Category Archives: Public Interest
Minnesota’s 2013 Legislative Session – A Potpourri for Employers
The 2013 Minnesota State Legislature passed into law several potentially high-impact changes that may affect business climate and, consequently, employer hiring. The changes include the expansion of sales taxes on electronics and telecommunications, increases on high earner “top tier” income tax, a very limited bonding bill, and significant increases in certain spending. As to specific employment legislation, there were several changes:
- The “Ban the Box” fair hiring law passed;
- Childcare professionals and personal care assistants whose funding source is the state can now unionize under the State union law (many predict a legal challenge to the “forced unionization” aspects of the law);
- Certain employers such as schools, churches, and other organizations that work with minors may face the complications of the three-year window period for filing of otherwise expired sexual abuse claims (although the window period does not apply to vicarious liability and “respondeat superior” claims against the employer, which may significantly limit exposure);
- The State health insurance exchange was passed into law for 2014 in conjunction with the U.S. Affordable Care Act; and
- The same-sex marriage law will expand marital-status discrimination protections to same-sex couples.
Sometimes what didn’t pass is noteworthy, as well. For example, the state minimum wage law did not change, and nursing staff ratios were rejected.
Takeaway: All in all, the 2013 legislative potpourri has a direct impact on employers by way of legislative changes to the State’s employment laws and an indirect impact by way of the potential positive or negative impact on the business climate of state revenue, spending increases, and the lack of a bonding bill. Minnesota Employer will look more closely at some of these topics in future posts. On to 2014!
What Employers Need to Know About Same-Sex Marriage in Minnesota
On May 14, 2013, Governor Mark Dayton signed legislation making Minnesota the 12th state to recognize same-sex marriage. The new law will take effect on August 1, 2013. The text of the bill is available here. Here are a few things that employers should keep in mind now that same-sex marriage will be legal in Minnesota:
- Sexual Orientation Discrimination: Even before same-sex marriage was recognized in Minnesota, the Minnesota Human Rights Act (MHRA) prohibited employers from discriminating against applicants or employees on the basis of sexual orientation. See Minn. Stat. § 363A.08. A limited exception to this rule exists for non-profit religious associations or educational institutions that are operated or controlled by religious associations, but the exception does not apply to secular business activities that are unrelated to the religious and educational purposes for which the institution is organized. See Minn. Stat. § 363A.26.
- Marital Status Discrimination: The MHRA also prohibits employers from discriminating against applicants or employees on the basis of marital status. The Minnesota Supreme Court has defined “marital status” to include “the identity of the employee’s spouse and the spouse’s situation, as well as the spouse’s actions and beliefs.” Taylor v. LSI Corp. of America, 796 N.W.2d 153, 156 (Minn. 2011).
- Exemption for Marriage Ceremonies: For employers who administer marriage solemnizations or ceremonies, the new law includes an exemption for religious associations, which allows them to refuse to provide goods or services for marriage solemnizations or ceremonies that violate their sincerely held religious beliefs. The exception extends to employees or volunteers of religious associations who are acting within their responsibilities for the religious association. However, the exception does not apply to secular business activities that are unrelated to the religious or educational purposes of the religious association.
Takeaways: While same-sex marriage in Minnesota will likely not have a significant impact on employment law, employers should make sure that their policies and practices do not discriminate on the basis of sexual orientation or marital status.
Update on Minnesota Minimum Wage Law Legislation
It is looking increasingly likely that the legislature will pass a state minimum wage increase this legislative session. Minnesota Employers should prepare and budget accordingly. We previously posted on the complications presented by the fact that Minnesota is not, and likely will not become, a tip credit state. But a potential “patch” is in the works that could take some of the edge off the impact of the increase on hospitality industry employers.
The Minnesota Restaurant Association has proposed a “stepped” system that would keep certain tip earning employees (those who, with tips, average at least $12 an hour) at the lower federal minimum wage of $7.25 per hour and stepped up to the new state minimum wage over a three-year period. Whatever the ultimate “patch,” if any, this proposal and others show the state employers’ recognition that legislation will likely be passed raising the minimum wage in Minnesota.
Takeaway: Minnesota Employers should consider what changes they will need to make if the increased minimum wage law passes. Please let us know if you have any questions concerning implementation and compliance.
Proposed Legislation Threatens to Ban Most Non-Competes in Minnesota
A bill has been introduced in this session in the Minnesota Legislature that would make most non-compete agreements in Minnesota void, including those between employers and employees. The bill, HF 506, contains exceptions for certain business transactions, but even those exceptions are very limited. The proposed bill would be codified at Minn. Stat. § 325D.72 and provide as follows:
NONCOMPETE AGREEMENTS VOID.
