Wednesday, August 9, 2017

Victory for Minnesota Employees

As an update to a post from 2013, the Minnesota Supreme Court issued an opinion this morning affirming that the 2013 amendments to the Minnesota Whistleblower Act (MWA) mean what they say.

Previously, the term "good faith" had not been defined in the MWA. The courts, including Minnesota's Supreme Court, provided their own judicially created definitions of these terms as these cases came before them. Many of these judicially created definitions significantly limited the scope of employee protection provided by the MWA. Specifically, the Minnesota Supreme Court previously held that in order to be in good faith, an employee's report had to be made "with the purpose of blowing the whistle." Subsequent judicial decisions stated that people who had legal compliance jobs could not make a claim under the MWA because the real motivation in making any report was it was a part of their job duties. These decisions exempted a large classes of employees and conduct from protection.

The 2013 amendments to the MWA provided clear definitions for a number of these terms, including "good faith," and were intended to abrogate the prior judicial definitions. For example, a "good faith" was now defined by the amendments to mean a report that was not "knowingly false or in reckless disregard of the truth."

Employers, however, argued that these new definitions simply "clarified" or "supplemented" the prior judicial definitions. Chaos ensued as courts tried to determine whether these new statutory definitions replaced the prior court created definitions.

In a victory for the hard working people at the Office of the Revisor of Statutes and statutory construction theorists everywhere, the Court held that when the legislature enacts new statutory language, it typically means to change the law. Or in other words, if the Court were to interpret the term "good faith" to simply mean what it did prior to the amendment, it would have rendered the legislature's addition of the definition meaningless. And it is well established that when the legislature enacts some change in the statutes, courts are to presume it meant to change the law.

What this means in practice is that many more employees in Minnesota will be covered by the protections of the MWA. It also means that the fight in these cases will no longer be about whether the employee has any protection under the MWA, but whether an employer's adverse employment action was motivated by the employee's good faith report. The bottom line is this is great news for Minnesota employees.

Thursday, August 3, 2017

Severance Agreements, Explained

The Minneapolis police chief, JaneĆ© Harteau, resigned July 21 under pressure from Mayor Hodges for alleged problems in the force that were highlighted by some recent high profile police shootings. However, since her resignation, there has been discussion of her receiving a "severance." Indeed, an article in today's Star Tribune carries the headline, "Details of former Minneapolis Police Chief Harteau's severance not final yet." 

I routinely receive calls from employees who have left employment, or are thinking about leaving employment, who ask "What severance am I entitled to receive?" or some other similar question. Often, these callers have the misunderstanding that all employees who leave or are forced to leave employment are entitled to some sort of severance from their employer. I thought this article was a place to start a short discussion on what a severance is and some common issues associated with them.

What is a severance agreement?

A severance agreement is a contract between an employee and employer laying out the terms of the employee's separation from employment. A severance agreement typically has a number of standard terms. Some key provisions include:

Release of Claims. This is also referred to as a "release." Simply put, the employer will require the employee to release any and all legal claims that the employee may have against the employer, its employees, insurers, attorneys, etc. etc. In other words, the employee agrees that it can't and won't sue the employer. This is the provision in the agreement that is most important to the employer. They want to be sure that the employee will not come back and make a legal claim against them in the future.

Consideration. In exchange for the release, the employer needs to provide the employee with something of value. Typically, it takes the form of money. It may also include other non-monetary terms such as a positive letter of reference. 

Confidentiality. The employer will almost always require the terms of any severance agreement to remain confidential. However, in the case of a public employer (like the City of Minneapolis), the terms are required to be public because government entities are required to share its dealings and financial transactions with the public.

Non-disparagement. Simply put, the parties agree not to say negative things about the other.

Who is entitled to severance?

As a general rule, employers are not required to offer their employees any severance, regardless of how the employment ends. So even if your employment is involuntarily terminated due to no fault of your own, the law does not require your employer offer you any severance. 

Some employers have a formal severance plan which they offer as a part of their compensation package. In those instances, the employer is required to provide a predetermined amount of severance (e.g. a week of pay for every year of service) in the event an employee separates from employment and qualifies for coverage under the severance plan. Depending on the plan and the type of employees, these can often be somewhat complicated arrangements.

How is the severance amount determined?

