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8th Circuit Court of Appeals Holds that Miscalculation of FMLA Entitlement Interfered with Employee’s FMLA Rights

August 2016

Eligible employees are entitled to 12 weeks of FMLA leave per year for qualifying reasons.  But how are those 12 weeks counted?  Incorrectly answering this question got an employer in trouble when it only counted the employee’s straight time in determining how many hours of FMLA leave the employee was entitled to take.

In a recent decision, the 8^th Circuit Court of Appeals (which covers Minnesota) held that an employer unlawfully interfered with an employee’s FMLA rights when he was terminated for excessive absenteeism after the employer claimed he had exhausted his FMLA leave.  When a need for overtime arose, employees could volunteer, and the employer would schedule overtime based on the volunteers.  Once an employee was scheduled for this overtime, it was no longer voluntary.  This means that missed scheduled overtime shifts due to a reason covered by the FMLA were properly counted against his 12 week FMLA entitlement.  But, it also means that his overtime should have been taken overtime into account when calculating how many hours of leave he was entitled to take, i.e., he was entitled to more than the 480 hours (12 weeks * 40 hours/week) he would have been entitled to if he did not work any overtime. 

If an employee works the same number of hours each week, it is not too difficult to calculate both their FMLA entitlement and their FMLA usage, but it becomes more difficult where, as in this case, the employee’s schedule varies.  However, the Department of Labor’s regulations interpreting the FMLA provide for what to do in such a situation, stating that if an employee’s schedule varies to such an extent that the employer cannot determine with any certainty how many hours the employee would otherwise have worked if they hadn’t taken FMLA leave, then the employee’s average hours over the past 12 months should be used in calculating the employee’s leave entitlement. 

For questions regarding administration of FMLA leave, contact James Sherman at jasherman@wesselssherman.com or 952-746-1700.

Minnesota Supreme Court to Decide Who Makes the Call on a $15/hour Minimum Wage Rate for the City of Minneapolis

August 2016

Following a trend of cities such as Seattle, Los Angeles and San Francisco, Minneapolis is considering creating a $15/hour minimum wage for employees working in the city.  Who gets to decide the issue, however, is the subject of considerable debate that has gone all the way to the Minnesota Supreme Court. 

Advocates for a higher minimum wage collected the signatures required to place the question on the November ballot, as an amendment to the city charter, but the Minneapolis City Council opposed the measure, instead wanting the discretion to decide the issue as an ordinance passed by the Council.  A state trial court judge sided with the advocates, and ruled that the question should be included on the ballot to be voted on by the residents of Minneapolis.  Given the obvious time constraints, the Supreme Court has agreed to decide the issue on appeal directly from the trial court.

The Court’s decision in this case could have far reaching effects, for Minneapolis and other Minnesota cities.  If the Court rules that the city charter can be amended for this sort of issue, advocacy groups may be encouraged to take further measures to establish other terms of employment that apply only locally, through the referendum process.  Some Council members (and no doubt many business owners) have expressed concerns about the economic impact of addressing the minimum wage at the city-level, including that establishing a much higher minimum wage rate of $15 in Minneapolis, when the state minimum wage is $9.50 for large employers, could potentially make the city less competitive with surrounding communities.  If the Supreme Court decides to leave this decision to the voters, hopefully they will become fully informed of all sides of the issue before deciding on such an important issue.

Employers Who Treat the DOL’s New Overtime Rule Lightly, do so at Their Own Peril!

August 2016

James B. Sherman, Esq. 

By now most everyone is aware of the Department of Labor’s new overtime regulations.  Effective December 1, 2016 the minimum salary necessary for exempt status in the so-called “white collar” positions (executive, administrative and professional), increases drastically from $23,660 to $47,476, or $913 per week.  Any white collar employee currently exempt from overtime pay, must be paid 1 ½ times his or her “regular rate of pay” if their salary does not meet this new minimum as of the 1^st of December.  For employers, the impact of the DOL’s new rule and the many issues and decisions it presents – some with significant consequences to their bottom line – should not be ignored or underestimated.  Those that fail to address the many nuances and details of this fast approaching change to their wage and hour practices, may encounter serious problems, as well as lost opportunities, even before the end of the year.