A contract that prohibits a party to that contract from exercising a lawful profession, trade, or business is void with the following exceptions:
(1) a seller of a business’ goodwill can agree to refrain from carrying on a similar business in a specified county, city, or part of one of them if the buyer carries on a like business in that area;
(2) partners dissolving a partnership can agree that one or more of them will not carry on a similar business in a specified county, city, or part of one of them where the partnership transacted business; and
(3) a member, when dissolving or terminating their interest in a limited liability company, can agree that the member will not carry on a similar business in a specified county, city, or part of one of them where the business has been transacted if another member or someone taking title to the business carries on a like business in that area.
The authors of the bill are Representatives Joe Atkins (District 52B) and Alice Hausman (District 66A). The bill has been referred to the Committee on Labor, Workplace and Regulated Industry.
Under current law in Minnesota, while courts scrutinize non-compete agreements carefully, employers and employees can agree to reasonable restrictions on a departing employee’s ability to compete with the employer. To be enforceable, such agreements must be: (i) supported by consideration; (ii) reasonable as to time and geographic scope; and (iii) limited so as to be reasonably calculated to protect the employer’s legitimate business interests.
Many businesses in Minnesota rely on non-competes to protect their investments in research, confidential information, relationships, training, and goodwill, and to prevent departing employees from turning around and using those assets to compete against the company. HF 506, if passed, appears to ban that practice, although it is not entirely clear what the bill’s language concerning “exercising” a trade or business means.
The proposed bill’s exceptions for certain business transactions are extremely narrow. For example, they only allow a seller of a business to agree not to compete in a specified county or even smaller area. Presumably, an agreement prohibiting a seller from competing regionally or nationally would be void, even if the company does business regionally or nationally.
Takeaway: If passed, HF 506 would arguably prohibit employers from entering into non-competes with their employees and, potentially, make current non-competes void. Even in the sale-of-business context, the proposed legislation may restrict a buyer’s ability to protect newly acquired goodwill and relationships. Employers should keep a close eye on this bill. We are happy to discuss with you the potential effects on your business.
Minimum Wage and the Tip Credit in Minnesota: Nothing is Simple
As we recently discussed, there is newly proposed minimum wage legislation in Minnesota. Such supposedly simple legislation can bring legal complexities and unintended consequences for Minnesota employers given its interaction with other laws.
One case in point is the implication to Minnesota hospitality industry employers (a very significant share of the state economy and an industry with traditionally narrow profit margins) because Minnesota does not have a “tip credit” law. In 43 other states and as allowed by the FLSA, a tip credit can be applied to a portion of an employer’s minimum wage obligations. Minnesota law, however, prohibits application of a tip credit to either the federal or state minimum wage.
Many hospitality industry employers argue that a minimum wage increase in Minnesota will have the unintended negative effect of increasing the cost of certain “minimum wage” tip-earning employees who actually earn far in excess of minimum wage by earning tips in a “no-tip credit” state. This increased cost, they argue, will be at the expense of the non-tip earning employees and, ultimately, the consumer. Some hospitality industry employers are strongly opposing the increase or proposing a tiered minimum wage system to offset unintended consequences. Some hope for tip credit legislation – although that may be a remote hope. A good discussion of the ongoing debate is found on the Minnesota Public Radio website.
Takeaways: Nothing is simple! Minnesota employers should stay current on the state and federal minimum wage legislation proposals and project their implications to their own labor force in light of the many other laws relevant to lower-wage workers.
Does Accusing a Former Employee of Blackmail and Extortion Constitute Defamation?
Not necessarily. The U.S. District Court for the District of Minnesota recently dismissed a defamation claim that relied on accusations of blackmail and extortion in the widely publicized case of Michael Brodkorb v. State of Minnesota et al.
Michael Brodkorb formerly worked as the Communications Director for the Minnesota Senate Majority Caucus. In December of 2011, the Secretary of the Senate, Cal Ludeman, fired Brodkorb after an extramarital affair was revealed between Brodkorb and then-Senate Majority Leader Amy Koch. After his termination, Brodkorb threatened to sue the Minnesota Senate for gender discrimination and offered to engage in mediation of his claims. Following that threat, Cal Ludeman released a press release that suggested Brodkorb was trying “to extort a payment from the Senate” and stated to a newspaper reporter that Brodkorb was attempting to “blackmail” the Senate.
Brodkorb subsequently filed a lawsuit alleging a number of different claims. One of the claims was a claim for defamation based on the statements relating to alleged extortion and blackmail. On February 13, 2013, the court granted the defendants’ motion to dismiss the defamation claim.
The court rejected Brodkorb’s argument that the terms extortion and blackmail were defamation per se because they allege criminal conduct. The court explained that the terms extortion and blackmail have “broader non-legal” meanings and are often used colloquially. The court found that Ludeman used the terms in the “generalized sense, and not as a label for punishable criminal offenses.” In addition, the court held that because the statements were made in a “heated context,” they could not reasonably be interpreted to accuse Brodkorb of “engaging in the crimes of extortion and blackmail.”
