woman wage dataIn only 18 months, federal contractors and subcontractors with 100 or more employees will be forced to report wage data to the EEOC via the new EEO-1 report, in order to show that there is no discrimination in pay. While this seems a long way away, employers whose data may not be so kind to them could benefit greatly from reviewing (and fixing) the pay disparities now. The “workforce snapshot period” is between October 1 and December 31, 2017. Thus, employers needing to review their pay practices (this is code for – employers whose data would show that females or minorities are paid less than their counterparts) would be wise to do so before the relevant period (one of the payrolls in that window) in order to make adjustments prior to reporting.

Further, if an employer were to be very on the ball, any such adjustments would best be made at the next annual merit increases, or performance reviews prior to the reporting period (preferably before December 1, 2016 – read more on that below). Thus, a little pre-planning could go a long way in not drawing any red flags to those who might otherwise receive a random raise without job justification. Further, if an employer has a bucket of money come raise time, it should use that opportunity to allocate more to those positions that are underpaid and less to those overpaid to control overhead costs. Additionally, employers should familiarize themselves with the relevant pay bands. It may not take much to raise a female employee from one pay band to another, or similarly, keep an male employee at a pay band when on the bubble (I recognize this sounds horrible, but it is reality – the EEOC is looking at pay bands, not actual salary so paying a woman 1 cent more to bump her up a pay band and a male 1 cent less to keep him in a pay band will fall in the employer’s favor all things being equal).

Also, keep in mind that employers would greatly benefit from reviewing the various pay bands at the same time you are reviewing the overtime revisions and make all the changes in one fell swoop come December 1, 2016. As I’ve said before, the December 1, 2016 deadline is really the best excuse employers have to change pay practices without much mystery as to why. There is hardly an employee that doesn’t know about the amendments and is waiting for the change.

Finally, in addition to reporting pay data in 10 EEO-1 job categories, employers will need to report the hours worked that year by each pay band. Employers can find more information on the EEOC’s website here. In the end, employers may be surprised to find after an internal audit that their pay rates are misaligned (not necessarily because of anything intentional) – and so now is the best opportunity to get that corrected and on the right path.

OfferOn September 28, 2016, the Minnesota Supreme Court confirmed that the Minnesota Payment of Wages Act does not allow an employer to offset liabilities owed by the employee to the employer when determining whether an employee “recovers” a greater sum of wages than the employer tendered in good faith where there is a dispute concerning wages owed. Toyota-Lift of Minnesota, Inc. v. American Warehouse Systems, LLC (Minn. 2016). Remember from my earlier post, the Minnesota Payment of Wages Act provides that when an employee’s employment terminates, the employer must promptly pay all wages due (or suffer double damages plus attorneys fees). If there is a dispute, the employer can make a “legal tender of the amount which the employer in good faith claims to be due” and then is not liable for any sum greater than the amount tendered, unless the employer recovers more than that amount in a lawsuit. Generally clients are advised to make a “payment” of the alleged wages due, then attempt to recover the over payment. This opinion appears to be a game changer.

Most notable (to me, anyway), is what the Court didn’t hold…but what it put in dicta (meaning, it’s two cents, but not binding law) in a footnote. The Court notes that the Act does not define “legal tender”, and goes on to state that it is not, “entirely clear that a ‘tender’ under subdivision 3 is the same thing as a ‘payment'”. Noting that “tender” is defined by Blacks Law Dictionary and others as an “offer”, “these factors suggest that a settlement offer might be considered a ‘tender,’ regardless of whether the settlement offer is accepted.” But, unfortunately, the employer failed to raise that argument in its brief, and so the Court did not formally make a ruling on that issue. Adding further insult to injury, the Court also noted that the employer argued at oral argument that the Act should be interpreted for extinguishing liability for penalties whenever an employer makes good faith tender of the amount allegedly due (regardless of whether the employee recovers more than the tender), but as they failed to brief that issue, it too, would not be considered.

This opinion could have huge impacts on the treatment of the payment of wages upon termination. Historically, when an employer terminates an employee, and a dispute arises as to unpaid wages, the employer is advised to pay the disputed amount within 24 hours, so long as it is in the realm of reason, then attempt to settle the dispute with the employee (knowing that rarely you are actually going to recover monies paid). This most often occurs with salespersons and their commissions.