There can be a tendency to over simplify the issues involved with a change that more than doubles the minimum salary level for the most common exemptions from overtime.  Despite predictions that the new regulations may impact over 6 million workers come December 1^st, many human resource professionals and consultants are treating this as a singular issue involving the simple decision of whether employees will remain exempt, or must be converted to nonexempt status.  While this certainly is the primary focus there is so much more employers should be taking into account if they care to minimize the impact of the new regulation, not only to profitability but to everything from employee morale to operational efficiencies and meeting the needs of their customers. 

Here is just a short list of issues many employers are overlooking as the new regulations are just around the corner:

·         What will be the cost of converting presently exempt employees, to nonexempt employees entitled to overtime?  How many employees must be converted?  What will be their “regular rate of pay” for purposes of overtime pay at 1 ½ this rate?

·         How many hours of overtime do these employees work?  Many employers assume their employees work little or no overtime, so converting some employees to nonexempt status will be inconsequential – don’t be so sure. Since few employers record hours worked each day by exempt employees, they may not truly know how many hours some employees work.  Also, white collar workers often perform job duties outside of normal business hours; e.g. training, mandatory business events and certain travel that must be treated as “hours worked” under the FLSA.

·         If employees receive an increase in salary to meet the new minimum, can the D.O.L. mandated raise be accompanied by increased expectations and/or job duties?  Yes.

·         Can employees in the same job category be split between exempt and nonexempt based on the new salary requirement, without generating discrimination lawsuits?

·         Is this a good time to address some current classifications of certain positions as exempt that are questionable because the job duties may not satisfy the requirements of any of the white collar exemptions?

The answer to the last of the above questions is “absolutely,” there is no better time to assess and reconsider improperly classified positions, or to redefine job duties to better meet the exemptions.  Failing to fully audit and assess all exempt/nonexempt positions, prior to the December 1, 2016 effective date of the new D.O.L. overtime rule, is a lost opportunity for employers to shore up their defenses at a time when class action wage and hour lawsuits are at an all-time high. 

_________________________________________________________________________________

James B. Sherman is a named shareholder of Wessels Sherman law firm.  He and fellow shareholder from the firm’s Chicago office.  The two submitted comments on behalf of employers throughout the country, on the D.O.L.’s proposed rules issued last summer, and have since fielded countless questions and presented a number of webinars and live presentations to hundreds of business owners, HR professionals, accountants, consultants (and other lawyers) from numerous states from coast to coast.  For help with questions, auditing wage and hour exposure, risk avoidance, or strategies to minimize the impact of the new overtime regulations that take affect December 1, 2016, contact: James Sherman at jasherman@wesselssherman.com or 952-746-1700.

EEOC Issues New Enforcement Guidance on Workplace Retaliation

August 2016

For the first time since 1998, the EEOC has published updated guidance on workplace retaliation.  Retaliation charges are by far the most common and fastest growing type of claim filed with the EEOC, comprising nearly 45 percent of all charges it now receives. Given the surge in retaliation claims and the additional attention these claims are receiving from the EEOC, employers need to know what activities are protected from retaliation.     

Among other things the new EEOC guidance addresses:

• The scope of employee activity protected by the laws, which includes “participation” in the EEO process—by raising a claim, testifying, assisting or participating in an investigation, proceeding or hearing under these laws—as well as “opposing” discrimination.
• Examples of retaliatory actions that would be likely to deter a reasonable person from engaging in protected activity.
• Guidance on the ADA’s unique prohibition on “interference” with the exercise of rights under the law, which is broader than the anti-retaliation provision.
• Best practices to minimize the likelihood of retaliation violations.

The new guidelines apply to each of the laws enforced by the EEOC, including Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act (ADA), Section 501 of the Rehabilitation Act, the Equal Pay Act (EPA) and Title II of the Genetic Information Nondiscrimination Act (GINA).  Accordingly, the scope of anti-retaliation laws in the workplace, is very broad. 

