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State snapshot

Key considerations
Which issues would you most highlight to someone new to your state?

While Minnesota’s anti-discrimination laws are similar in many respects to federal laws, Minnesota has some broader protections. For example, the Minnesota Human Rights Act specifically prohibits discrimination on the basis of sexual orientation, marital status, and public assistance. Additionally, an individual may be held liable for aiding and abetting discrimination under the act (Minn. Stat. § 363A.02, et seq.).

What do you consider unique to those doing business in your state?

Minnesota has some unique leave laws requiring employers to provide leave for the following reasons:

  • sick or injured child care leave;
  • school conference and activities leave;
  • break time for nursing mothers;
  • harassment or domestic abuse issues; and
  • various other unique leave issues.

Minnesota has one of the most restrictive drug and alcohol testing statutes in the nation. Employers must have a compliant drug and alcohol testing policy, and any testing must be done in strict compliance with the statute (Minn. Stat. § 181.950-957). If an employee tests positive in a first test, the employer must give the employee the opportunity to complete treatment and cannot terminate the employee for a first positive result if the employee successfully completes treatment.

Is there any general advice you would give in the labor/employment area?

Because Minnesota has many unique laws relating to protected class status, drug and alcohol testing, and leave laws, among others, multi-state employers should not assume that their handbooks and policies in effect in other states are necessarily lawful in Minnesota.

Emerging issues
What are the emerging trends in employment law in your state, including the interplay with other areas of law, such as firearms legislation, legalization of marijuana and privacy?

Minnesota now has a statute that makes it lawful for a healthcare provider to prescribe medical marijuana as treatment for certain illnesses. The effect of this law on the workplace remains unclear (Minn. Stat. § 152.22-.37).

Proposals for reform
Are there any noteworthy proposals for reform in your state?

Recently, the cities of Minneapolis and Saint Paul have explored the concept of mandatory paid time off for employees, as well as restrictions on scheduling employees for work. These issues are likely to remain at the forefront of discussion in the coming year. 

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)).

Hiring

Advertising
What are the requirements relating to advertising open positions?

There is no law that specifically governs the advertising of open positions in Minnesota. However, employers should be careful not to use any language that could be interpreted as discriminatory under state or federal law.

Background checks
What can employers do with regard to background checks and inquiries?

(a) Criminal records and arrests

Minnesota has a “ban the box” law which prohibits all employers from inquiring about, requiring disclosure of, or considering an applicant’s criminal record or criminal history during the initial stages of the hiring process. However, once an employer selects an applicant for an interview or makes a conditional offer of employment, the employer may then inquire about the applicant’s criminal history (Minn. Stat. § 364.021).

State law also mandates that employers of certain employee categories conduct criminal background checks before hiring applicants. These include healthcare workers, public school employees, apartment managers, and employees who have direct contact with persons served by state-licensed programs (Minn. Stat. §§ 144.057, 123B.03, 299C.66 to .71, 245C.03).

(b) Medical history

Covered entities, including employers, labor organizations, and employment agencies, cannot conduct a medical exam or ask a job applicant questions about an employee’s physical or mental impairments or health before making a job offer. Any post-offer inquiry or exam must screen for essential job-related capabilities only (Minn. Stat. § 363A.20, subd. 8).

(c) Drug screening

Minnesota’s Drug and Alcohol Testing in the Workplace Act is one of the most restrictive drug and alcohol testing statutes in the United States. Employers must have a policy that strictly complies with the act, and any testing must carefully follow the process outlined in the act or else the test will be invalid and the employer may be liable for damages to an employee harmed by an unlawful test. An employee who has a first positive test must be given the chance to complete treatment. In addition, an employee may not be fired for a first positive test unless the employee refuses to seek treatment or fails to successfully complete a treatment program. Testing may be performed in the following circumstances:

  • pre-employment testing for applicants;
  • with reasonable suspicion;
  • treatment program testing;
  • routine physical exam testing; and
  • random testing for safety-sensitive positions (Minn. Stat. § 181.950-.957).