This case, however, hints that it would be acceptable for an employer to tender an offer to pay that amount as part of a settlement agreement, and still be able to avoid the liability under the Act for not paying wages timely. Again, someone is going to have to challenge this, unfortunately, and properly bring the issue before the court to rule on. In other words, pay what is undisputed upon demand, and tender (an offer) to pay the remainder as part of a settlement. So long as the employee is not awarded more than the tender (settlement offer), the employer is not liable for anything else (such as double damages or the employee’s attorneys’ fees – the real penalty).

Band Aid ClockA year after President Obama’s executive order establishing paid sick leave for federal contractors, the DOL has finally published its final rule, Establishing Paid Sick Leave for Federal Contractors, at 29 CFR Part 13. For those of you not wanting to read all 466 pages of the Final Rule, I’ll try to summarize the good stuff below. Keep in mind that this rule is applicable to covered federal contract work (more on that below). Importantly, many of the provisions are very similar to requirements in the Minneapolis and St. Paul Sick and Safe Leave ordinances, so if you are a federal contractor doing business in those cities and this new rule applies to your business, it would be wise to craft a policy that covers all the requirements.

The rule applies to new contracts after January 1, 2017 covered by the Davis-Bacon Act, Service Contract Act, and other concessions contracts and service contracts related to federal property or lands. All contracts that fall under the executive order Establishing a Minimum Wage for Contracts are also covered. The rule does not apply to work under collective bargaining agreements that provide at least 56 hours of PTO that can be used for health-related reasons until January 2, 2020 (or the date the CBA ends if sooner). Employers may use multiemployer plans to provide leave under this Final Rule. Also the rule does not apply to contracts for the manufacturing or furnishing of materials, supplies, articles, or equipment, including those subject to the Walsh-Healey Public Contracts Act. It also does not apply to employees “performing in connection with covered contracts for less than 20 percent of their work hours in a given workweek.”

  • PTO Accrual or Up Front Bucket – Employees must be able to accrue 1 hour of paid sick leave for every 30 hours worked on or in connection with a covered contract, up to 56 hours (7 days) per year (MSP and St. Paul cap at 3 days). Employees who do not need to record their time can be assumed to work 40 hours under the contract each week, or can use an estimate of hours worked (so long as reasonable and based on verifiable information). In lieu of accrual, employers may chose to provide 56 hours of PTO at the beginning of each accrual year.
  • Use of PTO – Employees must be able to use it while working on or in connection with a covered federal contract for own health needs or those of a family member, or due to being a victim of domestic violations, sexual assault or stalking (or to assist a family member who is a victim). Note, there is no waiting period.  Requests for PTO may be verbally or in writing (you can’t force them to put the request in writing, but after it is approved, you could ask that they follow the normal procedures to record that request such as through an online system). Denial of PTO for this purposes must be in writing with a reason why it is denied. Failure to find replacement worker is not a reason to deny.
  • Carryover of PTO – Employees must be able to carryover up to 56 hours from year to year while working for the same contractor on covered contracts – and get unused PTO back if return to work within a  year of leaving a job on a covered contract.
  • Recordkeeping – Employers must provide the employee with their PTO availability each pay period.
  • Payout of PTO – not required, but if an employer pays out PTO upon termination, and the employee later returns to the job, the employer does not need to restore unused leave.
  • Proof – Employers may require a doctor’s note or other documentation supporting the need for leave of 3 days or more (be sure to follow the process provided).

In any event, given the direction of city ordinances and the spread of such sick and safe leave laws, contractors should consider revising their PTO policy (hopefully you still don’t have a separate sick leave and vacation policy) to incorporate the most employee generous of all the applicable leaves to your business, so that your PTO policy will be compliant with all the laws and ordinances your business needs to function with little further administrative burden. As always, employers should be sure not to retaliate for requesting or taking such leave, or otherwise discriminate or interfere these rights. Finally, if you can’t get enough, or want more information, the DOL has a series of information on the Final Rule that can be located here.

ConstructionEach month I receive in my inbox the City of Minneapolis’ Compliance Monthly – a newsletter that the Minnesota Department of Civil Rights Contract Compliance Divisions publishes. Often, as it does in the September 2016 edition, it toots its own horn about how many contractors they have “held accountable”, and how much they have collected and disbursed in restitution (17 and $53,995 for 2016 Q2 if you are curious). But this month they also provided in their compliance tips something I thought may actually be of interest – a simple “how to” obtain the most current prevailing wage decision under the Davis-Bacon Act (DBA). So, here it is, with a few of my thoughts.

