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Recent Developments in Employment Law

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The 2012-2013 U.S. Supreme Court session dealt with somewhat fewer employment cases than usual.  The decisions tend to be employer friendly.  The Minnesota legislative session, in contrast, resulted in more legislative changes touching on more employment matters than usual, and those changes tended to be employee friendly.  These materials summarize some of those changes and are not intended to be all inclusive.  These materials are not intended to convey legal advice.  For specific legal advice, you should consult an attorney. 

CONVERGENCE OF STATUTORY CHANGE AND SUPREME COURT RULING 

U.S. v. Windsor, 133 S. Ct. 2675 (2013), struck down a part of DOMA, which denies certain federal benefits to married same-sex couples, violates the due process and equal protection clauses of the Constitution. 

Minnesota also passed a provision allowing same-sex couples to marry.

Employers will need to review their policies to allow spousal rights to all married couples under the FMLA, the Minnesota Leave Law, pension and benefit plans and personnel policies.  The EEOC will be looking at policies denying equal benefits to same-sex couples as a potential discrimination issue, and the Minnesota Human Rights Act prohibits discrimination based on marital status. 

MINNESOTA STATUTORY CHANGES 

Ban The Box (Sort Of).  92 million Americans have been arrested or convicted of a crime.  Some have been having trouble finding work as a result.  The legislature has responded.Employers are now prohibited from asking about criminal convictions on the application for employment except as allowed or required by other applicable law.  Once the applicant has been selected for an interview, however, that inquiry can be made.  If no interviews are had, the inquiry can be made after a conditional offer of employment is made.  The MDHR has offered guidance on the application of the law.   Minn. Stat. § 364.01, et seq.

While this provision does not prohibit employers from asking criminal history during the interview stage or after a conditional offer of employment has been made, and employees can be excluded if the crime is relevant to the duties of the job, employers should keep in mind that the EEOC has been examining employment practices of automatically disqualifying applicants based on criminal history as potentially discriminatory based upon race, national origin, and other factors.

Failure to Pay Wages Promptly.  An employee who is discharged from his or her job has the option to make a written demand for immediate payment of wages, and a penalty attaches if he or she is not paid within 24 hours after the demand.  The statute has been amended to make clear that the employee’s demand does not have to state the precise amount of the unpaid wages or commissions to trigger the penalty.  The change to the law also makes clear that the amount owed is the greater of the amount contracted for between the employee and the employer, or the amount which is due under statute or ordinance.  In other words, if an employee had been paid less than minimum wage or had not been paid overtime that was owed, those matters would be covered under the wage penalty statute.   Minn. Stat. § 181.13.

An employer has a little bit more latitude for payment when the employee quits or resigns, and typically must make the payment by the next scheduled pay period.  If the next scheduled payday is less than five (5) calendar days away, the last payment may be delayed until the second regularly-scheduled payday, as long as the gap does not exceed 20 calendar days after the employee’s last day of work.  The statutory changes to this section is similar to those above, in that if the employee is not timely paid, the changes to the law make clear that the employee need not specify the amount of wages owed, and that the amount owed is the greater of the wages agreed to between the employer and the employee, or the amount due pursuant to law or regulation.  The provision also makes a change to the section regarding employees entrusted with money or property, indicating that no deductions from wages are to be made, directly or indirectly, from wages earned by an employee who is not an independent contractor for lost or stolen property, damage to property, or recovery of any other claimed indebtedness from the employee to the employer, except as allowed by Minn. Stat. § 181.79, which basically requires a judgment or a written agreement with the employee after the loss has been incurred.

The changes to these two provisions also clarify that unless the employee requests otherwise, the payments are to be made in the usual manner of payment.  The change from “place” to “manner” of payment was made to clarify that if the payments had been made previously in an electronic manner, that practice should be continued unless otherwise requested by the employee.

Whistleblower Law Changes.  The Minnesota Courts have been very narrowly construing whistleblower laws, and the legislature apparently did not like it.  It took action this session to expand the whistleblower laws.  The legislature defined the terms “good faith,” “penalize,” and “report,” to make them more inclusive.  Now, to be considered a whistleblower, the employee can make a “verbal, written, or electronic communication . . . about an actual, suspected, or planned violation of the statute, regulation, or common law, whether committed by an employer or a third party.”  State government employees are now specifically protected under the whistleblower provisions.  The definition of report adds a report of a planned violation, and it also adds a report of a violation of common law.  Minn. Stat. 181.931, et seq.

