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.

Same Sex Marriage And The Minnesota Human Rights Act

Governor Dayton recently signed into law a bill recognizing same-sex marriage in Minnesota. During debate, opponents of the bill introduced an amendment (which was subsequently defeated) to the bill that would have allowed any individual to refuse to conduct business with someone in a same-sex relationship if that relationship clashed with their sincerely-held religious beliefs. In support of this amendment, State Senator Warren Limmer was quoted as saying: “The question for this body is do we offer protection for all or only a few." Later he added: “I’m sorry we don’t have room in our statutebooks for people of faith anymore.”

You may be guessing that the direction that this blog post is heading is to explain the nuances of the Establishment Clause. Or that I may be about to analogize this argument to those people who have sincerely-held religious beliefs which might make them uncomfortable doing business with Blacks, Hispanics, Muslims, etc. You would be mistaken, despite the fact these would be very persuasive arguments against Senator Limmer's position.

Rather, I want to simply point out that refusing to do business with someone based on their sexual orientation has been illegal in Minnesota for years. The Minnesota Human Rights Act (MHRA), which I have referred to repeatedly in this blog because of the protections it provides employees in Minnesota, also includes a provision that specifically prohibits business discrimination. Minn. Stat. § 363A.17 states in relevant part:

"It is an unfair discriminatory practice for a person engaged in a trade or business or in the provision of a service... to intentionally refuse to do business with, to refuse to contract with, or to discriminate in the basic terms, conditions, or performance of the contract because of a person's race, national origin, color, sex, sexual orientation, or disability, unless the alleged refusal or discrimination is because of a legitimate business purpose."

 

This, of course, makes Senator Limmer's argument factually erroneous. And the dearth of complaints by people whose religious beliefs oppose homosexuality during the years the MHRA has legally required them to do business with gays and lesbians doesn't help his argument.

 

As a side note, Senator Limmer's statement that "we don't have room in our statebooks for people of faith anymore" is false as well. Numerous laws exist in Minnesota to protect people's religious freedoms and prohibit discrimination based on religion. The MHRA itself provides a myriad of protections for people based on their faith. (See here, here, here, and here.) Moreover, the last time I checked (which was a few minutes ago), Article I, Section 16 of the Minnesota Constitution still provides for religious freedom in Minnesota.

 

In sum, I just thought this was a nice way to provide some information on a portion of the MHRA that is rarely discussed or considered.

Flipping Off The Cops Is Not A Crime!

File this one under "The stuff everyone should know in dealing with cops."  While not related to employment law or Minnesota, I think this is a story that needs to be told.

A federal court recently decided the case of a couple who were arrested for flipping a cop the bird.  While the criminal case was thrown out for procedural reasons, the couple sued the officer for stopping their vehicle without reasonable suspicion of criminal activity.  The court held that the "ancient gesture of insult is not the basis for a reasonable suspicion of a traffic violation or impending criminal activity."  Therefore, the stop was unreasonable.

The best part of this story is how the court completely threw this cop under the bus for trying to sell one whopper of a lie.  The cop tried to explain that he pulled the couple over because he thought they were simply trying to flag him down for help.  The court rejected this line of BS out of hand stating that the "nearly universal recognition that this gesture is an insult deprives such an interpretation of reasonableness."

That is about as big of a smackdown as you can receive from a federal judge.

Close Election Silver Lining? Higher Employment Rate For Lawyers!

Many people cringe at the thought of a close election.  The uncertainty.  The recounts.  The leadership vacuum.  The hanging chads.  I mean, who can forget this guy, right?

So what could be the benefit to a close election and a recount?  A dramatic increase in the number of lawyers who have a job!  The recession has been particularly hard on new and younger lawyers, so what could be better than a slew of litigation through a number of battleground states to help boost employment in a segment of the working population close to my heart!  Maybe this is all part of the candidates' clandestine lawyer stimulus bill?  We'll see...

The Minnesota Marriage Amendment And The Workplace

Minnesotans will be asked to decide at the polls whether we should amend our State Constitution to include a definition of marriage as between one man and one woman.  I appreciate that for some of us this vote raises a number of personal, political, cultural and religious issues we need to grapple with in making our decision.  And as a disclaimer, I personally plan to vote "No" on this Amendment for a number of reasons.  However, I want to expound on one of those reasons because it directly relates to the subject matter I like to blog about: Minnesota employment law.

"What does this issue have to do with employment law?" you may ask.  The answer is plenty.  At the crux of the legal analysis regarding the constitutionality of gay marriage is the fact that government - federal, state and local - provides special benefits and rights to married couples.  And many of these marriage-based government benefits relate to employment.  For example, the Family Medical Leave Act allows many employees the right to take time off of work to care for a spouse or child with a serious medical condition.  There are many employee benefits programs governed by state and federal law such as health insurance, 401(k) retirement accounts, and the right to receive workers' compensation benefits for a incapacitated or deceased spouse that relate to marriage and the ability to marry. 