There are a number of factors that go into determining the severance amount paid to the employee. If there is a formal severance plan, that typically will govern. In the absence of a severance plan, oftentimes an employer will consider the employee's position, pay, length of service, contributions to the company, and other similar factors. However, the single biggest factor to influence the amount of severance pay is whether the separating employee has any viable legal claims against the employer, and how much they may be able to recover in the event the employee can prove they were fired illegally. Remember, the employer is essentially "buying" a release of claims from the employee. If the employee has strong legal claims she could bring against her employer, the release of those claims is worth more money. The employer has an incentive to pay more to a former employee with strong claims because if they don't pay more, the employee may choose to not to release her claims and sue the employer to recover more in court. 

In other instances, an employee may have held a position of leadership or influence for which an employer wants to part amicably. These employees may have access to media attention that could be unflattering to the employer. In these cases, the employer is doing an analysis of what it is worth to them to not have this senior employee out in the community bashing or criticizing the organization. Oftentimes, that can be worth a lot to an employer.

This brings us back to JaneĆ© Harteau. She was asked to resign because in the view of the Mayor, she wasn't doing a good job. So it does not appear her leverage comes from having a particularly strong claim for discrimination or other form of wrongful termination. Rather, the City is entertaining paying Harteau a severance because she is someone with significant name exposure, who has been at the center of a heated public debate (police shootings), and who could significantly damage the City's attempts to mend whatever fences it believes need mending in order to help the community move past these incidents. I wouldn't be surprised to she receives a payment commensurate with a year or two of her annual pay. Stay tuned and see if I am right...

Wednesday, July 31, 2013

Are You Safer Than a Sherpa?

We often take for granted various workplace safety laws that have been put in place by the federal, state and local governments to prevent and compensate us for workplace injuries and death. It wasn't all that long ago that a safe work environment was not exactly the norm. From the Occupational Safety and Health Administration, which oversees safe working conditions to prevent workplace injuries, to our workers' compensation system that typically provide workers with pay to cover lost wages and medical bills, we are lucky to have these protections in place.

I was reminded of this fact when I read this blog post about Sherpas in Nepal. According to the post and the article it cites, being a Sherpa is the most dangerous service job in the world. This is another reminder that, despite how we typically feel about work, we don't have it so badly.

Tuesday, July 23, 2013

Is The Big Law Firm On Its Way Out?

While not directly related to Minnesota Employment Law, this article from the New Republic is a fascinating read for those interested in the history and/or business aspect of how large law firms have operated and why that model may become extinct.

Plus, they have a great picture of Bob Odenkirk in character as Saul Goodman from the AMC television series Breaking Bad. Saul is one of my favorite TV attorneys of all time. New season starts August 11. Stay tuned...

Friday, July 12, 2013

Minnesota Strengthens Whistleblower Protections

The Minnesota legislature passed, and the Governor has signed, significant amendments to Minnesota's Whistleblower Act, which prohibits employers from, among other things, retaliating against an employee for making a good faith report of a violation or suspected violation of law.

Through a number of poor court decisions, the law had essentially been filled with so many employer-friendly loop-holes and defenses so that almost no one was protected by the law anymore.

Specifically, the bill does the following:

  • It defines a "good faith" report as one that is not knowingly false or in reckless disregard of the truth. Prior court interpretations of the term "good faith" had excluded from protection reports made as part of one's job duties or reports that did not affect some larger public policy. Those cases are now obsolete.

  • It defines the term "penalize" as "conduct that might dissuade a reasonable employee from making or supporting a report including a post-termination conduct by an employer or conduct by an employer for the benefit of a third party." Prior to this, an employer arguably had to take a much more tangible adverse employment action, such as termination, demotion, or a pay cut, to violate the statute. This amendment recognizes that there are numerous other ways an employer can dissuade someone from making a report and makes sure all of those actions are illegal.
  • It defines a "report" as a "verbal, written, or electronic communication by an employee about an actual, suspected, or planned violation of a statute, regulation, or common law, whether committed by an employer or a third party." Previously, there was significant debate about what an employee had to do to actually "report" a violation of law. Furthermore, this provides protection to employees to report "planned" violations, not just violations after they have occurred. It also expands the types of legal violations an employee can report to violations of the common law, such as torts.
  • Finally, the amendments provide protection for public employees reporting unlawful conduct to their legislators or constitutional officers.
All of these amendments recognize the realities facing employees who want to do the right thing and prevent their employer from breaking the law. The additional protections afforded employees will hopefully result in increased corporate compliance with laws and regulations in Minnesota.