Workers’ Compensation.  There were major changes to the Workers’ Compensation law, but since I do not routinely practice in that area, I will address only one in some detail.  In the past, if an employee suffered a purely mental injury as a result of something that occurred at work, it was not covered by workers’ compensation.  Under the change, if an employee has a “diagnosis of post-traumatic stress disorder by a licensed psychiatrist or psychologist” as a result of a work-related injury that occurs on or after October 1, 2013, the employee would be covered by workers’ compensation.  There are a number of exceptions.  Workers Compensation does not attach when the PTSD is caused by employee discipline, a work evaluation, job transfer, layoff, demotion, promotion, discharge, retirement, or that like, if it is taken in good faith by the employer.

Here is a hypothetical illustration of the difference.  Two employees witnessed an explosion in which they saw co-workers die.  Both suffered post- traumatic stress disorder (“PTSD”) as a result.  One suffered a broken arm in the explosion; the other had no physical injuries.  Under the old version of the law, the employee with no physical injuries would not be covered by workers’ compensation for the PTSD, but the employee with the physical injury would be covered for both the broken arm and the PTSD.  Under the law, to take effect for injuries occurring on or after October 1, 2013, both would be covered by workers’ compensation for their PTSD.

 A pilot project is to be created by the Commissioner to provide a patient advocate to persons considering back fusion surgery. 

The Commissioner is to establish rules relating to the long term use of Opioids for treatment of intractable pain and the use of pain contacts.

Other changes include changes to compensation rates, cost-of-living adjustments, rehabilitation services, and attorneys’ fees.

Unemployment Compensation Changes.  Changes to the unemployment compensation provisions include, among other things, a provision that additional unemployment benefits are applicable in the event of a lock-out, other than a lock-out involving professional athletes locked out by their professional sports teams, under certain circumstances.

There were changes to the Shared Work Agreement program which require, among other things, that the employer continue to provide health and pension benefits in the same manner as before the reduction in hours.  The Shared Work Agreement allows the employer to reduce hours of a number of workers as a way to avoid making lay-offs, while allowing the employees whose hours were reduced to collect unemployment benefits as long as they are not working more than 32 hours a week.  This allows an employer to save expensive turnover costs in the event of a temporary downturn. Recordkeeping and reporting obligations for the program also were changed.  For more information on the program, see http://www.uimn.org/uimn/employers/help-and-support/shared-work/faq-shared-work.jsp.

A new program, CLIMB (Converting Lay-offs Into Minnesota Businesses) allows unemployed workers to receive certain entrepreneurial training through dislocated worker programs while continuing to receive unemployment benefits.

Sick Leave Benefits May Be Used for Care of Relatives.  See Denise Tataryn's article on this important change to Minnesota's Leave Law.

Bullying.  Bullying has been a topic of conversation in educational and employment law, and has been the subject of potential legislation.  None of those proposed bills have been passed as of yet in Minnesota.  However, there have been a few cases under the Whistleblower statute in Minnesota where employers have been held liable for retaliation against an employee for reporting bullying conduct.  These cases arise where an employee reports acts of bullying that raise to the level of assault, battery, disorderly conduct or some other provision.  With the common law being added to the Whistleblower law, there is additional potential for use of the Whistleblower law to deal with bullying behavior in the workplace. 

But there are additional reasons to be proactive about bullying behavior:  It decreases employee morale and productivity, increases turnover, and negatively affects the bottom line.

SUPREME COURT CASES 

Vance v. Ball State University, 133 S. Ct. 2434 (2013), is a retaliation case in which an employee claimed she was fired after reporting that her supervisor sexually harassed her.  The question before the Court was whether the employer was strictly liable for the supervisor’s action.

Under prior rulings of the Court the employer is liable for the harassment of a co-worker if the employer was negligent in not controlling working conditions.  In co-worker situations, the employer can take advantage of an affirmative defense if the employer exercised reasonable care to prevent or correct the harassment and the employee unreasonably failed to utilize preventative or corrective opportunities.  Faragher v. Boca Raton, 524 U.S. 774, 807 (1998).

However if the harasser is a supervisor and the harassment culminates in “a significant change in employment status such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits,” the employer is strictly liable.  Burlington Industries, Inc. v. Ellerth, 524 U.S. 742, 761 (1998).

The question Vance was whether the supervisor was the type of supervisor that would cause the employer to be strictly liable under its prior rulings.  The Court held “an employer may be vicariously liable for an employee’s unlawful harassment only when the employer has empowered that employee to take tangible employment actions against the victim, i.e., to effect a ‘significant change in employment status, such as firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits.’”

The take away from this case is to be deliberate in assigning duties to leaders if you want to avoid strict liability for their conduct in federal discrimination cases.