The employment laws I have outlined above provide a number of benefits not just to the employees but to society in general. That is why they were passed in the first place. They allow for a smoother (and less expensive for taxpayers) transfer of wealth upon death or incapacity. They provide job security and financial stability in the event of serious illness or injury to family members. They allow for insurance coverage for medical and other costs that may otherwise not be provided to a non-family member.

Whether this Marriage Amendment passes or not, same-sex couples are going to continue to live together in committed long-term relationships.  They are going to have and raise children. They are going to be responsible for financially supporting each other and their kids.  The personal and societal benefits conferred by these laws would be equally as relevant to same-sex couples, and the benefits to society would presumably be the same as well.  Thus, from an employment law perspective, these are a few reasons why you may want to consider voting "No" to Minnesota's Marriage Amendment.

Get Out Of Work And Get Out To Vote!

November 6 is election day and everyone should exercise their right and get out to vote.  But better yet, those of us in Minnesota can get out of work to get out and vote!

Minnesota Statute 204C.04 states as follows:

Every employee who is eligible to vote in an election has the right to be absent from work for the time necessary to appear at the employee's polling place, cast a ballot, and return to work on the day of that election, without penalty or deduction from salary or wages because of the absence. An employer or other person may not directly or indirectly refuse, abridge, or interfere with this right or any other election right of an employee....

 

A person who violates this section is guilty of a misdemeanor, and the county attorney shall prosecute the violation.

So that jerk boss can't threaten, intimidate or coerce you into working late, taking a pay cut, using personal or vacation time or interfering in any other way with your right to vote.  If he or she has questions, have them give me a call. 

Who's Entitled to the Prevailing Wage? Not the People Doing the Work...

The Minnesota Supreme Court recently engaged in some mental gymnastics to deprive some employees doing work for the City of Minneapolis the right to have a jury decide whether they were paid the prevailing wage for their work.  The opinion in the case of Caldas v. Affordable Granite & Stone, Inc. (AGS) can be found here.

The City had hired the plaintiffs' employer, AGS, to repair some flooring in the Minneapolis Convention Center.  Per the City's requirements, the contract between AGS and the City expressly stated that AGS's employees would be paid the "prevailing wage" for the work they were doing on behalf of the city.  The 13 plaintiffs in this case argued that they were engaged in putting in the new floor, which entitled them to approximately $44 per hour which was the prevailing wage for the work.  AGS argued that the plaintiffs were engaged in janitorial work.  Two audits by the City into complaints by the plaintiffs found that they had been properly characterized as performing janitorial work.

The plaintiffs sued claiming breach of contract, among other things.  Because the plaintiffs were not parties to the contract between the City and AGS that contained the prevailing wage requirement, they had to argue that they were intended third party beneficiaries to that contract.  AGS, naturally, argued the plaintiffs were not intended beneficiaries so it could avoid paying these folks the prevailing wage.  The court's decision turned on whether these plaintiffs were intended third party beneficiaries or not. 

The test that is commonly used in Minnesota to determine if someone is a third party beneficiary states:
 
Unless otherwise agreed between promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and ... the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.

So what does that legalese mean?  Essentially, when a beneficiary of a contract is not expressly named in the contract, the court can look at the circumstances surrounding the contractual provision at issue to determine who, if anyone, may have been an intended beneficiary of the contract.  If you are not an intended beneficiary, you cannot sue to enforce the contract.

So at this point you have to be asking yourself this question:  If a prevailing wage provision was not meant to benefit the employees of AGS who were going to do the work , who the heck was it intended to benefit? 

And that would be a great question.  And logic would dictate that your instincts were correct.  And you would be in good company in reaching that conclusion because the City of Minneapolis itself argued to the court that the plaintiffs were intended third party beneficiaries of the prevailing wage agreement. 

But if you were a member of the Minnesota Supreme Court, you would have ended up on the losing end of this argument.  The court held that AGS's promise to pay the prevailing wage was a "general promise to comply with the law, which does not confer upon AGS employees the right to enforce the law."  The court went on to state that the City, not the employees, had a right to enforce that provision by conducting audits or investigations into whether AGS was complying with the prevailing wage provision of the contract.  The City conducted those audits, concluded the plaintiffs were paid properly, and that was the end of it.

My feeling is that it was easy for the court to dismiss this case because the City itself had already concluded that these plaintiffs were properly classified and properly paid.  As such, they did not present a compelling case that they had suffered some type of horrendous injustice.  When the facts of a particular case do not engender some level of sympathy, it is often difficult to persuade the court that your side should win.  But the problem here was that the only issue before the court was whether these folks were intended beneficiaries.  It was a jury's job to first determine whether the provision had been breached. 

Two of the six justices who decided the case dissented.  In addressing the question of whether these plaintiffs were intended beneficiaries of the contract, they asked this question: “If Affordable Granite & Stone’s promise to pay its employees the prevailing wage for their work on the Convention Center was not meant to benefit these appellants, for whose benefit was it intended?” 

For those of us who do this for a living, we think that is a really good question.