(d) Credit checks

Minnesota’s Access to Consumer Reports Act (Minn. Stat. § 13C.001 – 13C.04) regulates an employer’s use of credit reports, similar to the federal Fair Credit Reporting Act. Minnesota requires that a prospective employer clearly and accurately notify applicants in writing if they will be the subject of a consumer credit report prepared by a consumer reporting agency. The disclosure must include a box that the applicant can check to receive a copy of the report. Additional notification is required if the report is used to make an adverse decision, such as refusing to hire the applicant. An employer is required to pay for the cost of any credit check on a current or prospective employee.

(e) Immigration status

As of the end of 2015, there is no Minnesota law that restricts an employer’s ability to inquire about the immigration status of a potential employee.

Minnesota requires that any contractor or subcontractor of the state which has been awarded a contract in excess of $50,000 must use the E-Verify federal system to verify employee work eligibility (Minn. Stat. § 16C.075).

(f) Social media

As of the end of 2015, there is no Minnesota law that specifically restricts an employer’s ability to view potential employees’ social media information. However, Minnesota does have a Lawful Consumable Products Act, which generally prohibits an employer from taking any adverse action against an applicant or an employee for the use of lawful consumable products (e.g., alcohol or tobacco) while off the employer’s premises during non-working hours. Thus, employers should be cautious about taking any adverse employment action based on an individual’s lawful use of consumable products which may have been viewed on social media (Minn. Stat. § 181.938).

Employers are also cautioned not to restrict employee use of social media in such a way as to violate the National Labor Relations Act.

(g) Other

Not applicable.

Wage and hour

Pay
What are the main sources of wage and hour laws in your state?

The Minnesota Fair Labor Standards Act (Minn. Stat. § 177.21 to 177.35) sets forth minimum wage and overtime payment requirements, exemptions from the act, and required rest and meal breaks under Minnesota law.

What is the minimum hourly wage?

As of the end of 2015, the minimum wage in Minnesota is $9.00 per hour. The minimum wage will rise to $9.50 per hour on August 1 2016. The minimum wage in subsequent years will be set by the commissioner of labor according to a formula set forth in the statute, and a new rate will take effect on January 1 2018 (Minn. Stat. § 177.24, subd. 1(b)).

What are the rules applicable to final pay and deductions from wages?

An employer must pay a discharged employee all unpaid wages due within 24 hours of an employee’s demand. An employer that fails to pay within this 24-hour period may be liable for a penalty of up to 15 days of additional wages (Minn. Stat. § 181.13).

An employer must pay an employee who resigns on the first regularly scheduled payday after the final day of employment (Minn. Stat. § 181.14).

An employer generally may not make any deductions from an employee’s wages except as authorized by statute for items such as required tax deductions (Minn. Stat. § 177.24, subd. 4). However, an employer may make deductions for items such as union dues, insurance premiums, group annuities, contributions to a credit union, charity, political action committee, or an employee stock purchase or savings plan, so long as the employee provides a written agreement allowing for the deductions (Minn. Stat. § 181.06, subd. 2).

An employer may generally deduct, without any agreement, the cost of certain uniform and equipment expenses, up to $50, with certain additional restrictions for motor vehicle dealers (Minn. Stat. § 177.24, subd. 4).

An employer must withhold amounts ordered for child support and spousal maintenance, as ordered by law (Minn. Stat. §§ 518A.73, 518.552, 518.58, 518.581).

Minnesota generally prohibits an employer from deducting the value of lost, stolen or damaged property, or any debt owed to the employer, from an employee’s wages unless the employee authorizes the deduction in writing after the loss has occurred or the debt has arisen (Minn. Stat. §181.79).

Hours and overtime
What are the requirements for meal and rest breaks?

Minnesota law requires that an employer allow each employee a break to use the restroom once every four hours (Minn. Stat. § 177.253).

