiction” over the matter.  28 U.S.C. § 1441(a).  The federal court’s original jurisdiction may be based either on diversity jurisdiction or federal question jurisdiction.

What Is Diversity Jurisdiction?  Diversity jurisdiction exists when the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and the matter is between citizens of different states.  28 U.S.C. § 1332.  For removal, however, there must be “complete diversity” – this means that removal cannot be based on diversity jurisdiction if any one of the properly joined defendants is a citizen in the state in which the action was brought.  28 U.S.C. 1441(b)(2).  Sometimes plaintiffs try to defeat diversity jurisdiction by improperly naming a defendant who is a citizen of the state – this is known as fraudulent joinder and can be challenged by motion.

What Is Federal Question Jurisdiction?  Federal question jurisdiction exists for “all civil actions arising under the Constitution, laws, or treaties of the United States.”  28 U.S.C. § 1331.  In other words, if the claim alleges a violation of a federal law or constitutional provision, the action can be brought in or removed to federal court.

What Is The Process for Removal?  In general, a state court civil action must be removed to federal court within 30 days after the defendant is served with the lawsuit.  All defendants must consent to the removal.  To accomplish the removal, the defendants must file a “notice of removal” in the federal court as well as a “notice of filing of notice of removal” in the state court.  28 U.S.C. § 1446.  If the plaintiff believes that removal is improper, he or she may challenge the removal with a motion for remand to the state court.

Takeaway:  Federal removal is an important tool for employers because many employment law claims involve either diversity jurisdiction or federal jurisdiction.

Will There Be a Women’s Economic Security Act 2.0?

It’s possible that during the next legislative session, the Minnesota legislature will pass additional provisions to expand on the Women’s Economic Security Act (WESA).

In May of 2014, the Minnesota Legislature passed WESA, which made a number of changes to employment law in Minnesota.  These changes included requiring accommodations for pregnant employees, requiring certain state contractors to obtain equal pay certificates, expanding parental leave under state law from 6 weeks to 12 weeks, and prohibiting discrimination on the basis of “familial status,” among other things.

Shortly after WESA became law in Minnesota, a summit was held in Duluth.  At the summit, House Speaker Paul Thissen and Senator Sandra Pappas, both supporters of WESA, discussed additional steps that may be taken during future legislative sessions.  With respect to employment law, these additional steps included:  (i) potentially requiring employers to offer paid sick leave to employees; and (ii) adding “family caregiver” as a protected status under the Minnesota Human Rights Act.

Takeaway:  The Minnesota legislature may attempt to pass laws to require paid sick leave or create new family caregiver protections during the next legislative session.  Employers who feel strongly about these potential changes, either for or against, may want to consider contacting their local representatives about these issues prior to the beginning of the next legislative session.

Minnesota Supreme Court Rejects Twombly and Iqbal Pleading Standards

The Minnesota Supreme Court recently rejected the federal pleading standards of Twombly and Iqbal, holding that claims need not be factually plausible to survive a motion to dismiss.

In Bell Atlantic Corp. v. Twombly, the U.S. Supreme Court held that, in order to survive a motion to dismiss for failure to state a claim upon which relief can be granted, a complaint must contain “enough facts to state a claim to relief that is plausible on its face.” 550 U.S. 544 (2007). Unless the complaint contains sufficient facts to “nudge” the claims “across the line from conceivable to plausible,” the complaint must be dismissed.

In Ashcroft v. Iqbal, the U.S. Supreme Court further expanded on the plausibility requirement of Twombly. 556 U.S. 662 (2009). In Iqbal, the Court explained that a complaint must contain “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” When a complaint pleads facts that are “merely consistent” with a defendant’s liability, but does not allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged, the complaint does not meet the plausibility standard of Twombly and must be dismissed.

In Walsh v. U.S. Bank, the issue before the Minnesota Supreme Court was whether the federal pleading standards of Twombly and Iqbal applied to lawsuits filed in Minnesota state courts. A13-0742 (Minn., Aug. 6, 2014). Although the pleading standard under Rule 8 of the Minnesota Rules of Civil Procedure is identical to the pleading standard of Rule 8 of the Federal Rules of Civil Procedure, the Minnesota Supreme Court rejected the plausibility standard of Twombly and Iqbal. Instead, the Minnesota Supreme Court held that “[a] claim is sufficient against a motion to dismiss for failure to state a claim if it is possible on any evidence which might be produced, consistent with the pleader’s theory, to grant the relief demanded.” In other words, a claim need not be factually plausible to survive a motion to dismiss and subject a defendant to costly discovery – it is sufficient if a court determines that it is “possible” for evidence to be introduced that might support the plaintiff’s theory of liability.

