It’s been quiet around here (from a wage and hour standpoint) in Minnesota! I’ve had very little to blog about – no more! Governor Tim Walz recently signed a bill, Frontline Worker Payments, which will provide a payment to frontline workers up to $1,500. While the actual process is not yet up and running, once the Minnesota Department of Labor & Industry (MNDOLI) finalizes the online application system, and opens the application period, employers will have 15 days to notify all current workers that may be eligible for the payment. MNDOLI is preparing a form to be used (stay tuned). Employees will then have 45 days to apply. Once the application period closes, there will be a 15 day period for applicants to contest the decision. Once that timeframe is closed, the available money will be split equally upon the eligible applicants, in an amount not to exceed $1,500 per individual.

What are the frontline business sectors? 

  • Manufacturing
  • Long-term and home care, health care, vocational rehabilitation
  • Emergency responders
  • Child care, schools
  • Food service (including production, processing, preparation, sale and delivery)
  • Retail (including sales, fulfillment, distribution and delivery)
  • Temporary shelters and hotels
  • Building services, including maintenance, janitorial and security
  • Ground and air transportation services, public transit

Which employees are eligible within the frontline sector?

  • Must have worked at least 120 hours between March 15, 2020 and June 30, 2021 AND unable to telework AND worked in close proximity to others (not in your household).
  • Must have an annual income of less than $185,000 for married taxpayers filing jointly, or $85,000 for all others if the occupation does not have COVID-19 patient care responsibilities.
  • Must have an annual income of less than $350,000 for married taxpayers filing jointly, or $175,000 for all others if the occupation had direct COVID-19 patient responsibilities.
  • Must not have received unemployment for more than 20 weeks on a cumulative basis between March 15, 2020 and June 26, 2021.

So, for now this is just a heads-up. I’ll certainly post more as the process develops. Again, employers will only have 15 days to provide notice to employees, so you’ll want to be sure to keep your eyes out!

Today, March 11, 2022, the U.S. Department of Labor (DOL) announced its notice of proposed rulemaking (NPRM) that seeks to update the Davis-Bacon and Related Acts (DBA). This NPRM is the first major revision to the DBA in over 40 years.

I’ll provide a more comprehensive blog soon of how this is going to affect employers (I’ve got to read the over 400 pages), but here’s what the DOL is highlighting in the changes (all of which result in increased prevailing wages):

  1. Prevailing wage rates will increase, to “keep up with actual wages”.
  2. Return to pre-1983 definition of “prevailing wage”.
  3. Wage determinations will be periodically updated (note, some states’ little DBA already do this).
  4. Allows contracting agency to adopt state or local wage determinations.
  5. Will allow for supplemental rates for key job classifications when there is no survey data.
  6. Regulatory language will be updated to reflect modern construction practices.
  7. “Strengthen worker protections and enforcement, including debarment and anti-retaliation.

Also, employers should keep in mind that this is not law yet, it is just a NPRM, which is the first step the DOL must take to attempt to change the regulations.

From time-to-time, I meet (read: they got in trouble or were about to) a new client from out of state that has an issue in Minnesota arise – not because of any willful or intentional wrongdoing, but just because they don’t realize some unique aspects of Minnesota law.  So, for those non-Minnesota based Minnesota employers, here’s my top 10 FYI’s for you:

  1. Any severance and release needs to have a 15 day rescission and waiver period under the Minnesota Human Rights Act (this is in addition to a 7 day period for ADEA claims). Accordingly, you’re unlikely to see a Minnesota settlement agreement that pays an employee before the 14 day rescission period runs (i.e. we pay on the 16th day).
  2. Employees who are terminated may ask for a copy of their personnel record/file – this is a defined term in Minnesota.  Employers have 7 business days to provide it.  See my earlier blog here.
  3. Terminated employees may also ask for a statement of reasons for their termination. Employers have 10 business days to provide. I blogged about this as well here – this is more than just a request – likely an attorney is in the background.
  4. Terminated employees who demand their final pay in writing are entitled to it within 24 hours of written demand.  Again – here’s my blog on that…typically I suggest just having the check ready to hand over at the termination meeting.
  5. We do not have a tip credit! ‘Nuff said. Oh, and don’t force shared tips either… not okay.
  6. Employers cannot deduct wages for property damage, lost or stolen property, etc. without written authorization from the employee after the fact.  True story.  Don’t do it. Here’s the law and yep, my blog post.
  7. Minnesota recognizes overtime after 48 hours (not 40).  Minnesota does not recognize the computer exemption. Smart computer people would need to fall under one of the other exemptions (administrative, executive or professional) in order to be paid a salary without overtime.
  8. Minnesota does not require paid meal or rest  breaks.  Employees do get “sufficient time to eat a meal” every 8 hours – which is presumably at least 20 minutes – generally 30 paid, and time to use the bathroom every 4 hours. Here are the rules on that.
  9. We have a Wage Theft Act requiring employers to provide a lot of information on a sheet of paper about the terms of employment – even at-will – which you don’t want to mess with; this includes requirements as to what needs to be on a paycheck stub. MNDOLI’s guidance on this may be an easier read than the statue.
  10. We have sick and safe leave.  Check local ordinances to be sure you are following those (i.e. Minneapolis, St. Paul, Duluth) if you have employees working there. This could include snow days, dontcha know!

I hope the above helps our non-domestic employers to navigate our waters a bit better. See what I did there?! Land of 10,000 lakes?

They say money makes the world go round…  As end-of-year reviews are coming up and it may be close to merit increase time, I wanted to send out a friendly remember that Minnesota’s state minimum wage rates increase January 1, 2022:

  • Large employers (over $500k) = $10.33
  • Small employers (under $500k) = $8.42
  • Training wage = $8.42

St. Paul’s minimum wage increases next occur July 1, 2022 ($15/hr for macro businesses >10,001 employees; $13.50 for large; $12 for small; and $10.75 for micro).

Minneapolis’ minimum wage increases next occur July 1, 2022 ($15 for large  businesses >100 employees; $13.50 for small)

On August 11, 2021, the Minnesota Supreme Court held that it is for a jury to decide. In Hagen v. Steven Scott Management, Inc., (yes, this is the same case I just wrote about for rent credits being wages), the plaintiff argued that all of her on-call time should be compensable because it was part of her “duties of employment”. The hours-worked rule (Minn. R. 5200.0120) generally provides that an employee who cannot use their time “effectively for the employee’s own purposes is working while on call”. However, Minnesota courts have not yet addressed the distinction (as in federal law) of, “being able to use one’s time effectively or not, while working on call”.

In this case, the employee had to carry an employer-provided cell phone, stay within a 20 minute radius of the apartment complex (her worksite), and could not drink alcohol.  Further, certain activities such as grocery shopping would be occasionally interrupted from tenants seeking assistance, and her family all lived 30-45 minutes away so she could not visit them. The Court held that whether the mere act of being on-call was considered a duty of her employment was complicated because her job description lists, “working on an on-call basis,” as an essential duty. Ultimately, the Court held that reasonable persons could reach a different conclusion as to whether her on-call restrictions allowed her to use her time effectively for her own purpose – and thus, a jury must decide.

So what does this mean in the real world? Minnesota courts are not blindly following federal law (District of Minnesota) in determining whether on-call time is compensable under the MFLSA (compared to the FLSA). Further, the Court has stated that a jury must decide when on-call time is compensable (i.e. can the employee use the time effectively for their own use or not). This is an issue for employers as a claim for unpaid on-call time will almost certainly survive a motion for summary judgment – taking such questions to trial. As you can imagine, this increases the cost to litigate. Thus, employers should be careful to draft job descriptions and on-call policies (if employees are not paid to wait) to make it clear how they are – or are not – restricted during an on-call shift. For example, consider response times, prohibitions of activities during that time, and what they are required to do or not do. The more restrictions, the more the employee can argue they are duties of employment and thus, compensable. Check your handbook policies, job descriptions, and offer letters for on-call language and ensure it is accurate and the employee is properly compensated depending on how effectively they can use their on-call time for personal matters.

