Minnesota Court of Appeals Triples The Statute of Limitations For Whistleblower Claims

The Minnesota Court of Appeals recently reversed a longstanding precedent and held that claims under the Minnesota Whistleblower Act, Minn. Stat. § 181.932, are governed by a six-year statute of limitations instead of a two-year statute of limitations.

In Ford v. Minneapolis Public Schools, the issue before the court was whether the Plaintiff’s whistleblower claim was barred by the two-year statute of limitations.  A13-1072 (Minn. Ct. App., Dec. 15, 2014).  The court held that the two-year statute of limitations did not apply, overturning a prior decision in Larson v. New Richland Care Ctr., 538 N.W.2d 915, 921 (Minn. Ct. App. 1995).

The Ford court reasoned that a whistleblower claim was not an “other tort resulting in personal injury” governed by the two-year statute of limitations in Minn. Stat. § 541.07(1), but instead was a “liability created by statute” governed by the six-year statute of limitations in Minn. Stat. § 541.05, subd. 1(2).  To reach this result, the Ford court relied on a recent Minnesota Supreme Court decision in Sipe v. STS Mfg., Inc., which held that “541.07(1) is limited to common law causes of action not created by statute.”  834 N.W.2d 683, 686 (Minn. 2013).  The Ford court explained that “[t]he supreme court’s decision in Sipe essentially overrules this court’s reasoning in Larson.”

Takeaway:  Unless appealed and overturned, the Ford decision means that plaintiffs now have six years to bring a claim for violation of the Minnesota Whistleblower Act instead of just two.  Combined with the Minnesota legislature’s recent expansion of the Whistleblower Act, this decision yet again increases the difficulty for employers to defend against whistleblower claims.

NLRB Holds That Employees Have A Presumptive Right To Use Employer-Provided Email For Union Organizing

Reversing a previous 2007 decision, the National Labor Relations Board (NLRB) recently held that employees have a presumptive right to use employer-provided email systems for union organizing and other protected, concerted activities.

In Purple Communications, Inc., the NLRB held that “[w]e adopt a presumption that employees who have been given access to the employer’s email system in the course of their work are entitled to use the system to engage in statutorily protected discussions about their terms and conditions of employment while on nonworking time, absent a showing by the employer of special circumstances that justify special restrictions.”  361 NLRB No. 126 (Dec. 11, 2014).  This includes the right under Section 7 of the National Labor Relations Act (NLRA) to engage in union organizing and other protected, concerted activities.  29 U.S.C. § 157.  The NLRB’s decision in Purple Communications reverses its prior decision on this subject in Register Guard, 351 NLRB 1110 (2007).

The NLRB explained its decision by stating that “email is the most pervasive form of communication in the business world,” and that “[s]ome personal use of employer email systems is common and, most often, is accepted by employers.”  The NLRB concluded that email has become a “natural gathering place” for employee-to-employee conversations and, therefore, should accommodate the exercise of Section 7 rights by employees.  The NLRB also decided to apply this new rule retroactively.

The NLRB’s new holding in Purple Communications has some important limitations, including the following:

  • Employers are not required to provide email to employees.
  • The rule only authorizes employees to send Section 7 communications during nonworking time, not during working time.
  • The rule only applies only to email, not other electronic communications systems that employers may provide.
  • The rule only applies to employee use of email. It does not authorize non-employees to access employer-provided email.
  • An employer may rebut the presumption that employees should be able to send Section 7 communications via employer-provided email by showing that “special circumstances make the presumption inappropriate in its workplace.” However, the NLRB cautions that “it will be the rare case where special circumstances justify a total ban on nonwork email use by employees.”
  • Short of a total ban on nonwork email use by employees, employers may still maintain “uniform and consistently enforced controls over their email systems to the extent that such controls are necessary to maintain production and discipline.” However, to justify a particular restriction, the employer must be able to “demonstrate the connection between the interest it asserts and the restriction.”
  • Employers may still “monitor their computers and email systems for legitimate management reasons, such as ensuring productivity and preventing email use for purposes of harassment or other activities that could give rise to employer liability.”

Takeaway:  Subject to certain limitations, employees now have a presumptive right to use employer-provided email during nonworking time to send communications related to union organizing or other concerted and protected activities under Section 7 of the NLRA.  However, the ruling leaves open a number of unanswered questions, such as what “special circumstances” might justify a total ban on nonwork email use.  This question, and others, will likely be answered through future NLRB litigation.

Do Employees Need To Be Paid For Post-Shift Security Screenings?