To prevent your workplace from becoming another statistic in the significant growth in the number of retaliation claim, or for more information on how this government agency will analyze claims of retaliation under its new enforcement guidance, contact Wessels Sherman at (952) 746-1700.

New OSHA Regulations Jeopardize Post-Accident Drug Tests and Safety Incentive Programs

July 2016
By Alan E. Seneczko

On May 12, 2016, OSHA issued a Final Rule modifying its recordkeeping regulation, requiring employers in certain industries to electronically report illness and injury data that they are required to record in their OSHA logs. No big deal, right? Unfortunately, the big deal was buried deeper in the Rule, in comments relating to modifications to the regulation governing Employee Involvement (§1904.35).

Under the existing regulation, employers are required to establish a way for employees to promptly report work-related injuries and tell them how to do so. The amended regulation, which was scheduled to take effect on August 10, significantly expands this obligation in two ways. First, it requires employers to establish a “reasonable procedure” for employees to report injuries promptly and accurately, and goes on to state that “a procedure is not reasonable if it would deter or discourage a reasonable employee from accurately reporting a workplace injury.”

According to the interpretive comments that accompany this amendment, this means employers are prohibited from disciplining employees for delay in reporting a work injury in circumstances where the employee may not immediately realize that he has suffered an injury, such as in cases involving cumulative trauma. In those instances, in order for its reporting procedures to be considered “reasonable,” an employer must allow the employee to report an injury within a reasonable timeframe after realizing that he has suffered it.

Second, and even more significantly, the revised regulation contains new anti-retaliation provisions. It requires employers to inform employees of their right to report injuries free from retaliation, and prohibits them from discharging or discriminating against employees for doing so. It thus incorporates the existing statutory prohibition against retaliation found in Section 11(c) into the recordkeeping regulation, making retaliation an independent basis for a citation, which can then be “abated” through reinstatement and back pay – and effectively eliminates the 30-day statute of limitations that would otherwise govern such a claim.

Even more distressing is that, according to OSHA, this prohibition limits post-accident drug testing to only those situations “in which employee drug use is likely to have contributed to the incident, and for which the drug test can accurately identify impairment caused by drug use.” This last requirement is particularly interesting, and completely disingenuous, given that a drug test generally only reveals drug use, not impairment. OSHA contends that this regulation prohibits employers from testing employees who report repetitive motion injuries, back strains, bee stings, injuries caused by improper guarding, etc., since the requirement might “deter” employees from reporting their injuries, without contributing to an understanding of why the injury occurred or otherwise improving workplace safety. As a result, post-accident testing must be very narrowly drafted. [Note:  This does bring to mind a client situation several years ago, when an employee reported to his supervisor with a bloody, lacerated hand, claiming he did it at home hours earlier – presumably to avoid having to submit to a post-accident drug test.]

OSHA also uses this new regulation to attack safety incentive programs, such as drawings for employees who are injury-free, or bonuses to groups of employees who have not reported an injury over a specified period of time. According to OSHA:  “[I]t is a violation for an employer to use an incentive program to take adverse action, including denying a benefit, because an employee reports a work-related injury or illness, such as disqualifying the employee for a monetary bonus or any other action that would discourage or deter a reasonable employee from reporting the work-related injury or illness. In contrast, if an incentive program makes a reward contingent upon, for example, whether employees correctly follow legitimate safety rules rather than whether they reported any injuries or illnesses, the program would not violate this provision.” 

 Although these provisions of the Final Rule were scheduled to take effect on August 10, 2016, OSHA has pushed back the effective date to November 1, 2016, ostensibly to conduct “additional outreach” to employers, and to develop educational materials and enforcement guidance on the issue. In the meantime, a number of trade associations have joined together to file a lawsuit seeking to enjoin the new anti-retaliation provisions as they relate to post-accident drug testing programs. See, Texo ABC/AGC Inc. v. Perez, Case No. 3:16-cv-01998 (N.D. Tex.).

Stay tuned. If you would like more information, or have questions about the new regulation and/or how it may affect your post-accident drug testing or safety incentive programs, contact Attorney Alan E. Seneczko at (262) 560-9696, or alseneczko@wesselssherman.com.