Step 1 – go to http://www.wdol.gov  (this is the federal Wage Determinations OnLine)

Step 2 – Choose “Selecting DBA WDs” (if you want to search old ones, click on “Archived WDs”; if you know the number you can put that in there instead)

Step 3 – Choose the State, County, and Construction Type – then click “search”

Step 4 – The wage decision will populate – click “printer friendly version” to print

Step 5 – (Optional) – Select “Sign Up for Alert Service”

Assuming you checked the right boxes/selections, this will provide the most current wage decision. Note, you can sign up for the Alert Service which will alert you when that determination has changed. While a DBA project will use the same rates throughout the project, keep in mind that some cities or other municipalities may adopt the published DBA rates, but also require that the pay be updated during the course of a project. This means the contractor is responsible for updating prevailing wages during the course of a contract. Also, if more than 90 days lag between the bid and the contract, the new rates may apply. Accordingly, I would suggest selecting signing up for the alert if this is the case with your project. Of course, we all know finding the list of rates isn’t the hard part, but selecting the one that you think is right based on the job duties performed that the government will actually agree on, when the job title doesn’t line up with those offered. But that is a whole other topic…

teaAs I wrote about earlier this May, the City of Minneapolis has enacted a sick and safe leave (SSL) ordinance, effective July 1, 2017. However, just last Friday, September 23, 2016, after tireless work by the Minneapolis Regional Chamber’s Workforce Fairness Coalition, the Minneapolis City Council adopted several revisions to the ordinance that are helpful to employers doing work in Minneapolis. The City’s presentation regarding the amendments to the ordinance can be found here and the amended regulations here. Because I know you are overworked (which is why you are reading this and not the ordinance in the first place), here are the revisions in a nutshell:

  • Defines “Regular Rate of Pay” – and importantly excludes tips, commissions, expense reimbursement; premium pay, bonuses, special occasion gifts, profit sharing payments, and retirement contributions.
  • Accrual of time is in one hour increments (no fractions).
  • Employers may front load SSL by providing 48 hours or more to employees following their 90 days of employment and 80 hours of SSL each year thereafter.
  • SSL must be recorded recorded as normal payroll practices or policies but no less than monthly.
  • SSL must be compensated at same hourly rate with same benefits as was scheduled to work when used SSL.
  • No longer must track hours of employees who “occasionally” work in the City (but, there is a presumption of a violation if no records are maintained).
  • Clarified that additional PTO does not need to be given for SSL if current PTO is sufficient to meet the accrual requirements for SSL and allows the use consistent with the Ordinance.

Finally, the City is working on releasing a FAQ document in October and creating a 16 member Workplace Advisory Committee, which you can apply to be on here.

Shermancourthouse1The nation may soon be watching what unfolds in a small courthouse in Sherman, Texas. A little over 2 months before the new overtime regulations go into effect, on September 20, the Attorney General or Governor of 21 states sued the U.S. Department of Labor, alleging that the new Fair Labor Standards Act (FLSA) overtime regulations are unlawful and contrary to the Constitution in State of Nevada et. al v. U.S. DOL (E.D. Tex.). The same day, the U.S. Chamber of Commerce also spearheaded and filed a separate lawsuit joined by 55 plaintiffs (mostly large nationwide business associations such as the National Association of Manufacturers and Associated Builders and Contractors), in Plano Chamber of Commerce et. al v. U.S. DOL (E.D. Tex). The States and Business groups present great arguments, but only time will tell if this quiet town of about 38,000 and one judge will shake up the nation. One thing is for sure – all eyes will be on Judge Amos Louis III Mazzant in the upcoming months.

The States’ Case

The plaintiff States have asked the Court to declare the new overtime regulations unlawful as they: violate the 10th Amendment, exceed Congressional authorization; were imposed without observance of procedures required by law; are arbitrary and capricious; and, in the alternative, improperly delegate Congressional legislative power. The States ask the Court to enter a temporary or preliminary injunction, stopping the regulations from taking effect.