No – the U.S. Supreme Court recently held in a 9-0 decision that the Fair Labor Standards Act (FLSA) does not require employees to paid for post-shift security screenings because they are not “integral and indispensable” to the employee’s principal job activities.

In Integrity Staffing Solutions, Inc. v. Busk et al., the issue before the Court was whether the employer was required to pay warehouse employees for the approximately 25 minutes per day that they spent in security screenings following their shifts.  No. 13-433 (Dec. 9, 2014).  The employees’ primary job duties were to retrieve and package goods for delivery to customers of Amazon.com.  The screenings were implemented to prevent and detect employee theft.

The Court analyzed the issue under the Portal-to-Portal Act, which exempts employers from FLSA liability for claims based on “activities which are preliminary to or postliminary to” the performance of the employee’s “principal activities.”  29 U.S.C. § 254.  “Principal” activities are those activities that are an “integral and indispensable” part of the employee’s principal job duties.  The Court held that an activity is integral and indispensable “if it is an intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities.”

The Court held that the security screenings were not “integral and indispensable” to the employee’s primary job duties of retrieving and packaging goods for delivery and, therefore, were postliminary activities that did not require payment under the Portal-to-Portal Act.  The Court reasoned that the employer “could have eliminated the screenings altogether without impairing the employees’ ability to complete their work.”

In reaching this conclusion, the Court specifically rejected the argument adopted by the Ninth Circuit Court of Appeals that the security screenings were compensable because the employer required them.  The Court explained that the integral and indispensable test under the Portal-to-Portal act focuses on the productive work the employee is employed to perform – not merely whether the activity is required.  If all required activities were covered, this would lead to the conclusion that activities expressly excluded by the Portal-to-Portal Act would be compensable, such as walking from a factory gate to the workstation.

Takeaway:  Under the Portal-to-Portal Act, preliminary and postliminary activities are only compensable under the FLSA if they are “integral and indispensable” to the employee’s principal activities.  To meet this standard, the preliminary or postliminary activity must be both “an intrinsic element” of the employee’s principal job duties and “one with which the employee cannot dispense if he is to perform his principal activities.”

Minneapolis Bans Electronic Cigarettes In Workplaces

The Minneapolis City Council recently passed an ordinance that prohibits the use of electronic cigarettes in indoor public places, including places of employment, effective immediately.  In addition to workplaces, the ordinance will apply to other public areas such as stores and restaurants.  The only exception is for  electronic cigarette sampling in exclusive tobacco shops (including exclusive electronic cigarette shops) that restrict people under the age of 18 from entering.

In support of the ordinance, a press release from the City explained that:

Studies have shown that electronic cigarettes and their vapor contain toxicants and nanoparticles that may increase the risk of cardiovascular and respiratory disease. There have been no long-term studies conducted on electronic cigarettes, so the lasting impact on the health of users and those exposed to their vapor is unknown. While many people report that electronic cigarettes have helped them quit smoking cigarettes, electronic cigarettes have not been proven to be cessation devices, and the Food and Drug Administration has not approved them as one.

Other cities in Minnesota that have similar ordinances include Bloomington, Duluth, and Edina.

Even in cities that do not prohibit electronic cigarettes in the workplace, employers may adopt their own policies that prohibit them.  Potential reasons for adopting such a policy include the unknown health effects of electronic cigarettes, co-worker concerns, and the difficulty of enforcing a ban on traditional cigarettes, but not electronic cigarettes.

Takeaway:  If they have not already done so, employers in Minneapolis should implement policies that prohibit the use of electronic cigarettes in the workplace.

Federal Circuit Courts Reject Vague FLSA Overtime Claims

Two recent decisions from the Eighth and Ninth Circuit Courts of Appeal rejected overtime claims based on a lack of detail and supporting facts.

In Holaway v. Stratasys, Inc., the Eighth Circuit affirmed dismissal of the plaintiff’s overtime claim on summary judgment. No. 14-1146 (8th Cir., Nov. 6, 2014). The plaintiff alleged that he was misclassified as exempt under the FLSA and, as a result, his employer failed to pay him overtime. The district court dismissed the claim because the plaintiff did not provide sufficient evidence that he worked more than 40 hours in any particular workweek. The Eighth Circuit affirmed, explaining that:

[Holaway] failed to put forward any evidence of the amount and extent of his work in excess of forty hours a week for any week worked for Stratasys, let alone evidence of excess hours worked every week of his employment. Holaway has, instead, put forth contradictory and bare assertions of his overtime hours worked. At various times, Holaway has estimated his work hours as between forty-five and seventy hours a week, yet has failed to specifically account for the hours worked. In fact, Holaway failed to put forth any evidence regarding specific weeks where he worked beyond forty hours.