Takeaway: The Minnesota Supreme Court’s decision in Walsh permits claims to survive motions to dismiss even if they are factually implausible. The primary effect of this decision for employers is that it will be easier for plaintiffs to proceed with lawsuits in state courts, likely resulting in increased litigation costs – at least prior to a motion for summary judgment.

Recent Executive Orders Address Sexual Orientation and Gender Identity Discrimination And Require Disclosure of Labor Law Violations

President Obama recently signed two executive orders that prohibit federal contractors from discriminating on the basis of sexual orientation or gender identity and require federal contractors to disclose certain labor law violations, in addition to other requirements. Here’s what employers need to know about these executive orders:

Sexual Orientation/Gender Identity Discrimination: On July 21, 2014, President Obama signed an executive order, which amended previous executive order no. 11246. The primary effect of the executive order is that federal contractors are now prohibited from discriminating on the basis of sexual orientation or gender identity in employment, in addition to the other classes protected by executive order no. 11246 (race, color, religion, sex, and national origin). The Secretary of Labor may require that contractors provide a signed document certifying compliance with this requirement. Discrimination on the basis of any protected class may constitute a violation of a federal contract and render the contractor ineligible for future federal contracts.

Fair Pay and Safe Workplaces: On July 31, 2014, President Obama signed the “Fair Pay and Safe Workplaces” executive order. The executive order has three primary components that affect federal contractors and subcontractors: (i) disclosure of violations; (ii) paycheck transparency; and (iii) arbitration agreements.

Disclosure of Violations: The executive order requires that in order to be eligible for a federal contract for goods and services, including construction, where the estimated value of the supplies acquired and services required exceeds $500,000, a federal contractor must disclose any “administrative merits determination, arbitral award or decision, or civil judgment” rendered against the contractor within the preceding 3-year period for violations of any of the following laws or executive orders:

  • The Fair Labor Standards Act;
  • The Occupational Safety and Health Act;
  • The Migrant and Seasonal Agricultural Worker Protection Act;
  • The National Labor Relations Act;
  • The Davis-Bacon Act;
  • The Service Contract Act;
  • Executive Order 11246 (Equal Employment Opportunity);
  • The Rehabilitation Act;
  • The Vietnam Era Veterans’ Readjustment Assistance Act;
  • The Family and Medical Leave Act;
  • Title VII of the Civil Rights Act of 1964;
  • The Americans with Disabilities Act;
  • The Age Discrimination in Employment Act;
  • Executive Order 13658 of February 12, 2014 (Establishing a Minimum Wage for Contractors); or
  • Equivalent state laws, as defined in guidance issued by the Department of Labor.

Federal contractors will be permitted an opportunity to disclose any steps taken to correct the violations or improve compliance with any of the labor laws listed above. For contracts that exceed $500,000 and that are not for commercially available off-the-shelf items, subcontractors will also be required to make similar disclosures. In addition to the pre-award disclosure, covered contractors and subcontractors will be required to provide updated disclosures every 6 months for as long as the contract is performed.

Paycheck Transparency: The executive order requires that a contractor must provide to any individual for whom wage records must be kept under the FLSA, the Davis-Bacon Act, the Service Contract Act, or similar state laws, a document that identifies individual’s hours worked, overtime hours, pay, and any additions made to or deductions made from pay. For contracts that exceed $500,000 and that are not for commercially available off-the-shelf items, subcontractors will be required to make the same disclosures. In addition, if an individual is performing work as an independent contractor, the contractor must provide a document informing the individual of this status.

Arbitration Agreements: For federal contracts and subcontracts where the estimated value of the supplies acquired or services required exceeds $1 million, contractors and subcontractors must agree that any decision to arbitrate claims arising under Title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment may only be made with the voluntary consent of employees or independent contractors after such disputes arise. However, this provision does not apply to: (i) contracts or subcontracts for the acquisition of commercial items or commercially available off-the-shelf items; (ii) employees covered by a collective bargaining agreement; or (iii) any employees or independent contractors who entered into a valid contract to arbitrate prior to the contractor or subcontractor bidding on the covered contract – unless the contractor or subcontractor is permitted to change the terms of the contract with the employee or independent contractor, or the contract is renegotiated or replaced.