Can an employer pay an employee in rent credits versus money? On August 11, 2021, the Minnesota Supreme Court held that rent credits are “wages” (not improper deductions) under the Minnesota Fair Labor Standards Act (MFLSA). In Hagen v. Steven Scott Management, Inc., the employee was an on-site property caretaker. She received rent credits as wages, and thus, was primarily compensated with rent credits towards her monthly rent.

The Court held that while the MFLSA definition of “wage” is limited, its provision, “subject to the allowances permitted by the commissioner” means that permissible wages are those which are listed in Minn. Stat. 177.28 and authorized by the Minnesota Department of Labor and Industry (MNDOLI).  Because the lodging allowance rule (Minn. Rule. 5200.0070) authorizes an employer to take a credit towards minimum wages for the cost of lodging if the employee accepts it as a condition of employment, the plaintiff’s rent credits qualified as wages under the MFLSA.

The takeaway? Employers who have on-site caretakers may “pay” an employer in rent credit in lieu of wages, so long as the lodging rule is followed (with an employment contract that makes it clear the employee will live on-site and they will be compensated in the form of rent credit).

I think I’m in movie mode; last week I was blogging Back to the Future, this week I’m channeling my inner Top Gun.  In any event, on to the less exciting legal mumbo jumbo.  With remote work and expanding businesses, many more employers have employees throughout the U.S., some of which may be military members as well. If you are one of those Minnesota businesses, you should be aware of a few court of appeals cases that have addressed an “issue of first impression” (meaning, the court has not opined on it before) this year regarding an employee’s rights, and an employer’s obligations, under the Uniformed Services Employment and Reemployment Act (USERRA). Specifically, the courts held that an employer’s paid time off policy (for example, 3 days for bereavement or 5 days for sick leave) created a right to comparable paid leave for short-term military duty. You read that right – because a policy provided time off for x, y, or z, that same time off must be provided for military leave. Similarly, if an employee on paid time off/vacation is allowed to continue to accrue profit sharing, an employee on military leave must also be allowed to accrue profit sharing.

On August 10, 2021, the 3rd Circuit Court of Appeals (covering PA, NJ, DE) joined the 7th Circuit Court of Appeals (covering WI, IL, IN), finding that an employer failed to properly compensate an employee while on short-term military leave.  See White v. United Airlines, Inc., 987 F.3d 616 (7th Cir. 2021); Travers v. Federal Express Corp., __F.4th__ (3rd Cir. Aug. 10, 2021). Interesting to note, each of the lower district courts got it wrong – in other words, they found in favor of the employer and were overturned.  There is also a case pending in the 9th Circuit Court of Appeals (AK, AZ, CA, HI, ID, MT, NV, OR, WA), Clarkson v. Alaska Airlines, Inc., regarding the same issue; it is anticipated that court will also find in the employee’s favor (overturning the district court) based on that court’s previous liberal leanings. Minnesota, as you may recall, is in the Eighth Circuit. However, with the 3rd, 7th, and likely 9th Circuits all agreeing (and the 3rd and 7th typically more conservative), I would expect the trend will be towards this interpretation of USERRA (in favor of requiring paid leave).

These cases center around USERRA’s requirement that employees on military leave be given the same “rights and benefits” as comparable, non-military leaves.  Specifically, they address whether an employer is required to provide paid leave for a military absence if the employer provides other paid leaves (i.e., jury duty, bereavement leave, sick leave, vacation time, city-required sick and safe time, and paid time off), and similar benefits (i.e., earning credit under profit sharing plans).  Collectively, they find that an employer’s paid leave policy(ies) (or other benefits) can be as generous as they want, however, they must be equal (comparable) for both military and non-military members.  The DOL looks to three factors to consider whether leaves are comparable – (1) the duration; (2) the purpose; and (3) the ability to choose when to take it.  The first factor being the most significant.

