KNOWINGLY FRAUDULENT REPRESENTATION

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1 1 A divided Minnesota Supreme Court has reaffirmed the presumption of the employee-employer relationship in Minnesota being at-will. Dukowitz v. Hannon Security Services, 841 N.W.2d 147 (Minn. 2014). This means that either the employee or the employer can terminate the relationship with or without cause and with or without notice. The Court further held it will continue to make only narrow exceptions to the at-will rule, refusing to make such an exception for an employment termination following an employee s application for unemployment benefits. 2 Schmitz v. U.S. Steel An employee claiming workers compensation retaliation under Minnesota s workers compensation retaliation statute, Minn. Stat , has a right to a jury trial, the Minnesota Supreme Court has held. Schmitz v. U.S. Steel, No. 852 N.W.2d 669 (Minn. 2014). The Court also held that an employee may sue his employer where his supervisor threatened to discharge him if he filed for workers compensation benefits, even though no adverse action was ever taken. 3 1

2 Schmitz v. U.S. Steel The Court also held that employer liability for the supervisor s threat cannot be avoided by providing employees with a complaint reporting system in which the employer would have the opportunity to investigate complaints and take appropriate corrective action. 4 In Yvette Ford v. Minneapolis Public Schools, 2014 Minn. App. LEXIS 107 (Minn. Ct. App. Dec. 15, 2014), the Minnesota Court of Appeals reversed itself and held that whistleblower claims under Minnesota s Whistleblower Act, Minn. Stat , are not subject to the two year statute of limitations in Minn. Stat (1), but instead are subject to the six year statute of limitations under Minn. Stat , subd. 1(2). 5 This is a dramatic change in how whistleblower claims are viewed for timeliness. For almost twenty years, applying the Minnesota Court of Appeals holding from Larson v. New Richland Center (Minn. Ct. App. 1995), employers and employees alike have understood that all whistleblower claims must be brought by an employee within two years of the alleged adverse action (which is often, for example, an employment termination or some other form of employee discipline). 6 2

3 Relying on the Minnesota Supreme Court s decision in Sipe v. MTS Mfg., Inc., (Minn. Sup. Ct. 2013), the Court of Appeals held that because Ms. Ford s whistleblower claim was based on of Minnesota s statutes, the time period for suit was six years because a liability based on a statute carries a six year statute of limitations instead of two years. (Ms. Ford s claim was therefore timely under the six year statute of limitations.) 7 In Johnson v. St. Paul Plumbing, 2014 U.S. Dist. LEXIS (D. Minn. Dec. 29, 2014), the Federal District Court applied the obstruction prohibition in Minn. Stat. sec. 363A.14, and held that, similar to other aiding and abetting, an individual who is a sole shareholder of a corporation cannot be held liable for obstructing compliance with the Minnesota Human Rights Act, when the person allegedly engaging in obstruction is the sole shareholder of the defendant employer. 8 In Davies v. Waterstone Capital Management, N.W.2d, 2014 Minn. App. LEXIS 103 (Minn. Ct. App. Dec. 1, 2014), the Minnesota Court of Appeals held that a statutory limitations period that is shortened through an arbitration agreement can be enforced. 9 3

4 The Court held that the appropriateness of the shortened period affected the enforceability of the agreement, including the arbitration clause, and therefore was subject to Court interpretation. In determining if the shortened time period was enforceable, the Court held that if there is sufficient time to investigate a potential claim under a shortened time period, then the statutorily shortened time period is both reasonable and enforceable. In this particular case, a statute of limitations time period of 90 days was therefore enforceable. 10 KNOWINGLY FRAUDULENT REPRESENTATION In Ewald v. Royal Norwegian Embassy, 2 F. Supp. 3d 1101 (D. Minn. Mar. 6, 2014), the Court held that for a fraudulent inducement claim under Minn. Stat. sec to succeed for an employee, she must show that the employer knowingly made a false statement of fact. The Court also held that because the plaintiff had an employment agreement with the employer, any claims by her of promissory estoppel were precluded. 11 THE RESULTS OF TRIAL On December 31, 2014, the Court issued its Findings of Fact, Conclusions of Law, and Order for Judgment after trial. Ewald v. Royal Norwegian Embassy, F. Supp. 3d, 2014 U.S. Dist. LEXIS (D. Minn. Dec. 31, 2014). On the central cause of action in the case, equal pay, the Court held that if there was a disparity in pay between a woman and man in similar positions, there was strict liability for the employer under the federal Equal Pay Act ( EPA ) U.S. Dist. LEXIS , at *167, *