Lessons From The Jesse Ventura Defamation Trial

The recent Jesse Ventura defamation trial illustrates how a few key pieces of evidence can determine the outcome in a jury trial.

In the case, Ventura alleged that former Navy Seal, Chris Kyle, lied about an incident in which he claimed he punched Ventura in his New York Times Bestseller, American Sniper, the Autobiography of the Most Lethal Sniper in U.S. Military History.  In a chapter entitled “Punching Out Scruff Face,” Kyle wrote that, after exchanging words with Ventura on an evening in 2006, “I laid him out.”  During the trial, a number of witnesses offered conflicting testimony about the event.  The jury initially could not reach a unanimous decision.  After the parties agreed to a less-than-unanimous verdict, however, the jury returned an 8-2 verdict in Ventura’s favor and awarded him $1.8 million in damages.

In an article in the Star Tribune, an unnamed juror described some of the evidence that resulted in the verdict.  One of those pieces of evidence was a chart prepared by Kyle’s attorneys, which summarized the testimony of 11 witnesses who each testified that they saw part, but not all, of the alleged altercation.  The chart was intended to corroborate Kyle’s account of the altercation, but the juror said that it was hard to believe that no one saw all of the alleged event.

The juror also reported that it was significant that the photos taken of Ventura in the days following the event did not show any bruises on Ventura’s face.  The juror explained that Kyle was over 6 feet tall and weighed more than 200 pounds, so a punch from him would likely leave a mark or a bruise.

Finally, the juror reported that it was significant that Kyle did not use Ventura’s real name in the book and, instead, referred to him as “Scruff Face.”  The juror thought that if the story was true, there would be no reason not to use Ventura’s real name.

Takeaway:  In cases with lots of conflicting evidence, a few pieces of evidence may tip the scales in one direction.  To improve the chances of success, it’s important for trial attorneys to present a thorough case with lots of supporting details.

NLRB Targets McDonald’s and Seeks To Change The NLRA’s Joint Employer Standard

On July 29, 2014, the National Labor Relations Board (NLRB) Office of General Counsel issued a press release suggesting that it would seek to pursue unfair labor practice charges against McDonald’s franchisees – as well as against the franchisor, McDonald’s USA, LLC, as an alleged joint employer.  The announcement appears to be part of an ongoing effort to broaden the joint employer standard under the National Labor Relations Act (NLRA).  Here’s what employers need to know about this issue:

The Current Joint Employer Standard:  The current joint employer for the NLRA recognizes that two or more business entities that are separate may be joint employers when they “share or codetermine those matters governing the essential terms and conditions of employment.”  This is typically established by showing that the employer “meaningfully affects matters relating to the employment relationship such as hiring, firing, discipline, supervision, and direction.”  Laerco Transp., 269 NLRB 324, 325 (1984).

The New Proposed Joint Employer Standard:  In a recent amicus brief, the Office of General Counsel urged the NLRB to abandon the current joint employer standard and adopt a new, broader standard.  The new standard proposed would find a joint employer relationship if “under the totality of the circumstances, including the way the separate entities have structured their commercial relationship, the putative joint employer wields sufficient influence over the working conditions of the other entity’s employees such that meaningful bargaining could not occur in its absence.”  As the Office of General Counsel described it, this would result in a joint employer finding whenever “industrial realities” make an entity essential for meaningful bargaining.

The McDonald’s Press Release:  By publicly announcing an effort to target McDonald’s, the Office of General Counsel is signaling that it believes McDonald’s, as a franchisor, will qualify as a joint employer under the new proposed standard.  This has significant implications not only for McDonald’s, but for all franchisors, as well as other companies.  For more information about how this issue could impact franchisors, click here.

Takeaway:  The Office of General Counsel is seeking to broaden the joint employer standard under the NLRA so that more companies, including franchisors, will be found to be joint employers.  But the NLRB has not yet adopted this new standard.  As of today, the current joint employer standard remains the law, but that may not be the case for long.

Breaks For Nursing Mothers Under Minnesota Law

The Women’s Economic Security Act recently amended Minnesota’s employment law requirements for nursing mothers.  See Minn. Stat. § 181.939.  Here’s what employers need to know about the revised break time requirements for nursing mothers:

What Employers Are Subject To the Requirements:  Any person or entity that employs one or more employees in Minnesota is subject to the law.