This means, if you have an unlimited PTO policy, presumably, a military member could take unlimited paid military leave. However, the employee must demonstrate the leaves are comparable in duration. For example, a 3-day jury duty paid leave is not comparable to a 20-day military leave; however, unlimited time off is unlimited time off. If you allow salary continuation for one group, you must allow salary continuation for the other (military) group.  Basically, a military member cannot be at a disadvantage because of a military leave than an employee who took leave for another (non-military) reason. In short, you should be sure to treat one group the same as the other, and thus, provide the same paid time off for a USERRA qualifying event as you would for other leaves of absence.

I get that USERRA is triggered very infrequently for some employers, and more so for those that actively seek to hire reserve or guard members. However, if you’d like to read up on it, you can find USERRA guidance from the DOL here. Just something to keep in mind when you’re work on your paid leave plans in your handbook. Remember…no points for second place. You don’t want to find yourself on the wrong side of a wage and hour issue.

Last, but certainly not least, thank you to all who have served, continue to serve, and are family of service members. I recognize the timing of this blog is not ideal, but the 3rd circuit opinion just came outlast week, so I felt it was important for employers to understand the rights and obligations related to USERRA as this law is quickly evolving. I feel the need…the need for speed!

Duluth employers take note – the Earned Sick and Safe Time (ESST) Ordinance has been amended, and the revisions take effect August 19, 2021. What’s new, you ask? Here’s the good stuff:

  • ESST may be used for “Lost work hours due to closure of employee’s place of employment for public health reasons” (read: COVID).
  • All new employees must be given a copy of the ESST policy (or the substantially equivalent paid leave policy that encompasses ESST leave).
  • The ESST policy must be included in the Employee Handbook (if you have a handbook – which you should!).
  • If there is a violation found, employers may be ordered to notify employees in writing.
  • Appeals of findings are via the city’s administrative hearing process.

That’s all folks!

On August 5, the U.S. Department of Labor (DOL) announced it has settled yet another matter whereby a Golden Valley, MN home healthcare business paid only straight time to its employees regardless of how many hours they worked. In this case it was related to skilled nursing, private duty, personal aide and therapy services. In this case, the employer had to pay $241,582 in back wages AND $241,582 as liquidated damages. In other words, twice as much as it would have had to pay had it paid overtime correctly to begin with. For those of you unaware, this is the dreaded “double damages” we talk about in the wage and hour world. The employer has to pay what it is owed and then the same amount as a penalty.

Remember, this is something I blogged about recently here. I have worked with several of these businesses and cannot stress enough how important an internal pay practice audit can be. I would highly encourage all home healthcare agencies to review your pay practices (remember just because “everyone else” is doing it doesn’t make it okay!) with an attorney and determine whether changes need to be made (and how to implement them and/or address any errors in past pay practices) – BEFORE the DOL comes knocking.

Great Scott! In another Department of Labor (DOL) reversal of its own rulemaking during the Trump Administration, the Final Rule, Joint Employer Status Under the Fair Labor Standards Act, which had gone into effect (and I wrote about here) March 16, 2020, has been rescinded. Effective September 28, 2021 [UPDATE: October 5, 2021], employers need to forget everything the DOL previously said in 2020 about joint employment, and go back in time (see what I did there?) to prior guidance when deciding when an employee may have a joint employer.

This is important if two companies share employees. However, employers should have a good faith defense that they relied on then-DOL regulations in determining joint employment status. However, if that is the case, employers should show that once the rescission takes effect (September 28, 2021 October 5, 2021), they will go back to (or start if new situation), treating the employee as a joint employee for purposes of minimum wage and overtime under the Fair Labor Standards Act. For example, if you own two businesses and employees work at both locations (even if their job is different at each), generally you need to add their hours and make sure that they receive overtime for all hours worked at both locations.