Machinist Union Pension Fund and Its Trustees Accused of Misusing Retirement Monies

July 2016

James B. Sherman, Esq. 

The federal court for the District of Columbia has ordered trustees of the International Association of Machinists National Pension Fund, to repay $200,000 to the fund, plus an additional $40,000 as a civil penalty.  As recently reported by the U.S. Department of Labor, the fund and its trustees were sued by the Secretary of Labor for alleged violations of the Employee Retirement and Income Security Act (ERISA). The lawsuit accused the trustees of breaching their fiduciary duties to the IAM Union Pension Fund participants and beneficiaries by, among other things:

·         Unlawfully soliciting and accepting gratuities from plan service providers.

·         Spending/permitting others to spend fund assets lavishly on unnecessary trips, parties, extravagant food, wine and accommodations.

·         Creating conflicts of interest and failing to select plan service providers in the best interests of participants and their beneficiaries.

In a consent decree accepted and ordered by the court on July 19th, the defendants agreed to re-pay the very large sum of money and civil penalty, but admitted to no wrongdoing.  The trustees also agreed to adopt a number of measures designed to prevent activities of the sort the D.O.L. alleged in its complaint were unlawful under ERISA. For example, the IAM Pension Fund must now use an independent search consultant to identify service providers and must, going forward, prohibit the same person from acting as both a consultant and manager for the fund. The Fund must also maintain records for 6 years, presumably to allow for monitoring of its use of fund assets.

Of course this is hardly the first case alleging that union fringe benefit dollars were being misused for parties, junkets, wining and dining for trustees and their friends. In the past the Teamsters’ and other labor union employee benefit plans have faced similar allegations.  The consent decree in this case should be welcomed by current and former members of the Machinist Union who count on the IAM Pension Fund for their retirements, as well as their employers who contribute to the Fund.  

Employer Liable for Terminating Employee for Refusing to Share Tips, Under Minnesota Fair Labor Standards Act

July 2016 

Generally employment in Minnesota is at-will, meaning that either employer or employee can terminate the employment relationship at any time, for any lawful reason.  However, there are limits to at-will employment, including terminations on the basis of unlawful discrimination, retaliation for making a protected complaint, or according to a recent Minnesota case, refusing to share tips. 

The Minnesota Fair Labor Standards Act (MFLSA) makes certain employer actions unlawful.  Most commonly known are those provisions that require that employers pay minimum wage and overtime for most types of employees.  However, the MFLSA also contains several other provisions, including one that “prohibits an employer from requiring an employee to contribute or share a gratuity . . . with the employer or other employees.”  The court determined that an employee who was terminated because his employer felt he wasn’t properly sharing his tips with other staff, was fired illegally, and entitled to backpay. 

This case provides the lesson that employers should make sure that they are not making any illegal requirements a condition of employment.  In this case, the employer presumably thought the employee was being unfair to other employees, and terminated the employee on that basis.  However, under Minnesota law, the employer was not allowed to require the employee to share, and therefore when the employee was terminated because of this requirement, the termination was illegal.  

For assistance in determining whether an action is acceptable under the MFLSA and other state and federal employment laws, contact Attorney James B. Sherman at jasherman@wesselssherman.com or 952-746-1700. You can also find more information on our website at www.wesselssherman.com. 

New OSHA Recordkeeping Rule May Require Many/Most Minnesota Employers to Revise Their Drug & Alcohol Testing Policies and Procedures … ASAP!

July 2016

James B. Sherman, Esq. 

Buried in the new recordkeeping rule from the Occupational Safety and Health Administration (OSHA), are provisions likely to affect many if not most employers who do drug and alcohol testing of employees in Minnesota.  State law, specifically the Minnesota Drug and Alcohol Testing in the Workplace Act (DATWA), prohibits any testing in the absence of a written policy distributed to employees in advance of any attempt to test.  As a result Minnesota employers doing drug or alcohol testing have (or by law should have) in place a detailed written policy that is compliant with the DATWA’s very stringent requirements. Among other things, policies must specify how and under what circumstances testing may occur; e.g. pre-hire, reasonable suspicion, and limited use of random testing.  Unfortunately, the OSHA’s soon-to-be-implemented recordkeeping rule contains provisions that are forcing employers to reevaluate and revise their written policies to comply with certain new requirements. With the new rule set to take affect August 10, 2016, employers that have not already done so have little time to address these new requirements. 