The States’ basic argument is that the DOL has put salary levels as the primary indicator of exempt status over the actual duties test, which is not what Congress intended. Further, they argue that the automatic indexing of the salary level every three years does not account for actual economic conditions. Finally, they argue that the rule exceeds Constitutional authorization as the Federal government is mandating that States pay State employees overtime even if their duties are exempt. In support, the States note that despite President Obama’s instruction to “address the changing nature of the workplace”, the DOL didn’t in fact change the duties test, because it was more difficult than just changing the salary threshold (which doesn’t do anything to change the nature of the workplace). Notably, the $913 revised salary threshold was, as the States point out, based off of 2015 Q4 data from the “South”, nearly doubling the previous $455 per week threshold.

The U.S. Chamber of Commerce Case

The plaintiff business groups, on the other hand, argue that the new regulations violate the Administrative Procedure Act as the new minimum salary and escalator provisions exceed DOL’s statutory authority under the FLSA; and is arbitrary, capricious and otherwise contrary to law. The business groups argue that even the DOL has acknowledged that it does not have the authority to set wages or salaries for exempt employees. They further argue that historically, the DOL has declared the sole purpose of the salary level threshold is to screen out “obviously nonexempt employees”. Accordingly, in the past, the salary threshold has been set at the bottom 10 or 20% – not 40% as it will be. Interestingly, the “South” wages that were utilized include Maryland, the District of Columbia, and Virginia – which are 3 of the top 10 median income states. Slightly misleading (note the sarcasm), and kudos to whomever actually figured that out! At the end of the day, the business groups also make a great argument that basically, the DOL took an easy way out to force more employers to pay overtime to more individuals, many of whom are performing exempt duties and don’t need the FLSA’s protections.

While we can always hope, it is unlikely to change anything before December 1, 2016. Accordingly, employers should continue your wage and hour audit, and prepare for the imminent revisions to take place. Hope for the best and prepare for the worst!

MinnesotaJudicialCenterHope is on the horizon for Minnesota restaurants! On September 20, it was announced that the Minnesota Supreme Court will hear the appeal from the novel decision, Burt v. Rackner, Inc. d/b/a Bunny’s Bar & Grill (MN App. June 27, 2016). As I wrote about on August 4, 2016, the plaintiff, Todd Burt, was terminated by Bunny’s Bar and Grill for not sharing tips with other employees. Despite not losing tips/money, the Minnesota Court of Appeals held (for the first time in 40 years) that the termination of his employment for refusing to share his tips with other employees resulted in his lost employment, and thus, he had an actionable claim to recover future lost wages under the Minnesota Fair Labor Standards Act (MnFLSA). This may not sound like a big deal, but it is – here’s why.

The MnFLSA already provides remedies when an employee is wrongfully forced to share tips – the Minnesota Human Rights Commissioner may require the employer to pay the employee the lost wages. The problem is obvious, right?  Here, the employee didn’t lose any wages – because he wouldn’t share – so he sued under this new theory that it was wrongful discharge in violation of the MnFLSA. This opens up an entirely different box of remedies – and litigation. Good for the employee.  Bad for the employer. The question is, what remedies does the MnFLSA allow, as interpreted by the courts (this is called “common law”).

In the Court of Appeals opinion, the Court held, for the first time: “Where an employer requires, as a condition of employment, that an employee consent to working rules expressly prohibited by the MFLSA, the employee is authorized by the statute to sue for damages normally associated with a wrongful-discharge cause of action.” This decision was monumental, creating a new exception to Minnesota’s at-will employment.

Not surprisingly, and a great relief to many restaurants and employers, on July 27, 2016, Bunny’s Bar & Grill, petitioned the Minnesota Supreme Court to review (and overturn, obviously) the Court of Appeals decision. Here is the issue on appeal:

Whether the MFLSA, Minn. Stat. §§ 177.24 and 177.27, creates a claim for the retaliatory discharge of an employee who refused to share gratuities, abrogating the common law of at will employment without any expression of legislative intent to do so.”

That’s fancy lawyer speak for asking the Supreme Court to decide that the Court of Appeals decision improperly interprets the MnFLSA to create an action for wrongful discharge, when the law does not itself provide such an action. Bunny’s position is that the Minnesota legislature must change the law, not the courts, which are only tasked with interpreting the law. On August 17, the Minnesota Restaurant Association (MRA) asked the Minnesota Supreme Court to allow it to file a brief in support of Bunny’s Bar & Grill petition. On September 20, the Minnesota Supreme Court announced that it would take the extraordinary step and review the Court of Appeals decision, and also allowed the MRA to file an amicus curiae brief (a brief supporting why Bunny’s is right and the Court of Appeals was wrong) in support of Bunny’s.