In University of Texas Southwestern Medical Center v. Nassar, 133 S. Ct. 2517 (2013), the Supreme Court made it easier to defend against Retaliation cases, applying a “but-for” standard of review.  The Court applied that same reasoning it had used when it made it more difficult to prove age discrimination in Gross v. FBL Financial Services, Inc., 557 U.S. 167 (2009).  The employee in a Title VII case must now prove that retaliation was the “but-for cause of the challenged employment action,” eliminating the “mixed motive” burden of proof that had been used in many circuits.

A bill was introduced into the Senate in late July that, if passed, would have reversed the ruling in the Gross case.  One would expect that if this bill comes before Congress again, the retaliation provision may be added to the attempted change.

While this case increases the standard of proof of retaliation under federal law, it is unclear whether this standard will be applied under Minnesota law.  Even if it is, employers should use the same amount of care in discharging an employee as you have in the past, documenting the need for lay-off or reorganization, past warnings, discipline, or performance problems and the reasons for the adverse employment decision.

Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013), is a Fair Labor Standards Act case in which the plaintiff alleged that she and other employees were not paid for a 30‑minute “lunch break,” even though they worked during that time.  She brought the case on her own behalf and on behalf of “others similarly situated.” 

The employer then made an offer of judgment to pay her all she claimed she was owed plus her reasonable attorneys’ fees and costs, and asked the Court to dismiss the case as moot.  The Court agreed to do so after no other employee sought to join the case. 

This case provides a good formula for employers to expeditiously resolve these types of cases when only a few employees are interested in pursuing legal action. However, care should be taken to solve the problem that was identified going forward, to avoid a finding of willfulness in any subsequent case.

US Airways v. McCutchen, 133 S. Ct. 1537 (2013), involved an employee who was injured in an automobile crash.  The employer paid $66,866 for the employee’s medical bills out of its self-insured health plan.  After the employee recovered $10,000 from the other driver and $100,000 from his own auto insurance company, the health plan demanded reimbursement of the money it had paid for the health care.  The Court held that the health plan was entitled to recover under the terms of the health plan, but since the health plan was silent about allocating the cost of recovery, the common fund doctrine would apply, which means the health plan would have to pay its share of attorneys’ fees and costs attributable to the recovery. 

Without application of the common fund doctrine, the employee would have ended up in the hole. 

Employers with self-insured plans should review those plans to determine whether any language changes are warranted in light of this decision.  Employers with outside policies may wish to review the policy language to determine how this case might affect their employees.

American Express Co v. Italian Colors Restaurant, 33 S. Ct. 2304 (2013), upheld a contractual waiver of class action treatment in a credit card matter, even though the cost of proceeding as an individual outweighed the possible recovery.  In Oxford Health Plans LLC v. Sutter, 33 S. Ct. 2064 (2013), the Court held the arbitrator did not exceed his authority in determining that the parties’ arbitration agreement allowed him to hear the matter as a class action. 

Although these are not employment cases, they show that the Court continues to be very arbitration friendly, and is likely to give employers leeway in structuring appropriate arbitration agreements.  Employers should avoid the temptation to overreach, however, in drafting arbitration agreements. 

OTHER DEVELOPMENTS

NLRB At Full Strength.  In late July, 2013, the Senate confirmed President Obama’s nominees to serve on the National Labor Relations Board.  The confirmation of these new Board members brings the National Labor Relations Board to full strength for the first time in a decade.

In NLRB v. Canning, the D.C. Circuit held that an NLRB determination was invalid because three members of the Board had been appointed by way of recess appointments.  The Supreme Court has accepted review of the Canning case to determine the parameters under which recess appointments can be made.  The case is of less significance in the employment world now that the Senate has approved Obama’s NLRB appointments and it now has enough members to do business.  However, the decision may have political ramifications which could impact the way the Executive Branch and Senate do business. 

AN EIGHTH CIRCUIT CASE 

Persons Working in U.S. Illegally Covered by FLSA.  The Eighth Circuit Court of Appeals ruled this summer that employees working in the United States without legal status are entitled to protection under the Fair Labor Standards Act’s minimum wage and overtime protections.  The Court reasoned that the FLSA is not incompatible with the Immigration Reform and Control Act because each is designed to decrease worker exploitation and requiring minimum wage and overtime pay for all workers removes a financial incentive to employ workers without proper work permits.  The jury awarded the six restaurant workers over $141,000 for back wages, $141,000 for liquidated damages, and over $156,000 for costs and attorneys’ fees.  Lucas v. Jerusalem Café, No. 12-2170 (8th Cir., July 29, 2013).

 

Teresa J. Ayling
(952) 460-9244
tayling@hjlawfirm.com