Employers familiar with DATWA know that it is one of the most restrictive Drug and Alcohol testing statues in the country. Random testing is restricted to “safety-sensitive” positions and while “reasonable suspicion” testing is allowed, employers must comply with very particular procedures which must be detailed in their written policies. When the OSHA first issued its new reporting rule, the focus in the public was primarily concerned with its provisions regarding on-line reporting of workplace injuries. However, provisions ostensibly designed to address employer policies that might deter employees from reporting workplace injuries, may require many if not most Minnesota employers to revise their current Drug and Alcohol testing.

Provisions in the OSHA’s new rule that are likely to impacting testing include the following requirements:

1.       Employers must establish “reasonable procedure[s]” for employees to report work-related  illnesses or injuries.

2.       Employers must affirmatively advise employees that they cannot be retaliated against for  making a report.

3.       Reporting procedures may not deter nor discourage employees from reasonably reporting  work-related injuries or illnesses.

Buried in comments accompanying the OSHA’s new reporting rule are statements that post-injury/accident Drug and Alcohol testing may deter employees from reporting them. The OSHA has advised that in order to comply with its new reporting rule, as of August 10^th any post-accident or injury testing must:

a.       Be limited to instances where employee drug or alcohol use likely contributed to the  incident; and

b.      Test only for impairment at the time of the incident (versus using testing methods that  identify drug use only generally).

Because many Minnesota employers have in place written Drug and Alcohol policies required by MDATWA, with many if not most of those policies providing for post-accident or injury testing in all instances, revisions should be made prior to August 10, 2016 when the new OSHA reporting rule goes into effect. Rather than completely overhauling such policies, an addendum or “rider” may suffice; the important thing is to issue any changes to employees, in writing, consistent with the mandates of MDATWA for Minnesota employers.

Employers should consult with experience counsel, without delay, to adopt any compliant measures necessitated by the new rule.

Questions? Comments? Contact Attorney James B. Sherman at jasherman@wesselssherman.com or by phone at 952-746-1700 for more information, or if you have any questions about Drug and Alcohol testing or OSHA policies.

Construction Industry Double-Breasting

If You Try To Set This Up Yourself, Without Legal Counsel – Watch Out!

July 2016
Richard H. Wessels, Esq.

Here at Wessels Sherman we have seen an uptick recently in legal challenges by unions to construction industry double-breasting schemes. By using the word “schemes”, I don’t mean it in the bad sense at all. There is nothing improper or illegal about double-breasting. Unions hate it, but it’s not illegal. In the simplest terms, double-breasting means having a union entity and a non-union entity.

The fundamental principle is that in order to withstand a legal challenge, the two entities must indeed have separation. This is where it gets tricky. No single factor is determinative, it is like weights on a balance scale. There are many factors that can be evaluated and among these are ownership, interrelationship of operations, management, handling of labor relations, interchange of employees, and then a whole variety of factors such as geographic separation, bookkeeping, personnel policies, use of equipment, telephone, business cards, and advertising to mention just some. Again, no single factor is determinative, but some of these factors such as interchange of employees are definitely more important than others. You have big potential problems if the same workers have hours in both the union and non-union companies.

What makes this area even more confusing is that much depends on how you are challenged. Challenges can come from a union trust fund audit, NLRB charge, grievance alleging a labor contract violation, or a demand for recognition. We have definitely seen increased activity in this area, particularly as union pension funds are desperately looking for more money. A good potential source of money for these union trust funds is to allege that the non-union entity is not properly double-breasted and trust fund payments going back many years should have been made under the union contract with the union entity. In other words, “same book with a different cover”. You can see the problem here, and if you have any concerns, give us a call so that we can help you with risk evaluation and setting up better evidence if you are challenged.