In Landers v. Quality Communications, the Ninth Circuit affirmed dismissal of the plaintiff’s overtime claim for failure to state a claim upon which relief can be granted. No. 12-15890 (9th Cir., Nov. 12, 2014). The district court dismissed the case on the grounds that a plaintiff must do more than assert conclusory allegations that he was not paid for overtime in order to state a plausible claim for relief. The Ninth Circuit affirmed, explaining that although detailed factual allegations of overtime are not required, conclusory allegations are insufficient. Instead, “a plaintiff asserting a claim to overtime payments must allege that she worked more than forty hours in a given workweek without being compensated for the overtime hours worked during that workweek.”

Takeaway: Vague and unsupported claims of unpaid overtime are insufficient to prove liability under the FLSA. The Holaway and Landers decisions provide additional support for employers to challenge these types of claims either on a Rule 12 motion to dismiss or at summary judgment.

EEOC Challenge To Wellness Programs Becomes Political Issue

A leading group of chief executives is threatening political repercussions for the EEOC’s recent challenge to employer wellness programs.

The EEOC has several pending lawsuits challenging aspects of employer wellness programs. A federal court in Minnesota recently denied the EEOC’s motion for a preliminary injunction against surcharges imposed by Honeywell for employees who do not participate in certain biometric screenings. In denying the motion, the court cited a provision of the Affordable Care Act (ACA) that expressly states that  “the absence of a surcharge” may be used as a reward in a wellness program.

Now, a group of chief executives are using political pressure to push back against the EEOC’s challenges to wellness programs. Business Roundtable, a group that represents chief executives of 200 large U.S. corporations, intends to meet with President Obama about the issue soon. According to CNBC, the group is upset that the EEOC is challenging wellness programs that are authorized by the ACA. Potential options that members of the Business Roundtable group have for increasing political pressure regarding this issue include: (i) supporting legal challenges to the ACA; (ii) making executives available for hearings about potential changes to or repeal of the ACA; or (iii) ceasing to offer employer-provided healthcare plans and, instead, provide subsidies for employees to buy healthcare elsewhere.

Takeaway: In addition to the legal problems with the EEOC’s challenge to wellness programs noted by the court in the recent Honeywell decision, political pressure from leading executives may provide another headwind for the EEOC’s new initiative.

FLSA Rules For Exempt Employees During Snow Days

With winter weather arriving, many employers will soon face questions about whether certain employees are entitled to be paid when the office closes for the day or the employee can’t make it to work.

The answer is tricky when it comes to employees who are “exempt” from the normal minimum wage and overtime requirements of the Fair Labor Standards Act. “Exempt employees” are generally salaried employees who work in a bona fide executive, administrative, or professional capacity.

Salary Requirements

According to 29 C.F.R. § 541.602, whether the company can deduct money from an employee’s salary depends on whether the company is closed for the day, the employee decided he or she could not make it to work, and whether the employee misses a full day or something less than that.

The general rule is that employers can deduct from an exempt employee’s pay when the employee is absent from work for one or more full days for personal reasons other than sickness or accident. But if an employee is “ready, willing, and able to work,” the employer cannot make deductions when work is not available.

In the context of inclement weather, that means that if the office closes and the employee would have been “ready, willing, and able to work,” the business cannot deduct from the exempt employee’s salary. However, if the business is open but the employee cannot get there, the employer can deduct from the salary because the employee is missing work for a “personal reason” other than sickness or accident.

If, however, the employee misses less than a full day, the company cannot deduct from the employee’s salary.

PTO Requirements

Many employers wonder whether they can require an employee to use PTO or vacation time when the office has to close or the employee cannot make it to work.

The FLSA does not require employers to provide vacation time or PTO to employees. Notably, this means that there is no prohibition on an employer giving an employee vacation time and later requiring that such vacation time be taken on a specific day.  See DOL Opinion Letter (Oct. 24, 2005).

Therefore, as long as an employer does not reduce the employee’s guaranteed salary, the employer can reduce the accrued leave someone has acquired. This is true even if the employee will be left with a negative PTO/vacation time balance. This is also true even if the company makes the decision to close the office for the day, or the employee is absent from work for less than a full day.

Takeaway:  Employers need to make sure to follow the FLSA’s rules for paying exempt employees on snow days.  For more information about the FLSA’s requirements for weather-related closures, click here.

11th Circuit Rejects Overbroad EEOC Subpoena Against Cruise Ship

Although the EEOC’s subpoena authority is broad, a recent 11th Circuit Court of Appeals case shows that it has limits.