5 THE RESULTS OF TRIAL Regardless of an employer s intent, it is automatically liable for a pay disparity, unless one of the affirmative defenses to an EPA claim applies. Id. The Court also found that it is the day-to-day activities of the plaintiff and her alleged comparator that are used to determine if there is substantial equivalency between the two jobs. 13 THE RESULTS OF TRIAL The fact that the former Vice President of the United States, Walter Mondale, found the pay difference between Ewald and her alleged comparator to be source of concern was strong evidence that none of the typical defenses of substantially dissimilar duties, marketplace value, or salary negotiations held sway with the Court. 14 THE RESULTS OF TRIAL The Court awarded double economic damages under the Minnesota Human Rights Act, finding that such an award of double damages encouraged the making of meritorious claims. In awarding $100,000 in garden variety emotional distress damages, and citing recent state court cases, the Court declined to multiply the emotional distress award. 15 5

6 THE RESULTS OF TRIAL Reiterating an often overlooked point, the Court awarded prejudgment interest under the EPA, noting that interest would accrue from the date the back wages were owed. An award of attorney s fees to Ms. Ewald is still pending. 16 In Integrity Staffing Solutions, Inc. v. Busk, U.S., 135 S. Ct. 513 (Dec. 9, 2014), the Supreme Court held that time spent going through a security screen check before starting work and after finishing work was noncompensable under the FLSA as amended under the Portal-to-Portal Act. Stating that compensable time is work time spent on indispensable activities needed to perform productive work, the Court found that security screenings did not meet that test. 17 In Purple Communications, Inc. v. Communications Workers of America, 361 NLRB No. 126 (Dec. 11, 2014). The NLRB held that employees are presumptively entitled to use company to communicate about union issues on nonworking time. However, if solicitations for other nonwork matters are allowed during working time on the system, then the employer may not discriminate against union activities by prohibiting them during work time. 18 6

7 Familial Status Added as a Protected Class Pregnancy Accommodations Pregnancy and Parenting Leave Sick and Safety Leave Nursing Mothers Rooms Wage Disclosure Protections Equal Pay Certificate Unemployment Eligibility Related to Victims of Domestic Abuse, Sexual Assault or Stalking 19 Familial Status Added as a Protected Class o Effective date: May 12, o Familial status is defined as the condition of one or more minors being domiciled with 1) their parent or parents or the minor s legal guardian or 2) the designee of the parent or parents or guardian. o Familial Status also covers any person who is pregnant or is in the process of securing legal custody of an individual who has not attained the age of majority. 20 Implications for employers o More people are covered by the MHRA. o Unlawful to discriminate against an individual having a minor child living at home. o Unlawful to discriminate against an individual for being pregnant. o Be careful when making assumptions about individuals with caregiver responsibilities. Don t assume caregivers are unable to perform their job duties. o Minnesota employers should add familial status to the list of protected classifications in employment handbooks. o State contractors should review affirmative action plans. 21 7

8 What is familial status discrimination? o Failure to provide work schedule accommodation? o Failure to provide accommodation for ordinary performance expectations? o Imposing higher employee costs for health insurance? o Failure to provide accommodation such as additional leave based on an employee s parentage of minor children or pregnancy (other than current legal requirements)? o Failure to provide on-site day care? 22 Pregnancy Accommodations Who does the law cover? o Covered employees include -- MN Employers with 21 or more employees at one site. o Covered employees include persons who have performed services for the employer for 1) at least 12 months prior to the request; and 2) for an average number of hour per week equal to one half the full time equivalent position in the employee s job classification as defined by the employer s personnel policies or practices or collective bargaining agreement, during the 12 month period immediately prior to the request. 23 Pregnancy Accommodations Continued What Does the Law Say: o Employers covered by this statute need to provide reasonable accommodations to an employee for health conditions related to pregnancy or childbirth if she so requests, with the advice of her licensed heath care provider or certified doula, unless the employer demonstrates that the accommodation would impose an undue hardship on the operation of the employer s business. 24 8

9 Pregnancy Accommodations Continued What Does the Law Say: o Employers cannot require employees to obtain advice from a heath care provider (or doula) for the following accommodations: More frequent bathroom, eating, and drinking breaks; Seating; Limits on lifting over 20 pounds. o Employers also cannot claim undue hardship for theses accommodations. o Employers are required to engage in the interactive process with respect to other accommodation requests. 25 Pregnancy Accommodations Continued What Does the Law Say? o An employer cannot require an employee to take a leave of absence or accept any accommodation. o An employer cannot retaliate against an employee for requesting or obtaining a pregnancy related accommodation. o New law does not require an employer to create a new position, discharge any employee, transfer any other employee, or promote an employee as an accommodation. 26 Pregnancy Accommodations Continued Implications for Employers o Another law to keep in mind. ADA, MHRA, and now Minn. Stat o Section differs from the ADA. It does not require a disability. Health care certification cannot be requested for certain accommodations. No undue hardship defense for certain accommodations. o Review current disability accommodation policies. 27 9