Questions? Contact Richard Wessels at (630) 377-1554 or by email at riwessels@wesselssherman.com

EEOC Releases Report Addressing Workplace Harassment

June 2016

Thirty years after sexual harassment was recognized as a form of illegal sex discrimination in Meritor Savings Bank v. Vinson, workplace harassment remains a persistent problem: in fiscal year 2015, approximately one-third of charges of discrimination filed with the EEOC included an allegation of harassment, and likely most instances of harassment are not reported, either internally or to a government agency.  To address this issue, the EEOC released a report on harassment in the workplace, stating the business case for preventing and stopping harassment—including legal costs; employee morale, health, and productivity; turnover; and reputational harm—and provides some recommendations for doing so. 

The report addressed a number of issues relating to harassment prevention and correction, including trainings, policies, leadership and accountability.  It is important to both clearly define prohibited behavior, and create an environment in which employees feel comfortable coming forward to report any harassment before it gets to the point where legal action may be taken.  According to the report, harassment trainings that focus too much on avoiding legal liability have not been effective in preventing and stopping harassment, but suggested new and different approaches to training, such as bystander intervention and general respect and civility trainings, which may prove more successful.  Of course, any training should take into account the specific workforce and workplace, as what may be effective for one employer, may not be for another.

The report goes on to identify environmental risk factors that may lead to harassment.  Of course, every workplace will have at least some of these characteristics, but if a company has several, it might want to focus on minimizing the risk that these situations can create.  The identified risk factors include:

·         Homogenous workforces;

·         Workplaces where some workers do not conform to workplace norms;

·         Cultural and language differences in the workplace;

·         Coarsened social discourse outside the workplace;

·         Workforces with many young workers;

·         Workplaces with “high value” employees;

·         Workplaces with significant power disparities;

·         Workplaces that rely on customer service or client satisfaction;

·         Workplaces where work is monotonous or consists of low-intensity tasks;

·         Isolated workplaces;

·         Workplace cultures that tolerate or encourage alcohol consumption; and

·         Decentralized workplaces.

For assistance in preventing and stopping workplace harassment, including reviewing policies and procedures, conducting trainings, or minimizing risk factors,  contact James B. Sherman at jasherman@wesselssherman.com or by phone at 952-746-1700.

8th Circuit Clarifies Definition of a “Report” Protected under Sarbanes-Oxley Act

June 2016

Employees of publicly traded companies are protected from retaliation for reporting “any conduct which the employee reasonably believes constitutes a violation of” rules or laws regarding fraud against shareholders.  This includes internal reports made to a supervisor or another individual with investigative authority in a company.  Because of this, employers are often afraid to touch an employee who has made a complaint or report.  However, not all reports or complaints qualify for protection; the employee’s belief must be both subjectively reasonable (i.e. the employee sincerely believes the law is being violated) and objectively reasonable beyond what the employee may think.   Recently, the Eighth Circuit Court of Appeals clarified what constitutes a protected, “objectively reasonable” report, to support a claim under Sarbanes-Oxley. The court held that a plaintiff employee must prove that “a reasonable person in the same factual circumstances with the same training and experience would believe the employer violated securities laws.”  Applying this standard to the facts of the case, the court affirmed the dismissal of the employee’s complaint. 

In this particular case, the employee complained that the company had repeatedly overstated its sales revenue projections by several million dollars.  However, the court found this to be a mere drop in the bucket compared to the overall revenues of the defendant company.  The court reasoned that under these circumstances it was not reasonable for the plaintiff—a salesperson and shareholder of the company—to believe that these relatively inconsequential misstatements constituted shareholder fraud.  Because the courts in Minnesota and neighboring states require that employee whistleblowing needs to meet both a subjective and an objective “reasonableness” standard in order to be protected under the Sarbanes-Oxley Act, not every report or allegation of illegal activity will support such law suits.  This is good for employers. However, Minnesota employers must also be concerned with the Minnesota’s Whistleblower Act, which protects all good faith reports of violations, suspected violations, or planned violations of any law. 