Keep in mind that the decision, while applicable to tips sharing, will certainly be broadly interpreted (beyond tip sharing) and used for other wage situations. Accordingly, I would not be surprised to see more employer associations or large employers ask to file a “me too” amicus curiae brief. After that, it’s the hurry up and wait game – after briefing and oral arguments, I wouldn’t expect to see a decision until Spring 2017, so we’ll just have to wait.

Native AmericanI’m proud to have graduated from the University of Tulsa College of Law, home of the Native American Law Center. Because of TU’s deep commitment to the study of of Indian law issues, I certainly developed an appreciation to this specialized practice of law and its unique history. On Thursday, September 15, Minnesota swore in its first Native American Justice to our Supreme Court – Justice Anne K. McKeig, as reported by KSTP. Justice McKeig descends from the White Earth Tribe Ojibwe.

Naturally, I knew I just had to find a way to tie in this monumental event with my wage and hour blog. Thus, I felt it appropriate to explore whether the FLSA applies to Native American tribes. There are actually two very distinct issues in that single question: (1) whether the FLSA applies to the Tribe’s business; and (2) whether the Tribe has sovereign immunity with respect to the FLSA. Thus, even if the FLSA does apply to a Tribe, it may have immunity from a private suit for violation of the FLSA, though the courts tend to blur the two together often. This is admittedly a horribly long blog…I admit I may have gotten a bit carried away. However, because of how the courts don’t distinguish the two issues well, I just couldn’t find a good way to make this a two-parter. So, here we go!

Does the Federal Fair Labor Standards Act (FLSA) Apply to a Tribe’s Business?

Maybe.  If you were to Google that question, you’ll see a 9th Circuit Court of Appeals case from 2009 (Solis v. Matheson) flood your screen with various degrees of interpretation of the opinion. The 9th Circuit decided that the FLSA does apply to a “retail business located on an Indian reservation and owned by Indian tribal members”. However, this is not super helpful to us here in the Midwest, for several reasons. First, we (MN, AR, IA, MO, SD, ND, NE) are in the 8th Circuit Court of Appeals. We don’t have to follow the 9th Circuit interpretations of the law (for those of you unaware, that includes the state of California and is often 180 degrees different from many other circuits on the same issue). The 8th Circuit only defers to the precedent set by the U.S. Supreme Court, though it certainly can – and will – analyze and rely upon other courts. Thus, as I am always saying, you have to dig deeper (and then dig some more).

For example, in Costello v. Seminole Tribe of Florida (2010), the Middle District of Florida, Tampa Division, held that the FLSA does apply to a Tribe, but doesn’t expressly abrogate its sovereign immunity (the second question). Thus, the Court noted that the Tribe retains immunity absent an effective waiver. In Reich v. Great Lakes Indian Fish and Wildlife Commission (1993), the 7th Circuit Court of Appeals held that Tribal policemen are exempt from the FLSA, but that may not be the case with other employees of Indian agencies (hinting that policemen are different from employees who are engaged in a commercial or service character versus government character). Accordingly, this is not a simple question to answer.

Has The Tribe Waived Its Sovereign Immunity As to the FLSA?

As happened with a prevailing wage case I handled several years ago, a Tribe can actually chose to follow a federal or state law, removing all doubt as to whether sovereign immunity applies. Accordingly, the first thing to do, would be to determine whether your Tribe has indeed waived sovereign immunity as to a FLSA-based claim in its constitution, general administrative policies and procedures, handbook (for example, does it use words like “exempt” and “non-exempt” and/or reference state and/or federal wage and hour laws, or does it have its own wage and hour ordinances?), or other contract. For example, in 2007, the Tribal Court of the Little Traverse Bay Bands of Odawa Indians (LTBB) held in Harrington v. The Little Traverse Bay Bands of Odawa Indians, that the members of the LTBB could have voted for such inclusive waiver of rights in the LTBB Constitution, but did not do so. In Mitchell v. Pequette, (2008), the employee argued to the Leech Lake Band of Ojibwe Tribal Court that the General Administrative Policies and Procedures state the Band “may apply” the FLSA “when applicable”. However, the Tribal Court held that it is permissive rather than mandatory (“shall”), and thus, did not serve to waive its sovereign immunity.

What Have the Federal Courts Ruled on this Issue?

If no waiver is clear, then you’d look to common law (how the courts interpret the law). Continue Reading Are Native American Tribes Subject to the Fair Labor Standards Act?