10 Pregnancy and Parenting Leave New definition of employee o Previous definition required the person to perform services for at least 12 consecutive months immediately preceding the request for leave. o New definition removes the words consecutive and immediately. Increases the amount of unpaid leave employers are required to provide in conjunction with the birth or adoption of a child from 6 weeks to 12 weeks 28 Pregnancy and Parenting Leave Continued Parenting leave taken in connection with the birth or adoption of a child can start within 12 months after the birth or adoption. (Previously was 6 weeks). Paid parental, sick or vacation leave, and FMLA leave can run concurrently. Female employees can take unpaid parenting leave for prenatal care or incapacity due to pregnancy, childbirth or related conditions. Employers can require reasonable notice of the date of the leave and estimated length of the leave. 29 Pregnancy and Parenting Leave Continued Implications for Employers: o Review current FMLA and pregnancy-related leave policies. o Employers may require employees to give reasonable notice of the date leave is expected to commence and the estimated duration. o Benefits must be continued during pregnancy and parental leave

11 Sick and Safety Leave What Does the Law Say? o Previous law allows an employee to use personal sick leave benefits for absences due to an illness or injury to the employee s child, adult child,spouse, sibling, parent, grandparent, or stepparent for reasonable periods of time as the employee s attendance may be necessary on the same terms that the employee is able to use sick leave benefits for the employee s own illness or injury. o New law adds parent in laws and grandchild, which includes step-grandchild and a biological, adopted, and foster grandchild. 31 Sick and Safety Leave What Does the Law Say? o New law allows an employee to use sick leave for safety leave leave for the purpose of providing or receiving assistance because of sexual assault, domestic abuse or stalking. Safety leave can be used by the employee for him or herself or for a covered relative. o No retaliation based on employee s use of or request to use sick or safety leave. o Employers can limit the use of sick or safety leave to no less than 160 hours in any 12 month period. 32 Wage Disclosure Protection What Does the Law Say? Employers may not o Require nondisclosure by an employee of his or her wages as a condition of employment. o Require an employee sign a waiver which purports to deny an employee the right to disclose the employee s wages. o Take any adverse action against an employee for disclosing the employee s own wages or discussing another employee s wages which have been disclosed voluntarily. o Retaliate against an employee for asserting these rights

12 Wage Disclosure Protection What Does the Law Say? o Employers with employee handbooks are required to include a notice of employee rights and remedies under the law in the handbook. What are the Remedies? o Creates a new civil cause of action for certain violations of this statute for which a court may order reinstatement, back pay, restoration of lost service credit, and the expungement of any related adverse records, award of costs including reasonable attorney s fees. 34 Wage Disclosure Protection Implications Potential for new litigation claims including retaliation Train Managers to understand employee should not be disciplined for discussing wages Update employee handbooks 35 Nursing Mothers Old law required an employer to make reasonable efforts to provide a room or other location, in close proximity to the work area, other than a toilet stall, where the employee can express her breast milk. The Amended law requires reasonable efforts to provide a room or other location that is not a bathroom and is shielded from view and free from intrusion from coworkers and the public and includes access to an electrical outlet. No retaliation

13 Equal Pay Certificate the state cannot enter into a contract for goods or services in excess of $500,000 with a business that has 40 or more full time employees in Minnesota or a state where the business has its primary place of business unless the business has an equal pay certificate. Unemployment Eligibility Related to Victims of Domestic Abuse, Sexual Assault, or Stalking expands the existing domestic abuse quit and misconduct exceptions related to eligibility for unemployment benefits. 37 MN allows individuals suffering form certain illnesses to use medical cannabis Implications for Employers Employers must comply with the workplace provisions of the new law unless doing so would cause the employer to violate or lose monetary or license benefits under federal law or regulations. No discrimination in hiring, firing, or other employment decisions if employee or candidate is a patient who registered in the new registry for lawful use of medical cannabis. 38 Employee testing positive for cannabis on a drug test may explain the result by verifying enrollment in patient registry. No discrimination against employee who tests positive for cannabis unless employee used, possessed, or was impaired by medical cannabis at the employer s premises or during work hours. Industry specific exemptions to this law

14 MN raised it s minimum wage o For Large employers ($500,000 + annual gross sales) minimum wage increased to $8.00 ($6.50 for workers under 18) on 8/1/14. It will increase to $9.00 on 8/1/15 ($7.25 for workers under 18). On 8/1/16 minimum wage will increase to $9.50 ($7.75 to workers under 18). o For Small employers (less than $500,000) minimum wage increased to $6.50 on 8/1/14. It will increase to $7.25 on 8/1/15. It will increase to $7.75 on 8/1/16. o On 1/1/18, rates for all employers are subject to indexing for inflation. 40 Jury Trials Under MHRA o Until the last legislative session, a Plaintiff bringing a state law claim under MHRA received a bench trial as opposed to a jury trial. Amendments to the MHRA now entitle the Plaintiff to a jury trial. Changes to Sales Representative Agreement Statute o The law adds statutory language governing sales representative agreements that bar manufacturers, wholesalers, assemblers and importers from adding to their agreements that the laws of another state apply to their contract. o It also prohibits agreements from stating that state law relating to the termination of these agreements is inapplicable. Under the law, those that do will be void