Because employees may be protected from retaliation on any number of grounds under federal and state law, and because retaliation claims are among the fastest growing in all areas of employment law, employers should seek experienced legal counsel before disciplining or discharging any employee that has asserted any claims or made allegations against the company.  An ounce of prevention may be worth much more than a pound of proverbial cure.

EEOC, Department of Justice Make Transgender Equality a Priority

June 2016

Discrimination against transgender individuals in their workplaces, as well as in the public, is an issue many companies are currently dealing with.  Especially with the issue of bathroom access, many employers struggle to balance the privacy concerns of cisgender employees, some of whom may be wary about sharing restrooms, with the rights of transgender employees, for whom using a restroom that conforms with their gender identity is an important aspect of their transition.  Although Title VII of the Civil Rights Act of 1964 does not explicitly outlaw discrimination on the basis of gender identity, both the EEOC and the Department of Justice have taken the position that companies and laws that restrict transgender individuals’ access to public restrooms such as North Carolina’s controversial bathroom law, violate the law.  North Carolina and the Department of Justice have both filed federal lawsuits to determine whether the law is discriminatory. 

The EEOC has been actively seeking to protect lesbian, gay, bisexual, and transgender employees under federal anti-discrimination law’s sex discrimination provisions, as part of the its 2013-2016 Strategic Enforcement Plan.  Recent actions include extracting a $140,000 settlement from a Minnesota employer for allegedly complying with a client’s request to remove an employee from the client’s account on the basis of the employee’s gender identity, as well as publishing a new fact sheet reminding employers of its position that it is a form of sex discrimination to deny an employee equal access to a common restroom corresponding to the employee’s gender identity, under Title VII. 

The fact sheet clarifies that a person does not need to undergo any sort of medical procedure in order to be considered a transgender man or a transgender woman.  It also explicitly states that contrary state law, such as North Carolina’s bathroom law, will not be a defense to a discrimination case under Title VII.  The Minnesota Supreme Court has previously held in Goins v. West Group that the Minnesota Human Rights Act—which specifically prohibits discrimination on the basis of “having or being perceived as having a self-image or identity not traditionally associated with one’s biological maleness or femaleness”—does not require or prohibit restroom designation according to self-image of gender.  However, the legal landscape has changed considerably since the Goins decision, and employers wishing to avoid the wrath of the EEOC are well advised to allow employees to use the facilities that correspond with their gender identity.  The EEOC would not find it acceptable for employers to restrict transgender employees to a single-occupancy restroom instead of common restrooms available to other employees, but an employer may certainly provide a single-occupancy restroom for any employee who might choose to use it.

For assistance in dealing with this emerging area of workplace law, contact James B. Sherman at jasherman@wesselssherman.com or by phone at 952-746-1700.

Employers Beware: If You Make Your Employees Sign Noncompetition Agreements You Could Wind Up In Court These Days... As a Defendant in a Government Lawsuit!

June 2016

James B. Sherman, Esq.

Employment agreements that restrict employees from working for a competitor after they leave or are fired, have become increasingly common.  Indeed, these agreements have become so prevalent in today’s workforce that they are coming under fire from an unlikely source - state attorneys general, through lawsuits!  Perhaps this new (and disturbing) trend should not come as such a surprise.  With so many employees being required to sign restrictive covenants as a condition of employment, it is getting harder and harder for them to leave their jobs for another in their chosen field.  Similarly, employers looking to hire are seeing the pool of qualified applicants diminished by the fact that many are saddled with post-employment restrictions from an agreement with their prior employer.  In the past year, states have begun suing employers in court over their alleged unreasonable use/overuse of non-compete agreements.  Illinois became the most recent state to join this trend when Attorney General Lisa Madigan, filed a lawsuit against sandwich maker Jimmy Johns, in Illinois state court on June 8th.  Employers should take notice of these government lawsuits because the legal theories relied on in Jimmy Johns’ and other cases recently filed around the country, could just as easily apply in Minnesota, Wisconsin and most other states!