When Are Nursing Mother Entitled To Breaks?  The law provides that an employer “must provide reasonable unpaid break time each day to an employee who needs to express breast milk for her infant child.”  If possible, the break time must “run concurrently with any break time already provided to the employee.”

Do Nursing Mothers Need To Be Paid For the Breaks?  No.  The statute provides that the breaks are unpaid.

Where Should The Breaks Occur?  The employer must make reasonable efforts to provide a room or other location, in close proximity to the work area, other than a bathroom or a toilet stall, that is shielded from view and free from intrusion from coworkers and the public and that includes access to an electrical outlet, where the employee can express her milk in privacy.  The statute provides that an employer will “be held harmless if reasonable effort has been made.”

Are There Any Exceptions?  Yes, an employer is not required to provide break time to a nursing mother if to do so would “unduly disrupt the operations of the employer.”

Are Nursing Mothers Protected From Retaliation For Taking Breaks?  Yes, the law provides that an employer may not retaliate against an employee for asserting rights or remedies under Minnesota’s nursing mother law.

Takeaway:  The revised Minnesota law governing breaks for nursing mothers is similar in many respects to the requirements for nursing mother breaks under federal law, but there are a few key differences.  Employers in Minnesota need to be familiar with the requirements of both laws.

Six Things Employers Should Know About the Economy In Minnesota

Here are six quick facts about the economy in Minnesota and where it may be headed:

  • Minnesota was recently named the 8th best state for business by Forbes.
  • In 2013, Minnesota ranked second, next to Connecticut, in terms of having the most headquarters of Fortune 500 companies per capita.
  • In May of 2014, Minneapolis and St. Paul had the lowest unemployment rate (4.0%) of any large metropolitan area in the United States. The runners-up were Austin, Texas (4.1%), Columbus, Ohio and Oklahoma City (tied at 4.4%), and Boston, Massachusetts (4.7%).
  • Statewide, the unemployment rate in Minnesota was 4.5% in June of 2014, compared to 6.1% nationwide.
  • The five largest employers in Minnesota in 2014 are: (1) The Mayo Clinic (40,638 MN employees); (2) the State of Minnesota (37,076 MN employees); (3) the U.S. Federal Government (31,236 MN employees); (4) Target Corp. (31,035 MN employees); and (5) Allina Health (27,150 MN employees).
  • The Federal Reserve Bank of Minneapolis currently forecasts that moderate economic growth will continue in the region through 2015, with a likely 1% increase in employment in Minnesota in 2014.

Can An Employer Fire An Employee For Punching a Belligerent Shoplifter?

Yes – a federal court in Maryland recently rejected the argument that termination of an employee for punching an aggressive shoplifter violates public policy.

In Altschuld v. CVS Caremark Corp., the employee worked at a drug store and, in the course of his duties, confronted a suspected shoplifter.  No. WDQ-13-3680 (D. Md., July 10, 2014).  The shoplifter became aggressive and belligerent.  He shouted, cursed, and moved towards the employee in an aggressive manner.  Reasonably fearing for his safety, the employee punched the shoplifter.  After the shoplifter was arrested, the police determined that the employee acted in self-defense and did not charge the employee with any crimes.  The employer then fired the employee for using force against the shoplifter, and the employee sued for wrongful discharge, arguing that his termination violated a clear mandate of public policy.

On the employer’s motion to dismiss, the court rejected the argument that termination for punching a shoplifter violated a clear mandate of public policy.  The court explained that the self-defense statute that the employee cited as the basis for the alleged policy “merely immunizes a user of force from liability in certain cases – it does not mandate that use of force.”  The court further explained that, for purposes of the wrongful discharge claim, it did not matter whether the employee’s actions were “fair, justified, sensible, reasonable, or appropriate.”  Instead, the only consideration was whether the termination was wrongful because it violated a clear mandate of public policy.  Based on this reasoning, the court held that the employee’s claim failed as a matter of law.

Takeaway:  Employers have wide latitude in discharging at-will employees and can generally terminate an employee for any reason that it is not unlawful.  The Altschuld case shows that an employer can terminate an at-will employee even for engaging in lawful behavior, such as self-defense.