Small employerWith all the press about the December 1, 2017 overtime changes, I’ve spoken to a few small employers recently that didn’t even consider the fact that the federal Fair Labor Standards Act may not apply to their business. So, I wanted to take a step back and explain how this works. First, I should caveat this by stating that any employer can certainly chose to pay more than is required by law, so you can’t ever err by paying an employee as if the FLSA does apply (unlike if you fail to pay and it does apply – that is bad). But I know for some small businesses, the overtime requirement of 40 (FLSA) or 48 (MnFLSA) hours can make a huge difference. As for the cute small employer-like kid in the picture? Just couldn’t help myself…pun intended.

Is Your Business Covered By the FLSA?

There are two ways that an employee (as defined by the FLSA) may fall under the purview of the FLSA – working for a covered enterprise OR individual coverage. In other words, an entire business can meet the requirements for having to pay pursuant to the FLSA, or the business may not meet the requirements but a single employee does, and thus the business must pay that employee pursuant to the FLSA. A business meets the “covered enterprise” test if it has 2 or more employees and meets one of the following:

“(A) (i) has employees engaged in commerce or in the production of goods for commerce, or that has employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person; and

(ii) is an enterprise whose annual gross volume of sales made or business done is not less than $500,000 (exclusive of excise taxes at the retail level that are separately stated)”

In addition, hospitals and businesses providing medical or nursing care for residents and various types of schools are covered – regardless of whether they are for profit or not for profit. Finally, public agencies are covered enterprises.

Is Your Employee(s) Covered Individually By the FLSA?

If a business does not meet any of the above, an employee working for that business may still be entitled to the FLSA’s protections if the employee’s work regularly engages them in interstate commerce or the production of goods for interstate commerce (even if their job is not the actual production of goods, but related to the process such as a secretary or janitor). General examples are those who work in communications or transportation; regularly use mail/telephone/fax for interstate communication or keep records of interstate transactions; handle, ship, receive goods from another state; cross state lines for work. However, you should not rely on this alone – many of the key terms are further defined, and courts tend to interpret such coverage broadly (in favor of coverage).

The go-to case in the 8th Circuit is Reich v. Stewart (1997), whereby the Court held that the test of such coverage is “whether the work is so directly and vitally related to the functioning of an instrumentality or facility of interstate commerce as to be, in practical effect, a part of it, rather than isolated, local activity”.  In Reich, since the employees were making pallets that were sold across state lines, they were covered  by the FLSA, even though the business had less than $500,000 in gross sales. Also, domestic service workers (nannies, cooks, chauffeurs, housekeepers, day workers) are covered if the cash wages from an employer are at least $2,000 (the threshold determined by the Social Security Administration each year) or the work more than 8 hours a week for one or more employers.

What Does the Minnesota Fair Labor Standards Act Require If the FLSA Does Not Apply?

If the FLSA does not apply, the Minnesota Fair Labor Standards Act may apply to your business. Under the MnFLSA, covered employees are entitled to overtime (1.5x) after 48 hours worked in a workweek (unlike 40 hours under the FLSA). The 48 threshold is based on actual hours worked and so it does not count paid time off, holiday pay, or vacation/sick leave. However, as with the FLSA, certain employees are exempt from the state law. In general, employees typically exempt are certain agricultural workers, seasonal day camp staff, outside sales persons (over 80% sales outside), elected officials, volunteers for nonprofits, taxicab driver, nanny, seasonal recreation such as skiing), and a few more – you can find them at Minn. Stat. 177.23 under the definition of “Employee”.

Also, keep in mind that if the FLSA applies, the MnFLSA may likely still also apply – so that the stricter of the two would need to be followed. Sometimes Minnesota does not allow exemptions from overtime requirements that the FLSA does. Accordingly, because you are a Minnesota employer, you must also look to Minnesota law to be sure an FLSA-exempt employee is also exempt under Minnesota’s FLSA. So, while it may take a bit of work to make the determination whether the FLSA applies to your business or an employee, I know for smaller, local employers, it sure may be worth it – and it can be done!

St PaulAs predicted in my earlier post, on September 7, 2016, St. Paul joined Minneapolis in unanimously approving a sick and safe leave ordinance – with a very big difference. Unlike Minneapolis, the St. Paul ordinance mandates paid leave be provided by all sizes of employers. For purposes of the St. Paul Ordinance, an “employer” is a person or entity that employs 1 or more employees – even if that person is part-time or a temporary employee. As of July 1, 2017, employees working in the city for a large employer “shall” be provided paid time off for sick leave, safe leave, and…snow days.

