Hanft Fride June 2019 Employer Newsletter

June 2019 – Vol. 21, No. 6

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.

This Month’s Topics:

• Minnesota Wage Theft Law In Effect July 1, 2019
• Managers Get The Dough
• Making Comments ABOUT an Employee’s Alcoholism May Subject an Employer to FMLA and/or ADA LIABILITY        
• EMPLOYER MUST PROMPTLY OBJECT IF EMPLOYEE FAILS TO FILE COMPLAINT WITH EEOC       
• Tip Of The Month

Minnesota Wage Theft Law In Effect July 1, 2019

A new law in Minnesota makes it a crime for an employer to engage in “wage theft” with the intent to defraud employees of earned wages.  Wage theft can come in various forms, but includes unpaid wages or illegal deductions from paychecks, paying less than minimum wage, requiring employees to work “off-the-clock” and misclassifying employees as independent contractors.  In addition to criminalizing wage theft, the law includes numerous new record-keeping and notice requirements  that employers must familiarize themselves with to avoid monetary fines and penalties.   Some of the new requirements include:

• Employee Notice – employers must provide each employee with a written notice at the start of employment stating the terms of employment, including whether the employee is hourly or salary, the employee’s rate of pay, paid time off (vacation/sick) accrual rates and use rules, length of pay period, wage deductions, and the actual name and address of the employer.  A separate notice must be provided when any of the listed items changes (i.e. wage increase) and must be kept for each employee.  The Department of Labor and Industry has created an example notice form, which can be found at https://www.dli.mn.gov/business/employment-practices/wage-theft-legislation-2019-and-summaries .  

• Employee Policy Records – copies of all employee policies, including the date the policies (or amendments thereto) are implemented, must now be retained by employers for at least three years.  Employers must also document the date employee policies are given to each employee, regardless of whether the employee is new or tenured, accompanied by a description of the policies provided.

In addition to the new notice and record-keeping requirements, the Governor signed other employee protections into law this past session.  They expand DOLI’s enforcement authority by allowing the agency to inspect work places during working hours to investigate wage theft and other employment-related allegations, including interviewing employee witnesses.  Employers are also prohibited from retaliating against employees who report wage theft, for which monetary penalties may accompany other damages sought by the employee in a civil action.  Another new law states that employers may be fined up to $5,000 for repeatedly failing to provide records to DOLI investigators.  Lastly, the timing requirements for wage payments were altered so that all salary and wage earners must be paid at least every 31 days, while commissions must be paid at least every 90 days.  Employees demanding non-payment of wages are no longer subject to a 15-day cap on recovering such lost wages in a legal action.

These changes will impact all Minnesota employers, so attention to the new rules and requirements, which go into effect July 1, is critical.  The changes are likely to result in increased enforcement from the Department of Labor and Industry as well, so be prepared and compliant to avoid penalties and fines. 

Managers Get The Dough

This is a case involving Panera Bread Company, in which the Eighth Circuit Court of Appeals affirmed the District Court’s grant of summary judgment in favor of managerial employees, who alleged that Panera failed to properly administer its special bonus plan.  In order to recruit good managers, Panera had created a program under which qualified managers were eligible to receive a large one-time bonus of an uncapped amount.  After implementing the plan, the company capped the bonus at $100,000.  A class of 66 managers were successful in eliminating the cap.  The Eighth Circuit Court of Appeals, applying Missouri law, concluded the one-time bonus was a unilateral contract that was effective when the managers continued to work under its terms.  In the Court’s view, Panera had not reserved any substantial right that would allow it to modify the contract.  Panera had argued they could simply have terminated the at-will employees, or they were permitted to modify the formula.  The Court concluded capping the bonus was not an allowable “modification,” and the employees were never terminated.  Boswell v. The Panera Bread Co., 879 Fed. 3d 296 (8^th Cir. 2018).

Making Comments ABOUT an Employee’s Alcoholism May Subject an Employer to FMLA and/or ADA LIABILITY

While employers are generally free to fire employees who are under the influence of alcohol at work, doing so when the employee in question is a known alcoholic or in treatment could lead to liability under the ADA, FMLA, or both. For example, in McNulty v. County of Warren, Civ. No. 1:16-CV-843 (N.D.N.Y. 2019), an employee’s ADA and FMLA claims were allowed to proceed to trial when there was evidence the employer had subjected the employee to increased scrutiny and commentary as a result of the employee’s struggles with depression and alcoholism. McNulty concerned a claim by a county nurse that her bosses ridiculed her regarding her alcohol use (i.e. referring to the need to go home to drink “three martinis” or “have a double Stoli”) in order to push her out of her position, notwithstanding that the nurse had been found fit to return to work after treatment on two separate occasions. The employer in McNulty may have had the matter dismissed had the record not been replete with examples of the nurse’s bosses making comments and taking actions, seemingly connected to biases concerning alcoholism, right after the employee returned from FMLA leave for treatment. In light of McNulty, employers should instruct supervisory employees to avoid comments regarding alcoholism because failing to do so could lead to a costly and embarrassing discrimination suit.

Employer Must Promptly Object if Employee Fails to File Complaint with EEOC  

The United States Supreme Court recently ruled that an employee’s failure to file a discrimination claim with the EEOC before commencing a lawsuit is not always fatal to the legal action.  Under Title VII of the Civil Rights Act, employees are required to file a discrimination claim with the EEOC prior to commencing litigation.  In Fort Bend County v. Davis, the employee commenced a lawsuit in federal court without first filing and proceeding through the administrative claim process.  139 S.Ct. 1843 (2019).  The employer argued the lawsuit should be dismissed because the employee did not first file a claim with the EEOC.  The Court ruled the employer had waived its right to assert this defense because it was not raised until the litigation had been ongoing for a period of years. The Court commented that this decision will likely have minimal effect due to the fact that employees will not want to rely on the employer failing to raise the defense. As a result of this ruling, employers should be sure to raise objection based on an employee’s failure to properly file a claim with the EEOC before commencing legal action early in the litigation.  Fort Bend County v. Davis, 139 S.Ct. 1843 (2019).

TIP OF THE MONTH: Workplace dress codes serve various important purposes but can also lead to employee claims.  Though there are no federal statutes directly addressing employer-required attire or hygiene restrictions, there are limitations based on anti-discrimination statutes.  For example, employers should ensure their dress codes do not adversely affect one race more than another or create stricter standards for female employees as compared with males.  Employers must also be aware that otherwise neutral and non-discriminatory dress codes may at times have to be relaxed to accommodate a disabled employee or an employee with religious beliefs that conflict with the rules.  These exceptions are limited by considerations of reasonableness and hardship to the employer, but written policies should be written in a way that allows flexibility when required by the law.                 

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 lml@hanftlaw.com or call Scott Witty at 218.722.4766.

Copyright 2019 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.