The Employer E-Letter: Labor and Employment Law News
from the Duluth, Minnesota law firm of Hanft Fride, A Professional Association.
Co-Editors, Scott A. Witty, saw@hanftlaw.com and Richard R. Burns, rrb@hanftlaw.com, or 218.722.4766. Please feel free to forward this e-mail or share it with others. If there are other topics of interest to you or any other suggestions concerning this newsletter, please let us know.
- NEW FTC RULE BANNING NONCOMPETE AGREEMENTS GETS STRUCK DOWN
- VACATION OF JOINT EMPLOYER RULE ACCEPTED
- MINNESOTA APPEALS COURT DISMISSES DISCRIMINATION REPRISAL LAWSUIT
- COURT HOLDS QUITTING TO AVOID ANTICIPATED DISCHARGE IS NOT GOOD CAUSE FOR UNEMPLOYMENT BENEFITS ELIGIBILITY
- TIP OF THE MONTH
NEW FTC RULE BANNING NONCOMPETE AGREEMENTS GETS STRUCK DOWN
The new FTC rule banning non-compete agreements set to go into effect on September 4th was struck down by a Federal judge in Texas on August 20th. Practically speaking, this means a Federal ban on non-competes does not exist now, nor will it in the near future. That said, thanks to disparate rulings on the ban issued recently by several Federal Circuit Courts, it is likely the Supreme Court will weigh in on the subject at some point. While a Federal ban does not exist, employers should be mindful of the state laws and regulations surrounding non-compete covenants in their state. Employers with multi-state employees still must tailor each agreement to the law of the state in which the employee lives and works. For employers of Minnesota employees, the August 20th decision will have relatively little impact on employment agreements thanks to Minnesota’s own ban on non-compete provisions that went into effect in July of last year. Despite the ban, it is lawful for agreements with Minnesota employees to include provisions prohibiting the disclosure of confidential information and/or covenants prohibiting solicitation of information, customers, and employees. If you have Minnesota employees, now may be a good time to double-check that all non-compete provisions have been removed and consider adding covenants concerning confidential information and solicitation if you have not done so already.
VACATION OF JOINT EMPLOYER RULE ACCEPTED
The National Labor Relations Board (NLRB) has dropped an appeal of a Texas federal judge’s ruling that its expansion of the definition of “joint employer” was unlawful. The Texas court ruling was primarily on the basis that the new rule did not meet procedural standards under the Administrative Procedure Act, so it was not a ruling on the merits. However, now the NLRB has taken the position it is dropping its appeal so that it can evaluate its options. The effect of this action is a return to the Trump era rule that eased the “joint employer” test. In order to be a joint employer, an entity must have direct and immediate control over a group of workers. This is for franchisees or companies that use leased employees, as now the franchisor or lessor is not likely subject to collective bargaining or the risk of claims of unfair labor practices.
MINNESOTA APPEALS COURT DISMISSES DISCRIMINATION REPRISAL LAWSUIT
Plaintiff worked as an engineer at a plating business. In 2021, Plaintiff overheard a company executive refer to another employee as their “Black, Jewish, Muslim” engineer, in front of said employee. A few days after confronting the executive about the comments, Plaintiff was fired. Plaintiff sued, alleging she was fired as a reprisal for opposing the executive’s comments, which she believed were discriminatory towards the other employee. An appellate court upheld the dismissal of Plaintiff’s case. While Minnesota forbids reprisal against an employee for opposing discrimination, the Court held that no actionable discrimination took place, and Plaintiff could not have in good faith believed as such. Despite the executive’s comments about his race, ethnicity, and religion, since joining the company in 2014, the employee had received multiple promotions with pay raises, and had no negative performance reviews or written discipline. Thus, the court concluded there was no evidence to suggest any adverse changes to the employee’s working conditions based on the remarks. This case highlights the maxim that “actions speak louder than words.” While the employer escaped liability here, employers should train and remind managers to avoid racial, religious or other slurs or tropes – even if not technically wrongful, according to this court. Mullis v. Prof’l Plating, No. A23-1360 (Minn. Ct. App. 2024).
COURT HOLDS QUITTING TO AVOID ANTICIPATED DISCHARGE IS NOT GOOD CAUSE FOR UNEMPLOYMENT BENEFITS ELIGIBILITY
Plaintiff worked as a superintendent for Minnesota ISD 2172 for three years. In 2022, he learned the school board would be discussing whether to renew his employment contract at the end of its term. Plaintiff resigned his position, citing his wish to avoid having a “discharge on his record.” The parties disagreed about whether the District definitively told Plaintiff he would be discharged at the end of his term, or whether he was told a superintendent search would be commenced as part of deciding whether to renew his contract. Plaintiff applied for unemployment benefits. The Minnesota court of appeals upheld an employment law judge’s determination that Plaintiff was ineligible for unemployment benefits. Per state law, “[n]otification of discharge in the future… is not a good reason caused by the employer for quitting.” The court reasoned that even if Plaintiff was told he would be terminated at the end of his contract, he did not have good cause to quit and thus was ineligible. Boysen v. Indep. Sch. Dist. 2172, No. A24-0008, 2024 WL 3877491 (Minn. Ct. App. Aug. 19, 2024)
This may come as a surprise to some, but remote employees do report workplace harassment, and at a surprising rate. Surveys of remote workers indicate employees reporting harassment based on gender, race and age. Employers should be aware that harassment can occur between employees even though they are not in personal contact with one another. Employers should be sure to promptly investigate complaints just as they would if employees were all under one roof and take action to discontinue harassing conduct immediately. Policies should also be reviewed and revised to note that harassment via videoconference, text or other electronic means is prohibited.
Hanft Fride’s business and trial lawyers are located at 1000 U.S. Bank Place, in Duluth, Minnesota. Visit our website at www.hanftlaw.com 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.
To subscribe or unsubscribe to Employer E-Letter, e-mail your request to nrs@hanftlaw.com or call Scott Witty at 218.722.4766.
Copyright 2024 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.