In EEOC v. Royal Caribbean Cruises, Ltd., the 11th Circuit affirmed the lower court’s holding that an EEOC subpoena was overbroad and unenforceable. The case began when a single employee from the cruise ship filed a charge of alleged disability discrimination with the EEOC. The employer defended its decision not to re-hire the employee by arguing that it could not employ the employee due to standards developed by the Bahamas Maritime Authority (BMA). After the charge was filed, the EEOC issued an administrative subpoena that requested the employer to produce the following information:

  1. A list of all employees who were discharged or whose contracts were not renewed due to a medical reason since August of 2009;
  2. For each employee identified in response to request number 1, the employee’s name, citizenship, employment contract, position title, reason for and date of discharge, a copy of the separation notice and the last known contact information for each individual;
  3. For each employee listed in response to request number 1, the employee’s employment application and related correspondence, interview notes, the identity of the person who hired the employee, how the employee obtained the position (e.g., online, in person, recruiter), the location where the employee was interviewed, and the identity and location of the person who made the final hiring decision;
  4. A list of all persons who applied for a position but were not hired within the relevant period due to a medical reason; and
  5. For each employee listed in response to request number 4, the employee’s citizenship, employment application and related correspondence, interview notes, the identity of the person who hired the employee, how the employee obtained the position (e.g., online, in person, recruiter), the location where the employee was interviewed, and the identity and location of the person who made the final hiring decision.

The district court refused to enforce the subpoena on the grounds that the information sought was not relevant to the underlying charge of discrimination, and the EEOC appealed.

The 11th Circuit explained that when investigating a charge of discrimination, the EEOC is entitled to subpoena information that “is relevant to the charge under investigation.” 42 U.S.C. § 2000e-8(a). Although courts have interpreted relevancy broadly in this context, it is not limitless.

The 11th Circuit held that it was not clear “why company-wide data regarding employees and applicants around the world with any medical condition, including conditions not specifically covered by the BMA medical standards or similar to [the employee’s medical condition], would shed light on [the employee’s] individual charge . . . .” The court noted that because the employer admitted terminating the employee due to his medical condition, as required by BMA standards, there was no need for statistical data to determine whether the employer’s reason for the termination was a pretext for discrimination – that issue was settled. The court further explained that it would be unduly burdensome for the company to comply with the subpoena given its company-wide scope and the extensive requests for supporting documentation. As a result, the 11th Circuit affirmed the lower court’s refusal to enforce the subpoena.

Takeaway: The EEOC’s subpoena power is broad, but not unlimited. If information sought by an EEOC subpoena is not relevant to the underlying charge of discrimination, there may be a basis for an employer to oppose the subpoena. But employers need to act quickly when they receive an EEOC subpoena because EEOC regulations only give employers a limited period of five days to object to a subpoena.

Minnesota School Activities Leave

As the new school year is now well underway, employees may be requesting time off with greater frequency to attend activities related to their children. These requests may involve school conferences with teachers or advisors, school-related sporting events, or school concerts or play performances. Employees with children receiving child care services or attending a prekindergarten regular or special education program may also seek time off from work to attend a conference or activities, or to observe and monitor the services or program.

As an important reminder, eligible Minnesota employees are entitled to up to 16 hours of school-related activities leave during any 12-month period to attend such conferences or events which cannot be scheduled during non-work hours. Minn. Stat. § 181.9412. To receive this unpaid leave the employee must have worked for the employer for at least 12 consecutive months immediately preceding the leave request. The employee should provide reasonable notice of the leave request and make a reasonable effort to schedule the leave so as not to unduly disrupt the employer’s operations.

It is important to note that these activities must be school related. The Minnesota law does not apply, for example, to community or private programs such as youth hockey, gymnastics, or private music lessons or performances.

Takeaway: Employers should make sure to grant eligible employees the unpaid leave to which they are entitled to attend school-related activities.

Can Employers Use Paid Meal Breaks to Offset Unpaid Donning and Doffing Time Under the FLSA?

Yes – according to a recent federal court decision in Pennsylvania, an employer can take an offset for payments for non-working meal breaks against any claims for unpaid donning and doffing time.

In Smiley v. E.I. Du Pont De Nemours and Co., the plaintiffs alleged that they were not paid for donning and doffing time before and after their shifts in violation of the Fair Labor Standards Act (FLSA). No. 3:12-cv-2380 (M.D. Pa., Nov. 5, 2014). The employees typically worked 12-hour shifts, during which they received three thirty-minute meal breaks, which the employer paid even though it was not required to do so under the FLSA. The employer argued that because the paid meal breaks exceeded any amount of payment allegedly due for donning and doffing, it could not be held liable. The court agreed.

