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.
Please feel free to forward 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 FEDERAL COURT ADOPTS FOURTEEN-FACTOR INDEPENDENT CONTRACTOR TEST
- WHISTLEBLOWER PROTECTION HAS LIMITS: EMPLOYERS PREVAIL IF LEGITIMATE BUSINESS REASON IS PROTECTING THEIR REPUTATION
- 8th CIRCUIT CLARIFIES NLRB “REASONABLE PERSON” TEST
- ACTING NLRB GENERAL COUNSEL RESCINDS GENERAL COUNSEL MEMORANDA
- TIP OF THE MONTH
MINNESOTA FEDERAL COURT ADOPTS FOURTEEN-FACTOR INDEPENDENT CONTRACTOR TEST
A Minnesota Federal District Court recently denied the motion of two trade associations and a commercial construction company seeking to stop enforcement of a new fourteen-factor test used for classifying construction workers as independent contractors. Minn. Chapter. Of Ass’n of Builders & Contractors, Inc. v. Blissenbach, No. 25-550 (JRT/JFD) (D.Minn. March 5, 2025). Commencing March 1, 2025, a construction worker will only be classified as an independent contractor in Minnesota if they meet all fourteen factors, as outlined in Minn. Stat. § 181.723. The test, created by the Minnesota Department of Labor, was previously only nine factors but has since been expanded. The new fourteen factor test assesses whether the worker: (1) was established and maintained separately from and independently of the person for whom the services were provided or performed; (2) owns, rents, or leases equipment, tools, vehicles, materials, supplies, office space, or other facilities that are used by the business entity to provide or perform building construction or improvement services; (3) provides or performs, or offers to provide or perform, the same or similar building construction or improvement services for multiple persons or the general public; (4) is in compliance with five additional requirements that relate to federal employer and Minnesota tax identification numbers, 1099 forms, business or self-employment tax returns, and W-9s; (5) is in good standing as defined by Minn. Stat. § 5.26, if applicable; (6) has a Minnesota unemployment insurance account if required to; (7) has obtained workers’ compensation insurance if required to; (8) holds current business licenses, registrations, and certifications as applicable; (9) is operating under a written contract to provide or perform the specific services for the person – with five applicable requirements; (10) submits invoices and receives payments for completion of the specific services provided or performed under the written proposal, contract, or change order in the name of the business entity (payments made in cash do not meet this requirement); (11) the terms of the written proposal, contract, or change order provide the business entity control over the means of providing or performing the specific services, and the business entity in fact controls the provision or performance of the specific services; (12) incurs the main expenses and costs related to providing or performing the specific services under the written proposal, contract, or change order; (13) is responsible for the completion of the specific services to be provided or performed under the written proposal, contract, or change order and is responsible, as provided under the written proposal, contract, or change order, for failure to complete the specific services; and (14) may realize additional profit or suffer a loss, if costs and expenses to provide or perform the specific services under the written proposal, contract, or change order are less than or greater than the compensation provided under the written proposal, contract, or change order. The Federal District Court also found that the workers failed to establish a likelihood of success on any of their claims or that any of their members would suffer irreparable harm. The fourteen-factor test remains in full force and effect, and employers engaged in construction should be mindful of the serious penalties imposed for mislabeling an employee as an independent contractor.