U.S. Supreme Court Deals Two Blows To Employees

The U.S. Supreme Court issued two recent opinions that negatively affect the rights of every employee in Minnesota and across the country.

In University of Texas Southwestern Medical Center v. Nassar, the issue before the court was the standard a plaintiff needs to meet in order to prove a retaliation claim under Title VII. As you may recall, Title VII is the federal law that, among other things, prohibits discrimination and retaliation in employment based on a person's race, color, religion, sex, or national origin. The court was presented with the question of what standard a plaintiff had to prove in order to succeed on a claim of retaliation. A claim of retaliation typically exists when an employee complains of discrimination in the workplace and then suffers some type of adverse employment action (termination, demotion, cut in pay, etc.) as a result.

As recognized in the SCOTUS Blog, Congress and the court have had a unique "back-and-forth" about what a plaintiff has to prove to succeed on a claim brought under Title VII. Like many employment law statutes, Congress approved Title VII and the Supreme Court then began narrowly interpreting it in a series of decisions. Specifically, the court had previously held that a plaintiff need to prove that "but for" their race, color, religion, etc., they would not have suffered the adverse employment action at issue. This meant that even if a plaintiff could prove an employer's decision was based in part on an improper motive such as sex, they could still lose if the jury believed the employer would have fired them anyway.

In 1991, Congress acted and overturned those decisions. Specifically, the court adopted a "motivating factor" test that, in essence, allowed the plaintiff to prevail if she could show an improper motive was one of many "motivating factors" in the adverse employment decision.

The issue before the court in Nasser was whether the motivating factor test applied to retaliation claims. The court held that it does not. Justice Alito, writing for the 5-4 majority, stated that retaliation claims are to be decided using the "but for" analysis. Justice Ginsberg, who read her dissent in court, specifically called on Congress to overturn this decision because the court has, on numerous occasions, held that retaliation is simply another form of discrimination.

In sum, this decision makes it more difficult for plaintiffs to prove a claim of retaliation under federal law. Employees in Minnesota still may bring a retaliation claim under the Minnesota Human Rights Act, which applies the motivating factor test.

The second case is Vance v. Ball State University. In that case, the court further defined who constitutes a "supervisor" in claims for workplace harassment. Specifically, the court held that a supervisor is limited to someone authorized to take “tangible employment actions” like hiring, firing, promoting, demoting or reassigning employees to significantly different responsibilities. The court went on to hold that “the ability to direct another employee’s tasks is simply not sufficient” to call someone a supervisor. Limiting who constitutes a supervisor is significant because the burden to prove harassment against a supervisor is less burdensome than against a co-worker.

In the big picture, these cases materially limit employees' rights in the workplace.

Wednesday, May 22, 2013

Prevailing Wage Update: Good News For MN Employees!

Last year I wrote about the case of Caldas v. Affordable Granite & Stone, Inc. (AGS), in which I explained how the Minnesota Supreme Court held that the employees who actually did work for the City of Minneapolis were not the intended beneficiaries of the prevailing wage provision of the construction contract.

I am happy to report that my friend, attorney Justin Cummins, almost singlehandedly pushed through new legislation to amend the applicable statutes, Minn. Stat. sections 181.13 and 181.14, to overturn this decision and provide greater protections for Minnesota employees as it relates to their pay. The laws, as amended, can be found here.

The amendments themselves do a number of things. First, they clarify that employees who are hired to do the work are the intended beneficiaries of a prevailing wage rate provision in a contract between the employer and a third party, or when otherwise set by law. So when someone hires a your company to perform a service, and the contract or some other law provides for how much you will be paid, you have the right to seek relief.

Second, the amendments also restore an employee's substantive right to sue an employer when it fails to pay wages or commissions the employee has earned. The Minnesota Supreme Court had previously held that these were nothing more than "timing" statutes that did not provide a party with a substantive claim to recover these amounts.

Third, the amendments define when wages and commissions have actually been earned. As crazy as it sounds, employment lawyers used to fight over this and the courts did not apply our common sense understanding in most cases. Now, wages and commissions are earned when the employee was not paid for all time worked.

Finally, the amendments clarify that employers cannot deduct amounts from your final paycheck for alleged amounts owed to it by the employee. Occasionally, employers would come up with any number of excuses not to pay an employee what they were owed at the conclusion of employment.

This is all good news for Minnesota employees.