The United States Department of Labor is responsible for administering regulations and statutes that affect business and are designed to protect employees from unfair practices. These are standards that business are required to adhere to; however, states also have the power to enact statutes and regulations to protect workers from unfair treatment. As such, corporations who have employees in multiple jurisdictions must ensure they adhere to the specific employment laws of each state where employees are located.
CURRENT CHANGES – MINNESOTA
In recent years employment law, both on the federal and state level, has undergone some major changes. Same-sex marriage was legalized nationwide in 2015 and the United States Supreme Court held state-level bans on same-sex marriages to be unconstitutional. Same-sex marriage couples are now entitled to federal benefits, including federal employment benefits. Minimum wage has also been a hot topic. Several states have been faced with demands to raise the minimum wage, including Minnesota, where protests have been held to raise the minimum wage to $15 an hour. Currently, Minnesota’s minimum wage is at $7.25 for small employers and $9.00 for large employers.
RELEVANT AND IMPORTANT STATUTES
In addition to several staple employment law statutes, there are three specific laws employers should be aware of in Minnesota:
- Whistleblower statutes and wrongful termination
- Non-compete agreement validity
- Payment upon termination.
Whistleblower Statues and Wrongful Termination
Minnesota has several employment laws that amend or supplement the federal employment laws. First, Minnesota recognizes at-will employment with a few exceptions. One exception is The Whistleblower Act. The Act was greatly amended in 2013 and it prohibits an employer from “discharging, threatening, otherwise discriminating against, or penalizing an employee regarding the employee’s compensation, terms, conditions, location, or privileges of employment” in six situations, however three are particularly relevant to corporations:
- An employee in good faith reports a violation whether it be actual, planned, or suspected, of any federal or state law or a rule adopted pursuant to law to an employer.
- An employee refuses an order to perform an action that the employee has an objective basis to believe violates any state or federal law.
- An employee, in good faith, reports a situation where the quality of health care services violates a standard established by federal or state law or professionally recognized national clinical or ethical standards and potentially places the public at risk of harm.
In Minnesota, whistleblower plaintiffs are only protected if there is a report of a legal violation. In order to establish a whistblower claim under Minnesota law a plaintiff must:
- Show facts that establish a violation of a law.
- Specify the nature of the violation and explain why the conduct would violate the law.
If a plaintiff can successfully demonstrate that they were terminated because they reported a violation, they are entitled to compensatory damages and under Minnesota law they are also entitled to reasonable attorney’s fees.
A solution to avoid whistleblower claims is to implement a compliance program that addresses employee concerns internally and resolves legitimate issues. These programs should protect the reporting persons identity to the maximum extent in order to avoid unfair treatment and retaliation by fellow employees. Employees who blow the whistle could consider a request to change desks, a relocation to a different department or state, or the mere fact that they are now shunned at work as retaliation.
Non-Compete Agreement Validity
Many companies ask employees to sign non-compete agreements. Generally the law rejects such restrictions but in certain cases it does recognize non-competes. Minnesota generally disallows non-competes, however the Minnesota Supreme Court has noted that such agreements are enforceable if they are serve a “legitimate employer interest and are not boarder than necessary to protect this interest.” In such cases, a Minnesota court will balance the employer’s interest in protection from unfair competition against the employee’s right to earn a living. If the employer’s interests outweigh the employee’s, the agreement is valid and enforceable. Minnesota does recognizes claims against a new employer for violation of a prior non-compete agreement. There are three elements of this claim:
- A contract
- The wrongdoer’s knowledge of the contract
- Intentionally breaking the contract without justification and the payment of damages
Notably, Minnesota courts have also adopted the “blue pencil” doctrine which allows them the equitable power to rewrite the scope of an agreement to whatever it deems is reasonable.
Payment Upon Termination
Each state has different requirement regarding payment upon termination. Minnesota requires an employer to pay discharged employees their wages within 24 hours of their demand for wages. Wages include accrued, unused vacation or paid time off as well as non-discretionary bonus payments. An employee who resigns is entitled to the same wages as a discharge employee however a resigning employee must be paid within 20 days. Failure to pay within 24 hours for discharged employees or 20 days for resigning employees may cause an employer to pay an additional 15 days of wages. Employers are required to pay commissions to sales persons paid on a commission basis and who are independent contractors and not employees. If an employer fails to pay commissions, they will be liable for unpaid commissions and a penalty in the about of 1/15 of the commissions earned through the last day of employment for each day up to 15 that the commission is unpaid, plus attorney fees.
Employers located outside of Minnesota should me mindful of Minnesota specific employment laws. Outlined above are statutes that differ from state to state and require employers to be mindful of these differences to avoid law suites and penalties. Employers should also be aware of the current Minnesota employment law “climate”, anticipating potential changes and evaluating how changes affect their business and employees.