Minnesota Law on Genetic Testing

In 2008, Congress enacted the Genetic Information and Nondiscrimination Act (GINA), which prohibits genetic information discrimination in employment.  24 U.S.C. § 2000ff-1. While the passage of GINA was significant, Minnesota employers had already been restricted at that time regarding the administration or use of genetic testing for seven years.

In 2001, the Minnesota legislature enacted a similar statute regarding genetic testing in employment.  Minn. Stat. § 181.974.  That statute restricts an employer or employment agency from directly or indirectly (i) administering a genetic test or requesting, requiring, or collecting protected genetic information regarding a person as a condition of employment or (ii) affecting the terms or conditions of employment or terminating the employment of any person based on protected genetic information.  Further, no person is permitted to provide or interpret for any employer or employment agency protected genetic information on a current or prospective employee.  “Protected genetic information” means (i) information about a person’s genetic test or (ii) information about a genetic test of a blood relative of a person.

Unlike GINA which applies to employers with 15 or more employees, this state statute applies to employers with one or more employees in Minnesota.  The law does not apply to independent contractors.  The cost of non-compliance is significant.  A person may bring a civil action in which the court may award (i) up to three times actual damages suffered, (ii) punitive damages, (iii) reasonable costs and attorney fees, and (iv) injunctive or other equitable relief.

Takeaway:  Smaller employers who may not be covered by GINA should be aware that they are nonetheless restricted by the similar Minnesota law prohibiting genetic information testing.

Can Managers Scream, Curse, and Act Like Jerks Towards Employees?

Yes – it may be unwise, but it’s generally not unlawful for a manager to scream, curse, or otherwise act like a jerk towards an employee.

A recent decision from the Eighth Circuit Court of Appeals illustrates this point well.  In Rester v. Stephens Media, LLC, the court affirmed dismissal of a plaintiff’s hostile work environment claim under Title VII based on an incident in which her manager screamed and cursed at her and physically prevented her from leaving the area.  739 F.3d 1127 (8th Cir. 2014).  The court described the incident as follows:

Elderton slammed his hands on the desk and began screaming and cursing at her. Rester testified that she rolled her chair back, stood up, and said that she needed to leave, but Elderton put his hands on her three times, and physically prevented her from leaving until she began “wailing and cussing and screaming and hollering.”

In holding that this incident did not give rise to an actionable claim, the court emphasized that the hostile work environment standard is “demanding” and requires “extreme” conduct “rather than merely rude or unpleasant” conduct.  The plaintiff must show “that discriminatory intimidation, ridicule, and insult permeated the workplace.”  The court held that the single incident alleged by the plaintiff did not meet this standard.

Another reason why the plaintiff’s hostile work environment claim failed is because the conduct alleged did “not denote a sexist connotation.”  The anti-discrimination laws only prohibit harassment based on certain categories protected by law, such as sex, race, national origin, religion, disability, etc…  The conduct at issue in Rester, however, was based on a workplace disagreement, and there was no indication it was based on a protected class status.

In this latter respect, the Rester case was similar to another recent case, Lenzen v. Workers Compensation Reinsurance Ass’n, 705 F.3d 816 (8th Cir. 2013).  In Lenzen, the court rejected a hostile work environment claim because the plaintiff could not establish that the manager’s bad behavior was based on her disability.  Instead, the evidence showed that the manager “created a hostile work environment for the whole support staff — including for those without any medical conditions.”

Takeaway:  Managers who scream, curse, and act like jerks may be undesirable for a host of non-legal reasons, such as employee morale, productivity, and retention.  But acting like a jerk is generally not sufficient to create a hostile work environment claim unless the behavior is based on a protected class status and is so extreme that discriminatory intimidation, ridicule, and insult permeate the workplace.

Don’t Forget! The Minnesota Minimum Wage Is Going to Increase on August 1, 2014

The minimum wage in Minnesota is about to increase.  Effective August 1, 2014, “large employers” – whose gross annual volume of sales made or business done is $500,000 or more – will need to pay a minimum wage of at least $8.00 per hour.  “Small employers” – whose gross annual volume of sales made or business done is less than $500,000 – will either need to pay a minimum wage of at least $6.50 per hour under state law or $7.25 per hour if the federal Fair Labor Standards Act applies.

The minimum wage will increase again on August 1, 2015.  For more information about Minnesota’s minimum wage law, click here.

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