The court explained that, although the FLSA does not specifically authorize offsets of paid non-work time for unpaid work time, offsets are only precluded in two circumstances. First, an employer may not take an offset for any payment that is excluded from the employee’s “regular rate of pay” for purposes of calculating overtime. Second, an employer cannot take an offset if the parties agreed to treat the non-work time as “hours worked” for FLSA purposes. If neither of these conditions applies, an offset may be permissible.

In Smiley, the court held that an offset was permissible for the paid meal breaks. There was no dispute that the employer included the paid meal breaks in the employee’s regular rate of pay, nor was there any evidence that the parties agreed to treat the meal breaks as hours worked. Because the paid meal break time exceeded the amount of time the employees spent donning and doffing, the court determined there was no liability under the FLSA and granted the employer’s motion for summary judgment.

Takeaway: In limited circumstances, an employer may take an offset for paid non-work time against unpaid work time, precluding liability under the FLSA.

Court Denies EEOC’s Motion For Preliminary Injunction Against Honeywell’s Wellness Program

The U.S. District Court for the District of Minnesota recently denied a motion for a preliminary injunction against aspects of Honeywell’s wellness program.

In EEOC v. Honeywell International, Inc., the EEOC challenged certain surcharges that Honeywell imposes on employees who participate in the Company’s High Deductible Health Plan and do not participate in a wellness program with required biometric screenings. No. 14-4517 ADM/TNL (D. Minn., Nov. 6, 2014). In order to be eligible for a Health Savings Account, employees who participate in the wellness program are required to be screened for blood pressure, height, weight, waist circumference, and cholesterol, glucose and nicotine levels. Employees who do not participate are subject to a $500 annual surcharge. Employees and their spouses may also be subject to $1,000 annual surcharge if they are tobacco users. Employees and spouses who refuse to be screened are presumed to be tobacco users, unless they establish that they are tobacco free in another way. When employees agree to the testing, Honeywell receives the data in aggregate form, but does not receive individual results.

The EEOC alleges that Honeywell’s wellness program violates the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) and sought a preliminary injunction against the imposition of surcharges while the case is pending. The court denied the motion for a preliminary injunction.

In order to obtain a preliminary injunction, the EEOC needed to show four things: (1) the threat of irreparable harm; (2) that the balance of harms favored the injunction; (3) the likelihood of success on the merits; and (4) that the public interest favored the injunction. The court found that the EEOC failed to prove irreparable harm, explaining that the three employees represented by the EEOC had already agreed to the biometric testing and did not demonstrate any potential violation of their privacy. The court also found that the balance of harms did not favor the injunction because the injunction would likely result in increased costs for Honeywell’s healthcare program and would create problems for the administration of the health plan.

With respect to likelihood of success on the merits, the court did not analyze the issue in-depth, but identified some potential problems for the EEOC’s case. First, the Court noted that Honeywell’s wellness program may qualify for the safe harbor provision of the ADA, which allows companies to establish or administer “the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with state law.” 42 U.S.C. § 12201(c)(2). Second, the court noted that Congress specifically approved of surcharges in a provision of the Affordable Care Act, which provides that “the absence of a surcharge” may be used as a reward in a wellness program. Third, the court noted that the biometric screening may not constitute a “genetic test” for purposes of GINA, which is defined as “analysis of human DNA, RNA, chromosomes, proteins, or metabolites, that detects genotypes, mutations, or chromosomal changes.” 29 U.S.C. § 1191b(d)(7).

The court concluded by stating that “great uncertainty persists in regard to how the ACA, ADA and other federal statutes such as GINA are intended to interact.” As a result, the Court refused to issue a preliminary injunction against Honeywell’s wellness program.

Takeaway: The Honeywell case is an important test case regarding the viability of wellness programs with financial surcharges. The Court’s initial denial of the EEOC’s motion for a preliminary injunction is a positive sign that the practice may be permissible, but it is not a final decision on the merits.

2015 Cost-of-Living Adjusted Amounts for Employee Benefit Plans

On October 23, 2014, the Internal Revenue Service announced the 2015 cost-of-living adjusted amounts for certain retirement plan limitations. Earlier in 2014, the Internal Revenue Service announced the 2015 cost-of-living adjustments affecting health savings accounts and high deductible health plans, and on October 22, 2014, the Social Security Administration announced the 2015 cost-of-living adjustments related to Social Security benefits.

A list of the most significant of these cost-of-living adjusted amounts is available here.