An employer must allow each employee a meal break for every eight consecutive hours worked, but the break need not be paid (Minn. Stat. § 177.254). The employee must be completely relieved of duties for the purpose of eating a meal; 30 minutes is the amount of time that is typically expected, unless the employer can demonstrate that special conditions justify a shorter time period (Minnesota Rule 5200.0120; Frank v. Gold’n Plump Poultry, Inc., 2007 WL 2780504, *9 (D. Minn. 2007)).

What are the maximum hour rules?

Minnesota has no maximum hour work rules, except for minors. 

How should overtime be calculated?

In Minnesota, an employee must receive overtime at one-and-a-half times the employee’s regular rate of pay for all hours worked in excess of 48 in a week (Minn. Stat. §177.25, subd. 1). Because the Federal Fair Labor Standards Act requires overtime for all hours worked in excess of 40 hours in a working week, the 48-hour threshold for overtime under the Minnesota Fair Labor Standards Act applies only to those smaller employees not covered by the act.

What exemptions are there from overtime?

Minnesota exempts executive, administrative, professional and sales employees, like the Federal Fair Labor Standards Act (Minn. Stat. § 177.23, subd. 7(6)). Because Minnesota has not adopted the U.S. Department of Labor’s 2004 regulations, the Minnesota regulations implementing white collar exemptions are similar to the pre-2004 Fair Labor Standards Act regulations (Minn. R. §§ 5200.0190 to 5200.0210). Minnesota has also adopted many of the same miscellaneous exemptions as the Fair Labor Standards Act (Minn. Stat. § 177.23, subd. 7).

Record keeping
What payroll and payment records must be maintained?

At the end of each pay period, an employer must provide a statement of earnings for that pay period. The statement must include:

  • the employee’s name;
  • the rate of pay;
  • the total number of hours worked, unless exempt;
  • the total amount of gross pay earned during the period;
  • a list of all deductions from pay;
  • the total amount of net pay earned during the period;
  • the date the payroll period ends; and
  • the legal name of the employer and the operating name, if different from the legal name (Minn. Stat. § 181.032).

Pursuant to Minn. Stat. § 177.30, Minnesota also requires that an employer keep, for at least three years, the following for each employee:

  • name, address, social security number, and occupation;
  • rate of pay, all deductions, and amounts paid for each pay period; and
  • start and end hours worked each day and working week.

Additional requirements are imposed on employers that perform work on a public works project funded at least in part by state funds (Minn. Stat. § 177.30(a)(4)-(5)).

Discrimination, harassment and family leave

What is the state law in relation to:
Protected categories

(a) Age?

Yes. The Minnesota Human Rights Act prohibits discrimination on the basis of age. Unlike federal discrimination law, an employee does not have to be at least 40 years old to be in a protected class (Minn. Stat. §§ 363A.03, subd.2, 363A.08, subd. 2). It is also important to note that the act applies to all employers who have at least one employee, so coverage is broader than under federal anti-discrimination laws (Minn. Stat. § 363A.03, subd. 16).

(b) Race?

Yes. The Minnesota Human Rights Act prohibits discrimination on the basis of race, color creed, and national origin (Minn. Stat. § 363A.08, subd. 2).

(c) Disability?

Yes. The Minnesota Human Rights Act prohibits discrimination on the basis of disability (Minn. Stat. § 363A.08, subd. 2). A “disability” is defined as a physical, sensory, or mental impairment that materially limits one or more major life activities, one who has a record of such an impairment, or one who is regarded as having such an impairment (Minn. Stat. § 363A.03, subd. 12).

(d) Gender?

Yes. The Minnesota Human Rights Act prohibits discrimination on the basis of sex (Minn. Stat. § 363A.08, subd.2). 

(e) Sexual orientation?

Yes. The Minnesota Human Rights Act prohibits discrimination on the basis of sexual orientation (Minn. Stat. § 363A.08, subd. 2).

(f) Religion?

Yes. The Minnesota Human Rights Act prohibits discrimination on the basis of religion (Minn. Stat. § 363A.08, subd. 2).