What Does the St. Paul Sick and Safe Time Ordinance Require?

The St. Paul Ordinance is effective July 1, 2017 for large employers (those with 24 or more employees), and January 1, 2018 for smaller employers. Similar to Minneapolis, employees working in St. Paul will accrue sick and safe time leave at the rate of 1 hour for every 30 worked, up to an annual cap of 48 hours (either calendar or fiscal year). Employees must be allowed to use sick and safe time after 90 calendar days of employment. Employers must permit an employee to carry over at least 80 hours of accrued but unused sick and safe time into the following year.

Accrued but unused sick and safe time does not need to be paid out at termination. Employees must be able to use the leave in the same increment of time consistent with current payroll practices and existing employer policies (but no more than 4 hours). They must be compensated at the same hourly rate with the same benefits (except they are not entitled to lost tips or commissions and compensation is only required for the hours the employee was scheduled to work).

Who Is An “Employer” and “Employee” Under the Ordinance?

The Ordinance defines these terms with specificity, but here it is in a nutshell:

  • An “Employer” is a non-government person/entity employing one (1) or more employees.
  • An “Employee” is any individual employed by an Employer (including temps and part-time) that performs work for the Employer within St. Paul for at least 80 hours in a year.  An Employee is not an independent contractor.
  • “Family Members” are children (step, adopted, foster, adult); spouse; sibling; parent (step and in-laws); grandparents; grandchildren; guardian (ward, or member of household); registered domestic partner; and “any individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship”

Unlike Minneapolis’ ordinance, this Ordinance does not specifically allow employers operating under a collective bargaining agreement to develop alternate means of meeting the goals of the Ordinance. In fact, the St. Paul ordinance sates that, “Nothing in this chapter shall be construed as diminishing the obligation of an employer to comply with any contract, collective bargaining agreement, employment benefit plan, or other agreement providing more generous sick and safe time to an employee than required herein.”

Construction Company Opt-Out

Also like Minneapolis, construction companies may opt-out of this Ordinance if the employees are paid at least the Minnesota prevailing wage (Minn. Stat. 177.42) or the rates set forth in a registered apprenticeship agreement. Such employers shall be deemed in compliance for those employees who receive either prevailing wage rate or the apprenticeship rate – regardless of whether the employees are working on a private or public project.

What If An Employer Already Offers Paid Time Off?

Employers may certainly have more generous sick and safe time policies – but no lesser. Employers do not need to offer additional paid time off to employees if they already offer the same amount of PTO to employees that “may be used for the same purposes and under the same conditions.” In other words, the PTO policy must meet these minimum standards of accrual, use, recordkeeping, notices, etc.

Further, the Ordinance does not prohibit employers from having policies allowing donation of this paid leave to other employees – so an employee may accrue the time but not “use” it, instead “donating” it to another (seems to me that this goes against the whole purpose of the ordinance for the benefit of that employee). Employers may also advance sick and safe leave to an employee prior to accrual.

What Can Accrued Sick and Safe Time Be Used For?

Like Minneapolis, after 90 calendar days of employment, an employee may use sick and safe time for:

  • Mental or physical illness, injury, or health condition (theirs or family members).
  • Medical diagnosis, care, or treatment of a mental or physical illness, injury or health condition (theirs or family member).
  • Preventative medical or heath care (theirs or family member).
  • Absence due to domestic abuse, sexual assault, or stalking (so long as the absence is to seek related medical attention, victim services, counseling, relocation or legal action).
  • Closure of the employer’s business by a public official due to public health emergency or an infectious or hazardous situation.
  • Accommodation of need to care for child whose school or daycare has been closed by a public official due to public health or emergency situation.
  • Accommodation for need to care for family member whose school or place of care has been closed due to inclement weather, loss of power, loss of heating, loss of water, or other unexpected closure.

Unlike Minneapolis, the St. Paul ordinance does not carve out that a health care provider may only use sick and safe time when the provider has been scheduled to work (this does not include when the provider calls in and requests a shift within 24 hours or for on-call shifts – unless asked to remain on the premises during the on-call shifts).

What Can Employers Require of Employees?