The court also found that the statements could not be defamatory because they could not be proven true or false. Instead, the court characterized the statements as “simply subjective statements of rhetoric and hyperbole.” The court emphasized that a reasonable person would have understood the statements to be hyperbole given that they were made in the context of heated negotiations relating to Brodkorb’s threatened lawsuit. Accordingly, the court held that the statements could not give rise to an actionable defamation claim.
Takeaway: The Brodkorb case shows that, in the right context, referring to a former’s employee’s settlement demands as “extortion” or “blackmail” may not necessarily be defamation. On the other hand, the defendants in the Brodkorb case could have avoided the defamation claim (and some legal fees) by being more cautious about their language. For that reason, it is advisable for employers in most cases to avoid making statements about extortion and blackmail by their former employees – even if the statements may not result in actionable defamation.
Minimum Wage Legislation Gains Momentum
Efforts to raise Minnesota’s minimum wage appear to be gaining momentum. In early January, Minnesota Senator Chris Eaton introduced a bill that would raise the minimum wage in Minnesota to $7.50 per hour and require annual increases to match inflation. See S.F. No. 3. Then, in his State of the Union address, President Obama proposed raising the federal minimum wage to $9.00 and indexing it to inflation.
Now, Minnesota Senator David Tomassoni and Representative Melissa Hortman have introduced legislation that would raise Minnesota’s minimum wage to $9.50 per hour and index it to inflation. See H.F. No. 430. The bill would first raise the minimum wage for large employers to $8.25 per hour in September of 2013 and then raise it again to $9.50 per hour in July of 2014. Beginning in 2015, the minimum wage would increase on an annual basis to keep pace with inflation.
The Star Tribune reports that the latest minimum wage legislation is supported by the House Majority Leader, Erin Murphy, as well as a number of DFL committee chairs. The Star Tribune also reports that the Minnesota Speaker of the House, Paul Thissen, has said that a minimum wage hike in Minnesota has “a much better chance” of passing this legislative session than some of the other bills that have been introduced.
Takeaway: With broader support and multiple bills introduced, it is looking more likely that the Minnesota legislature may raise the state minimum wage this year. Employers with minimum wage employees should pay close attention to the pending legislation.
Is Minnesota a “Right to Work” State?
All the national media attention given the passage in Michigan of a “Right to Work law” may raise the question, is Minnesota a Right to Work state? With the Michigan law, there are now 24 that are considered “right to work” states.
The answer is no – Minnesota is not a right to work state. Minnesota state law allows negotiation of a union security clause that requires all workers who receive the benefits of a collective bargaining agreement to pay union dues ( i.e., the proportion of union dues related to collective bargaining expenses). This applies to public and private employers.
But there was a legislative push for a Minnesota Right to Work law in the 2012 session by way of a proposed state constitutional amendment entitled Minnesota Freedom of Employment Amendment or the “Right to Work”Amendment. It provided:
Shall the Minnesota Constitution be amended to guarantee all citizens the individual freedom to decide to join or not join a labor union; to remain with or leave a labor union; or to pay or not pay dues, fees, assessments, or other charges of any kind to a labor union or any affiliated third party or charity, without having it affect their employment status?
After considerable publicity and legislative procedures, the proposed amendment stalled and, as we know, did not appear on the November 2012 ballot.
Takeaway: The winds of change may someday resurrect in Minnesota another attempt to prohibit mandatory union membership or payment of union dues. But the immediate driver is political will and with a DFL- controlled legislature and a DFL Governor committed to preserving current state law, the chances are that Minnesota employers will be observers rather than participants in any Right to Work national zeitgeist caused by the Michigan law.
Don’t Forget Election-Related Employment Laws
The election is next Tuesday, November 6, 2012. Employers in Minnesota need to be aware of Minnesota’s laws regarding voting leave and leave for election judges.
Truth is a Defense to Tortious Interference – Why the Johnny Northside Case Matters To Employers
On August 20, 2012, the Minnesota Court of Appeals issued an opinion that reversed a $60,000 jury verdict for tortious interference claims against North Minneapolis blogger, Johnny Northside. At the trial court, the jury determined that Johnny Northside tortiously interfered with Jerry Moore’s employment contract with the University of Minnesota by suggesting on his blog that Moore had some involvement with a fraudulent mortgage in North Minneapolis. The jury awarded $60,000 in damages to Moore. The jury also found that the statement regarding Moore’s alleged involvement with the fraudulent mortgage was not false.
