Aug. 2017 – Vol. 19, No. 8 The Employer E-Letter: Labor and Employment Law News from the Duluth,MN law firm of Hanft Fride, A Professional Association

This Month’s Topics:

  • Reasonable Explanation Required of Denial
  • Tip Of The Month

Trump’S Department of Labor Not to Support Salary Level

Prior to the end of the Obama Administration, an appeal was filed with the Fifth Circuit Court of Appeals to overturn the district court injunction, involving the increase in the minimum salary from $23,660 to $47,476 for exempt salaried employees.  The lower court had ruled that the Department of Labor had exceeded its delegated authority and ignored Congress’s intent as the broad purpose of the statute was to exempt persons from overtime that engaged in certain activities without regard to any minimum salary.  In a somewhat strange appeal, the Trump administration is asking the Fifth Circuit to affirm its authority to use some minimum salary level, without seeking to reinstate the specific salary set in 2016.  The Administration also suggests that it will conduct new rulemaking to determine what the salary level should be, but the Fifth Circuit may go many different directions in the appeal.  In the interim, however, the lower salary level continues to apply.

Racial Barbs on Picket Line Did Not Create a Hostile Work Environment

Recently at issue before the Eighth Circuit Court of Appeals was the question of whether an employer was justified in terminating an employee who made racially derogatory statements while participating in a union picket. The arbitrator ruled the termination was justified.  His decision was overturned by an Administrative Law Judge and the National Labor Relations Board upheld the decision of the ALJ. The Eighth Circuit on appeal determined that the comments, which included statements directed at African American replacement workers such as “Did you bring enough KFC for everyone” and “Hey anybody smell that? I smell fried chicken and watermelon,” were racially derogatory but that the comments did not create a hostile work environment in accordance under the law. There was no evidence that any of the replacement workers heard the comments, though other members of the crowd did, and no evidence of any threatening actions. As such, the Court determined that there was no just cause to terminate, and the employee’s actions were protected under Sections 7 and 8 of the National Labor Relations Act as he was participating in the concerted activity of picketing regarding terms and conditions of employment. Cooper Tire & Rubber Company v. NLRB, Case No. 16-2721 and 16-2944 (8th Cir. August 2017).


Douglas Sellner sued his former employer, MAT Holding, Inc., and its subsidiaries alleging retaliation under the Minnesota Whistleblower Act.  In reversing the District Court, the Eighth Circuit Court of Appeals provided an opinion that is very instructive as to the statutory standards involved.  While indicating that there were serious problems with a pump, it was alleged that Sellner was requested by management to produce a report showing no major issues with the pump.  Sellner says that when he told his employer that no units performed without major issues, Stark said “Well, if you don’t do this, we’re all going to be on the street – no, you’re going to be on the street.”  A couple days later he was told to get creative with his documentation, but continued to refuse.  After continued pressure and refusal, Sellner called the Minnesota Department of Labor and Industry and reported that he was instructed to “doctor up some documentation”.  He also filed an online form and told his employer about his actions.  It is important to recall in whistleblower cases that one does not need to have found that the conduct proposed was in fact illegal, but simply that an employee “engaged in a statutorily protected conduct, here, making a good faith report of a suspected violation of law”.  The court went on to say an employee alleging retaliation need not show that the alleged contact was actually unlawful, only that the employee “in good faith reported a violation or suspected violation.”  In this case, falsifying test data is a state law violation.  The next issue was whether the employee could establish a causal connection between the protected conduct and the termination by direct evidence or under the McDonnell Douglas burden-shifting structure.  Here, of course, there was direct evidence, but there was an intervening period of 27 days and some other circumstances that created an argument for no direct causal link.  Similar to cases where persons received a favorable review shortly before termination, the Court concluded the fact that the supervisor was involved in supporting a raise and promotion for Sellner worked against the employee’s position.  This resulted in the court concluding that there might have been mixed motives for Sellner’s termination, but this is a trial issue and not one intended for summary disposition.  The court concluded that viewed most favorably to Sellner, there is sufficient support for a finding by a reasonable fact finder that an illegitimate criteria actually motivated the adverse employment action.  Sellner v. MAT Holding, Inc., et al (8th Cir. 2017). 

Reasonable Explanation Required of Denial

In an ERISA case, the plan administrator of the Wells Fargo plan was found deficient in its explanation to an employee of why his salary continuation plan benefit was denied in a merger and acquisition.  The plan included a disqualifying event if an employee was offered comparable benefits and continued employment at the new entity, even if the employee declined the new employment offer.  In its denial of the claim, the administrator simply provided a conclusory response to the claim.  Citing a recent U.S. Supreme Court case, the District Court noted that “Courts cannot exercise their duty of substantial evidence review unless they are advised of the considerations underlying the action under review.”  T-Mobile v. The City of Roswell, 135 S. Ct. 808, 815 (2015).  Here there was no analysis so the court could not determine whether or not there was substantial evidence.  In such cases, however, the remedy is not an award of benefits, but rather a remand so that the claimant can get a full and fair review of entitlement to benefits.  McGillivray v. Wells Fargo & Co. (D. Minn. 217, Case No. 15-CV-4347). 

TIP OF THE MONTH:  At least under Massachusetts law as determined by the Supreme Court, employers can be held liable for disability discrimination if they terminate an individual for using legally prescribed marijuana.  This position could spread to other states, and employers should consider making exceptions to drug-free policies to accommodate workers’ medical needs.  Recall, however, that those accommodations must not create any undue hardship to the employer or risks to the employee or others (i.e. heavy machinery).

Hanft Fride’s business and trial lawyers are located at 1000 U.S. Bank Place, in Duluth, Minnesota.  Visit our website at for general information on the firm and our attorneys. Our employment lawyers include Tom Torgerson, Rob Merritt and Scott Witty.  Richard Burns is now of Counsel.

The information provided in this E-letter is general in nature and should not be used as a substitute for professional services and advice.  The communication and receipt of this information is not intended to create an attorney-client relationship.  Readers should consult with their legal counsel  before taking any action on matters covered in this E‑letter.

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Copyright 2017 by Hanft Fride, P.A.  All rights reserved.  Hanft Fride, A Professional Association, 1000 U.S. Bank Place, 130 W. Superior Street, Duluth, MN 55802.  Phone 218.722.4766; Fax 218.529.2401.