The Minnesota Court of Appeals recently ruled that even when an employee makes a protected report under the Minnesota Whistleblower Act, the employer may lawfully terminate the employee if it has a legitimate, non-retaliatory reason—such as protecting its reputation—and the employee cannot prove that reason is pretext. See Stevens v. State Bank of Bellingham, No. A24-1499, 2025 WL 1730539 (Minn. Ct. App. June 23, 2025). A former president/CEO of a bank was terminated after preventing release of a deceased employee’s calendar that allegedly contained confidential customer information. He argued termination was retaliation under the Minnesota Whistleblower Act (MWA) for reporting the vice president of operations’ (VPO) attempt to release confidential information. The employer stated termination was due to the former CEO’s rude and disrespectful behavior toward the deceased employee’s family, which harmed the bank’s reputation. The Court held that the former CEO failed to provide evidence that this reason was false or that retaliation was the real motive. The employer’s testimony, corroborated by staff accounts, consistently tied termination to reputational concerns, not the report. This case underscores that just because a termination is close in time to a report, it does not mean it is retaliatory. The employee must be able to show concrete evidence that the employer’s stated reason is false and motivated by retaliation. The key lesson for employers is to clearly document the actual reasons for termination and ensure they are communicated consistently, as courts will uphold decisions grounded in well-supported business judgments.
8th CIRCUIT CLARIFIES NLRB “REASONABLE PERSON” TEST
In May 2022, a Starbucks manager held meetings with her store’s employees regarding potential unionization. In a meeting with one employee, the manager expressed her disfavor towards unionization and repeatedly described her wish to know who started the union campaign, asking the employee if she knew anything about the union drive. The manager stated that a union could affect the benefits and raises of employees but offered no other explanation. Workers United, the union organizer, filed charges against Starbucks, alleging the manager had threatened economic retaliation against the employee and coercively intimidated her about the potential union. The NLRB agreed, finding that Starbucks had violated the National Labor Relations Act. Starbucks appealed. In evaluating the manager’s statements, the Administrative Law Judge stated that “the actual intent of the speaker or the effect on the listener is immaterial,” citing the NLRB’s test of whether a “reasonable person” would intend or find the conduct coercive. The 8th Circuit disagreed, stating the “reasonable person” test contemplates the “totality of the circumstances” and that the subjective intent and impressions of speaker and listener needed to be considered. While it vacated the Administrative Law Judge’s decision, the 8th circuit did not actually determine whether the manager’s conduct violated the NLRA. Employers should take care when speaking to employees about unions – the NLRB and courts consider both the words you speak and the subjective impression these words leave on the person spoken to.
ACTING NLRB GENERAL COUNSEL RESCINDS GENERAL COUNSEL MEMORANDA
Historically, the General Counsel (GC) for the National Labor Relations Board (NLRB) has issued nonbinding memoranda that provide employers with guidance on the NLRB’s enforcement priorities. The memos, often referred to as “GC memos”, have also been used to respond to inquiries regarding the Board’s decisions or applicable judicial opinions. The acting GC for the Board recently rescinded more than 30 Biden-era memos, thereby signaling a shift in priorities that favors employers more than employees/unions. For example, memoranda affecting student athletes’ ability to unionize were rescinded, seemingly signaling that student-athletes are not “employees,” and their unionization efforts would likely fail under the current board. Severance agreements were also affected, as the prior GC had discouraged employers from including provisions that required employees to repay severance payments they had received if they later violated conditions of the agreement, such as confidentiality or non-disparagement clauses. In addition, the NLRB has retreated from its earlier stance that non-compete and “stay-or-pay” agreements, which required employees to repay training costs or a penalty if they quit before a set time, likely violated federal labor law. Employers should nonetheless proceed with caution, as many states already restrict or prohibit such agreements, and the Federal Trade Commission’s proposed nationwide ban remains tied up in litigation and could still take effect. Again, these memoranda are not legally binding, and it is the Board itself that creates the legal standards applicable to employers and employees through decisions. However, the rescissions of these memoranda offer insight into what decisions the Board may be issuing under the new administration.
TIP OF THE MONTH
No Retaliation Claim. An employee on Family Medical Leave (FMLA) can be terminated on returning to work if actions discovered while they were absent would have resulted in their termination. In such cases, there is no valid claim for retaliation. In FMLA cases, make sure that you are consistent and can show that breaking the same rule equals the same punishment. You can then show that you treated employees who were disciplined while on FMLA leave just like all other employees disciplined for the same kind of reasons.
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 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 2025 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.