The Employer E-Letter: Labor and Employment Law News
February 2023 – Vol. 25, No. 1
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, email@example.com and Richard R. Burns, firstname.lastname@example.org, 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.
- BAN ON EMPLOYEE NONCOMPETE LANGUAGE PROPOSED BY FTC
- MINNESOTA SUPREME COURT CLARIFIES KEY ELEMENTS OF CONSTRUCTIVE DISCHARGE AND HOSTILE WORK ENVIRONMENT CLAIMS
- MINNESOTA FEDERAL COURT RULES A MONTH IS TOO LONG A PERIOD TO ESTABLISH RETALIATION FOR PROTECTED ACTIVITY
- UNION MEMBERSHIP DOWN
- Tip Of The Month
BAN ON EMPLOYEE NONCOMPETE LANGUAGE PROPOSED BY FTC
Along a straight party line vote by the Democratic-controlled Federal Trade Commission (FTC), the agency has proposed a rule essentially banning all noncompete agreements for U.S. employees. The FTC Chair, Lina M. Khan, said “The freedom to change jobs is core to economic liberty and to a competitive, thriving economy.” She added: “Noncompetes block workers from freely switching jobs, depriving them of higher wages and better working conditions, and depriving businesses of a talent pool they need to build and expand. By ending this practice, the FTC’s proposed rule would promote greater dynamism, innovation and healthy competition.” It is further suggested a ban on noncompetes would ensure that employers cannot exploit their oversized bargaining power to limit workers’ opportunities and stifle competition. The only proposed exception involves a former employee/owner, allowing such noncompetes entered into by a person having significant ownership interest in the business who is selling a business entity or otherwise disposing of all the person’s ownership interest in the business entity. The FTC also seeks to outlaw employment contract terms that amount to ”de facto” noncompete clauses, such as nondisclosure requirements written so broadly they effectively preclude the worker from working in the same field and obligations for workers to cover training costs if they end their employment too soon. The FTC says that challenges to the new rulemaking may occur, but that their authority to make and enforce these rules is “very clear”. On the other hand, the U.S. Chamber of Commerce called it “blatantly unlawful”, and the Commission’s sole Republican commissioner penned a 14-page dissent arguing the agency does not have the rulemaking authority. Commissioner Wilson argues that the noncompete studies are scant and show mixed results and provide insufficient support for the scope of the proposed rule and will have unintended consequences.
Obviously there have been abuses by some employers trying to cover low paid employees who gained little from their training and skills. This is not the case with many industries where loss of a key employee going to a competitor causes real damage, including confidential information and goodwill losses. Consider submitting a comment to the FTC if you are impacted significantly. Maybe one alternative solution is a mandatory reasonable salary level for employees under a noncompete.
MINNESOTA SUPREME COURT CLARIFIES KEY ELEMENTS OF CONSTRUCTIVE DISCHARGE AND HOSTILE WORK ENVIRONMENT CLAIMS
An employee resigned her position as a school district network technician after receiving multiple poor performance reviews from her supervisors within a year. She sued, alleging the district constructively discharged her through age discrimination, and created of a hostile work environment by subjecting her to performance reviews with standards it knew she could not meet.
The Supreme Court affirmed the lower courts’ dismissal of the hostile work environment claim. It noted that even if the district’s reviews were unreasonably crafted to guarantee the woman’s poor performance, this conduct was not “objectively hostile or abusive behavior” that would sustain a hostile work environment claim. Still, the Court allowed the woman to maintain her claim of constructive discharge based on age discrimination. The district argued that a hostile work environment is a required element for constructive discharge, and because the woman had no claim for hostile work environment, she had no claim for constructive discharge. The Supreme Court disagreed, noting that constructive discharge can arise from a hostile work environment or from other circumstances, such as discrimination. The Court reasoned that the woman’s allegations could support a finding that the school district disparately treated the woman through its allegedly more stringent reviews. This case reminds us that constructive discharge claims need not arise solely from physical or verbal harassment. Henry v. Indep. Sch. Dist. #625, No. A21-0004 (Minn. Feb. 8, 2023).
MINNESOTA FEDERAL COURT RULES A MONTH IS TOO LONG A PERIOD TO ESTABLISH RETALIATION FOR PROTECTED ACTIVITY
A former special education teacher sued her school district employer alleging wrongful termination in January 2020 based on retaliation for engaging in protected activity – specifically FMLA leave she requested in October 2019 and a worker’s compensation claim she filed in December 2019. The school district claimed it terminated the teacher for various inadequacies related to her instruction of students and classroom safety/tracking procedures. The district court dismissed the teacher’s retaliation claims, finding she failed to provide sufficient evidence that her protected activity was the cause of her termination. The teacher argued that her termination shortly after her FMLA leave and worker’s comp claim demonstrated that these protected activities were the school’s true cause for terminating her. While the court agreed that close “temporal proximity” between an employee’s protected activity and his or her termination could provide circumstantial evidence of her claim, it felt a month was too long a period. The court noted that both events would have needed to take place within only a couple weeks to demonstrate retaliation.
If you are considering terminating an employee, be wary of your timing – even if your reasons for termination are not retaliatory, they could nonetheless be perceived that way if the employee recently engaged in protected activity, such as filing a worker’s compensation claim, requesting FMLA leave, or reporting allegedly illegal activity at your workplace. WILLMAN v. FARMINGTON AREA PUBLIC SCHOOL DISTRICT (ISD 192), No. CV 21-1724 (D. Minn. Feb. 9, 2023).
UNION MEMBERSHIP DOWN
The Bureau of Labor Statistics (BLS) has kept statistics since 1983 when 20% of the workers were unionized. The share of workers represented by unions today is down to 11.3%, a .3% decrease from the prior year. Of course, this downtrend is in a period where we have had significant increased employment. Surprisingly, private sector unionization is at an all-time low, but there have been substantial increases in the hospitality and service industry, and total union employment increased by nearly 275,000 during the last 12 months. The AFL-CIO suggests that unionization is “poised to grow significantly in future years,” noting that this is “despite broken labor laws.” Union leadership is still pushing for passage of the Protecting the Rights to Organize Act, which would impose monetary penalties on recalcitrant employers and make it easier to organize. Current trends in regulation at the Department of Labor favor union organization. It is pointed out that BLS statistics show the median weekly earnings of a union employee is more than $200 above the median weekly wage of a non-union employee. Employers need to be diligent and pro-active in making sure they treat employees fairly, and this is obviously a challenge in this significant inflationary period. Of course, it is not only wages which employees look to, but a positive and supportive work environment.
A publication funded by the Department of Labor entitled “Employers’ Practical Guide: Reasonable Accommodations During the Hiring Process” provides practical guidance from the Job Accommodation Network on how to treat hiring accommodations. Similar issues are faced with requested accommodations by current employees, so the examples are helpful.
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.
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Copyright 2023 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.