The case against Jimmy Johns alleges that the company is violating Illinois state law by requiring unskilled sandwich makers and delivery drivers to sign a non-compete agreement banning them from other, similar jobs during and for a specified period following their employment.  The government’s lawsuit asserts that Jimmy Johns has no legitimate business interest that would justify such restrictions on employees in these sorts of jobs. However, what is unique about this case is that Attorney General Madigan is alleging that using a non-compete agreement for employees who essentially pose no threat to the employer if they should leave and go to work for a competitor, constitutes a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act. This raises the stakes, since this law could allow for the recovery of damages as well as punitive damages and attorney fees against the defendant.  The complaint asserts that unless an employer has a legitimate, protectable business interest that cannot be secured by means other than a narrowly drafted noncompetition agreement applicable to each employee who is required to sign one, such an agreement harms the employees as well as the general public by decreasing employee mobility, stagnating wages and diminishing the pool of available workers.

Employers outside Illinois should not feel they are immune to similar lawsuits.  Just this month, another employer defendant, Employment 360, which is owned by Lexis Nexis Legal & Professional, settled a lawsuit brought last year by New York’s Attorney General. The suit challenged 360’s use of non-compete agreements for its editorial employees, on grounds that the restrictive covenants were too broad and therefore, constituted an unlawful restraint of trade. The settlement effectively calls for 360 to notify its former employees that their non-compete agreements are no longer in effect and they are free to work wherever they please.

Minnesota and other nearby states (such as Wisconsin) have their own Deceptive Trade Practices Acts similar to that of Illinois, and the courts in these and every state recognize that unreasonable restraints of trade are illegal. Therefore, it is likely only a matter of time before Minnesota and other nearby states begin to see unsuspecting employers dragged into court in lawsuits by the attorneys general in their state, over their use of non-compete agreements if alleged to be unreasonable.   

So what are Minnesota and employers elsewhere to do in light of this growing assault on noncompetition agreements? First, don’t overreact by starting to shred all non-compete agreements.  Used properly, noncompetition and other restrictive covenants can save an employer’s business from unfair competition, poaching by competitors and loss of highly confidential information and trade secrets.  However, simply assuming that your agreements will pass muster if challenged in court, ignores the growing hostility toward restrictive employment agreements and the many new legal theories being used to challenge them.  Not only must the agreement itself be narrowly drafted to secure only clearly protectable business interests, but it must also be required only of employees who would pose a clear danger to those interests if they were to go and work for a competitor.  Therefore, the sensible approach is to have all restrictive agreements evaluated by an experienced attorney who is knowledgeable in this highly specialized area of the law.  Only then can an employer determine whether to: (1) keep its existing agreements unchanged; (2) modify existing agreements and/or pare down which employees are required to sign them; or (3) shred unreasonable agreements before being ordered to do so by a court in a lawsuit brought by the government.

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James B. Sherman has nearly 30 years of experience drafting non-compete and other restrictive employment agreements, as well as litigating their enforceability in state and federal courts in Minnesota, Wisconsin, Illinois and numerous other states.  He is licensed to practice in the state and federal courts of Minnesota, Wisconsin and Illinois and he has represented employers in many other states by special permission or with the assistance of local counsel in those states in which he is not licensed.  For questions about this article, or to discuss how Mr. Sherman can assist your company in evaluating the enforceability and use of its noncompetition, non-solicitation, or confidentiality agreements, as well as related restrictive covenants, please contact his legal assistant: Tyler Birschbach, by email, at tybirschbach@wesselssherman.com or by calling (952) 746-1700 .

Legislative Update: Wisconsin Organ Donor Leave

June 2016
By Alan E. Seneczko, Esq.

On July 1, 2016 a new form of leave will become a right under Wisconsin law: Bone Marrow and Organ Donation. Under the new law, enacted without much fanfare on April 1, 2016, employees have the right to up to six weeks of unpaid leave "for the purpose of serving as a bone marrow or organ donor if the employee provides his/her employer with written verification." Although the law is not formally a part of the Wisconsin Family Leave Act, the rights and remedies under the law are essentially the same, including eligibility requirements.

For more information, see 2015 Wis. Act 345 or contact Attorney Alan E. Seneczko at (262) 560-9696, or alseneczko@wesselssherman.com.