The Minnesota Court of Appeals reversed the jury verdict against Johnny Northside and held that truth is “a defense to a claim for tortious interference with a contract arising out of an allegedly defamatory statement.” Because the jury found that the statement about Moore on the Johnny Northside blog was true, it could not serve as a basis for Moore’s claims for tortious interference with contract or prospective business advantage. The court also found that there was insufficient evidence of other tortious conduct, apart from Johnny Northside’s constitutionally protected speech, to sustain the jury’s verdict.
The Court of Appeals’ decision in the Johnny Northside case is a good decision for employers because there are some contexts in which protection of an employer’s business may require informing third-parties about irresponsible conduct by an ex-employee. For example, it may be necessary to alert a former employee’s new employer that the former employee has violated a non-compete agreement or misappropriated confidential information or trade secrets. The Johnny Northside case makes clear that as long as the statements made to the new employer are true, they cannot form the basis for a tortious interference claim.
Takeaways: In most situations, it is advisable for employers to limit disclosures about former employees to the information protected by Minnesota’s employment references statute. However, there may be other situations, such as non-compete disputes, when additional disclosures may be necessary. In these cases, employers can reduce potential liability by making sure that any information provided about the former employee is factually true. In some contexts, it may be helpful to consult with counsel to avoid factual misstatements.
What Is The Right To Work Amendment?
On February 6, 2012, republican senators David Hann and Dave Thompson in the Minnesota State Senate introduced legislation that would allow Minnesota voters to vote on whether to amend the state constitution to make Minnesota a “right to work” state. In a right-to-work state, employees may not be compelled to become a union member or pay union dues.
Currently, Minnesota employees have the right not to join a labor union, but they may still be required to pay “fair share” dues to cover the cost of collective bargaining. If the amendment passes, it will be unlawful for any employer or union to require non-union employees to pay fair share dues. Twenty-three other states have similar right-to-work laws.
If the legislation passes, Minnesota voters will be asked to vote on the following question during the November 2012 election:
Shall the Minnesota Constitution be amended to guarantee all citizens the individual freedom to decide to join or not join a labor union, and to pay or not pay dues to a labor union?
If a majority of Minnesota voters vote yes, the Minnesota Constitution will be amended to provide, in relevant part, as follows:
No person shall be required as a condition of obtaining or continuing public sector or private sector employment to: (1) resign or refrain from membership in, voluntary affiliation with, or voluntary financial support of a labor organization; (2) become or remain a member of a labor organization; (3) pay any dues, fees, assessments, or other charges of any kind or amount, or provide anything else of value, to a labor organization; or (4) pay to any charity or other third party an amount equivalent to, or a portion of, dues, fees, assessments, or other charges required of members of a labor organization. An agreement, contract, understanding, or practice between a labor organization and an employer that takes force or is extended or renewed after adoption of this section and that violates this section is unlawful and unenforceable.
Employees affected by a violation of the provision will be entitled to bring a civil action for damages, injunctive relief, or both. Prevailing plaintiffs will also be entitled to an award of costs and reasonable attorneys’ fees.
Neither the Minnesota Senate nor the House of Representatives has voted on the proposed legislation yet, so it is not yet clear whether the proposed amendment will be on the ballot for the November 2012 election. If the legislation passes and the constitutional amendment is approved by a majority of voters, it will be a significant change for unionized employers and labor unions in Minnesota.
Joe Paterno, Penn State, and Negligent Retention
On November 9, 2011, Penn State University fired its long-time football coach Joe Paterno and university president Graham Spanier. The University’s Board of Trustees made the decision to terminate Paterno and Spanier based on allegations that Paterno and other top school officials were told that a graduate assistant saw assistant coach Jerry Sandusky assault a boy in a school shower in 2002, but did not report the matter to police. To the extent the allegations are true, the failure of Paterno and other Penn State officials to report the incident to police or take corrective action could arguably expose the University to a negligent retention claim.
Under Minnesota law, liability for negligent retention is “predicated on the negligence of an employer in placing a person with known propensities, or propensities which should have been discovered by reasonable investigation, in an employment position in which, because of the circumstances of the employment, it should have been foreseeable that the hired individual posed a threat of injury to others.” See Bruchas v. Preventive Care, Inc., 553 N.W.2d 440 (Minn. Ct. App. 1996). This theory of recovery imposes liability on an employer for an employee’s intentional torts if the employer knew or should have known that an employee was violent or aggressive and might engage in injurious conduct. The threat of injury or actual injury caused by the employee must be physical in nature for negligent retention to apply.
Takeaway for Employers: It is important for employers to take seriously any incident in which an employee threatens to cause injury or actually causes injury to another person. What corrective action is necessary, if any, will depend on the particular circumstances of the case.
Ankoor Bagchi
Ann Huntrods
Britt Gilbertson
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Ellen Brinkman
Greg Stenmoe
Michael Miller
Michael Wilhelm
Mike Moberg
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