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Employment relationship

State-specific laws
What state-specific laws govern the employment relationship?

The Minnesota Notice of Termination Law, often referred to as the “whistleblower” law, prohibits employers from taking adverse personnel action against an employee who refuses to follow an order that the employee objectively believes violates state or federal law (Minn. Stat. § 181.932).

Minnesota also has a public policy common law tort exception to the doctrine of employment at will (Phipps v. Clark Oil & Refining Corp., 408 N.W.2d 569 (Minn. 1987)). This public policy exception prohibits an employer from terminating an employee who refuses to take an action that the employee believes in good faith to be illegal.

Who do these cover, including categories of workers?

The Notice of Termination Law covers all public and private employers who have one or more employees.

Misclassification
Are there state-specific rules regarding employee/contractor misclassification?

Minnesota courts typically utilize a modified version of the common law test from the Restatement of Agency to determine an individual’s classification as an employee or independent contractor. The right to control the means and manner of performance is a critical factor in this determination (Guhlke v. Roberts Truck Lines, 128 N.W.2d 324 (Minn. 1964)).

Contracts
Must an employment contract be in writing?

No (Skagerberg v. Blandin Paper Co., 266 N.W.2d 872 (Minn. 1936)).

Are any terms implied into employment contracts?

Minnesota has rejected the idea that a covenant of good faith and fair dealing is read into all employment contracts as a matter of law (Hunt v. IBM Mid America Employees Federal Credit Union, 384 N.W.2d 853 (Minn. 1986)). It is unclear whether Minnesota would recognize a cause of action for violation of a covenant of good faith and fair dealing (Nordling v. Northern States Power Co., 478 N.W.2d 498 (Minn. 1991)).

Are mandatory arbitration agreements enforceable?

Yes. The Minnesota Supreme Court has held that gender and age discrimination claims arising under Minnesota law may be subject to compulsory arbitration under the terms of an arbitration agreement (Johnson v. Piper Jaffray, Inc., 530 N.W.2d 790 (Minn. 1995)). However, the court has also held that the Minnesota Uniform Arbitration Act does not supersede the Minnesota Human Rights Act’s ban on agreements that prospectively waive the right to a judicial forum (Correll v. Distinctive Dental Services, PA, 607 N.W.2d 440 (Minn. 2000)). Thus, an otherwise valid arbitration agreement regarding Minnesota Human Rights Act claims may be enforced under the Federal Arbitration Act, but not under the Minnesota Uniform Arbitration Act.

Employers are also advised to be cautious about the use of mandatory arbitration agreements given the recent pronouncements by the National Labor Relations Board that such agreements may violate the National Labor Relations Act.

How can employers make changes to existing employment agreements?

There is no specific statute mandating requirements to modify an existing employment agreement. General contract rules requiring a specific and definite offer, communicated and accepted by the other party, are sufficient with consideration (Pine River State Bank v. Mettille, 333 N.W.2d 622 (Minn. 1983); Lee v. Fresinius Medical Care, Inc., 741 N.W. 117 (Minn. 2007)).