The St. Paul ordinance requires an employee to do far less to obtain this new benefit.  Whereas a Minneapolis employer may require an employee to provide up to 7 days’ advance notice of foreseeable leave (such as doctor appointments) if the employee intends to use sick and safe time leave and notice of the need to use such leave “as soon as practicable” when it is unforeseeable (such as domestic violence), St. Paul only states that:

Earned sick and safe time shall be provided upon the request of an employee.”

Like Minneapolis, St. Paul employers may require “reasonable” documentation that the leave is covered for absences of 3 or more days. For all leave, “when possible, the request shall include the expected duration of the absence.” Further, “An employer may require an employee to comply with the employer’s usual and customary notice and procedural requirements for absences or for requesting leave, provided that such requirements do not interfere with the purposes for which the leave is needed.” In other words… “sick and safe time shall be provided upon the request of an employee”.

Notices Required at Workplace, Employee Handbook & Upon Request

Employers must post a notice that addresses the following: “Employees are entitled to earned sick and safe time; the amount of earned sick and safe time and the terms of its use guaranteed under this chapter; that retaliation against employees who request or use earned sick and safe time is prohibited; and that each employee has the right to file a complaint or bring a civil action if earned sick and safe time as required by this section is denied by the employer or the employee is retaliated against for requesting or taking earned sick and safe time.” The St. Paul Department of Human Rights and Equal Economic Opportunity (HREEO) will be creating a model notice for employers to use, which must be displayed in a “conspicuous and accessible place”.

Further, if you have an employee handbook – which I strongly advocate every employer should – the notice must be included in the handbook. Also, upon request, the employee must be provided their then-current hours of sick and safe leave he or she has earned, and how much has been used. This may be provided on a pay stub or other online system for employees to access their own information.

Recordkeeping, Confidentiality & No Retaliation

Employers must keep records of hours worked and sick and safe time taken for 3 years. HREEO may have access to the records to monitor compliance, as well as the employee. Similar to Minneapolis, if an employee is transferred to a location outside of St. Paul by the same employer, and the employer doesn’t have sick and safe leave outside the city, the employer has to keep the employee’s accrued time on the books for 3 years. If that employee returns to work in the city within 3 years, the employee is entitled to all previously accrued time not used. Thus, employers that have employees perform work in Minneapolis and St. Paul should consider providing this leave outside of the city so that there is only one bucket of paid leave for all work, wherever performed.

Further, if an employee is terminated but thereafter returns to the same employer within ninety (90) days, his or her sick and safe leave must be reinstated and the employee may use it at the commencement of reemployment (no 90 day wait). In the case of mergers and acquisitions of businesses where the employees remain, the employees accrued time remains intact (no 90 day wait).

Not surprising, any health or medical information collected as a result of the employee’s use of sick and safe time must be treated as confidential.  As with any laws providing employee rights, retaliation for any employee actions under this Ordinance must be prohibited.

What Happens If An Employer Violates the Ordinance?

Any person may report a suspected violation. The HREEO Director may decide to investigate and/or pursue a violation. Note, the “relief and administrative fines” are different than Minneapolis (and the procedure a little less clear at this point):

  • Reinstatement and back pay.
  • For the first violation – payment to the employee of the time unlawfully withheld x2 or $250, whichever is greater, as liquidated damages.
  • For a second violation against the same employee – an additional  fine payable to the City of St. Paul, up to $1,000.
  • For a third violation against the same employee – ad additional penalty of up to $1,000 to the employee, or an amount equal to 10% of the total amount of unpaid wages, whichever is greater.
  • Administrative penalty of up to $1,000 payable to the employee for each violation.
  • Administrative fine of up to $1,000.

An employee, former employee or employer may appeal any violation of this Ordinance within 21 days from the determination. Following the appeal process, the violation determination becomes final. If an employer does not comply the City of St. Paul may initiate a civil action in Court against the employer and, upon prevailing, “shall be entitled to such legal or equitable relief as may be appropriate to remedy the violation.” Further, an employee does have a private right of action to sue the employer directly in district court if retaliated against for exercising rights under the Ordinance.

What’s Next?

The HREEO has to create the notice for employers.  It’s expected that the HREEO will also adopt guidelines and regulations for its implementation. As to the bigger picture, as predicted in my blog about Minneapolis’ ordinance, I suspect Duluth will be next as on July 18, 2016, the Duluth City Council approved a resolution establishing an earned sick and safe time taskforce.