(g) Medical?

Yes, similar to disability.

(h) Other?

The Minnesota Human Rights Act also prohibits discrimination on the basis of familial status, marital status, and status with regard to public assistance (Minn. Stat. § 363A.08, subd. 2).

Harassment
What is the state law in relation to harassment?

Sexual harassment is a form of sex discrimination, and is prohibited by the Minnesota Human Rights Act (Minn. Stat. § 363A.03, subd. 13). Because the definition of “sexual harassment” under the act is consistent with how sexual harassment is defined under federal law, state courts generally look to federal law to decide claims of sexual harassment under the act (Minn. Stat. § 363A.03, subd. 43; 29 C.F.R. Part 1604.11(a)). 

Family and medical leave
What is the state law in relation to family and medical leave?

Minnesota’s Parenting Leave Law applies to employers with at least 21 employees. An employee is entitled to 12 weeks of unpaid leave for the birth or adoption of a child, or to a female employee for prenatal care, or incapacity due to pregnancy, childbirth or related health conditions. An employer must continue to make insurance coverage available to the employee while the employee is on leave (Minn. Stat. § 181.941).

Minnesota’s Sick or Injured Child Care Leave Law also applies to employers with at least 21 employees. This law allows an employee to use any personal sick leave benefits available to the employee for use in caring for a sick or injured child, adult child, spouse, sibling, parent, parent in-law, grandchild, grandparent, or stepparent, on the same terms that the employee is able to use sick leave benefits for the employee’s own illness or injury (Minn. Stat. § 181.9413(a)). This applies only to sick leave benefits payable from an employer’s general assets, but does not apply to short-term or long-term disability benefits (Minn. Stat. 181.9413(a), (d)).

An employee may also take personal sick leave for “safety leave,” which is leave for the purpose of providing or receiving assistance because of sexual assault, domestic abuse, or stalking. Safety leave may be used for the assistance of the employee, or for assistance to the relatives described above (Minn. Stat. § 181.9413(b)). Additionally, an employer may limit the use of sick leave benefits for safety leave or for care of any relatives (other than a minor child) to no less than 160 hours in a 12-month period (Minn. Stat. § 181.9413(c)).

Privacy in the workplace

Privacy and monitoring
What are employees’ rights with regard to privacy and monitoring?

Generally, employers have the right to monitor employees at work with respect to usage of computers, email, internet, phones and work spaces, so long as appropriate notices of consent are issued to employees and the employer has a clear monitoring policy. Employers should be aware that email and telephone monitoring of employees is subject to the Minnesota Privacy of Communications Act (Minn. Stat. §§ 626A.01-.42).

Video surveillance without audio is permitted, so long as the surveillance does not occur in areas where an employee might be undressed (Minn. Stat. § 609.746).

Minnesota courts recognize three of the four common law torts for invasion of privacy:

  • intrusion on seclusion;
  • appropriation of name or likeness; and
  • public disclosure of private facts (Lake v. Wal-Mart Stores, Inc., 582 N.W.2d 231 (Minn. 1998)).

Are there state rules protecting social media passwords in the employment context and/or on employer monitoring of employee social media accounts?

As of the end of 2015, no Minnesota law restricts an employer’s ability to monitor social media accounts for an applicant or employee. However, employers should be mindful not to restrict social media use by employees in such a way as to violate employees’ Section 7 rights under the National Labor Relations Act.

Bring your own device
What is the latest position in relation to bring your own device?

Employees of private employers have limited privacy rights at work. Employers should be aware that the National Labor Relations Act restricts an employer’s ability to engage in surveillance of any employee’s union or other protected concerted activities.

Off-duty
To what extent can employers regulate off-duty conduct?

Minnesota’s Lawful Consumable Products Act generally prohibits an employer from taking any adverse action against an applicant or employee because of the employee’s use of lawful consumable products (e.g., alcohol and tobacco) while off the employer’s premises during non-working hours (Minn. Stat. § 181.938, subd. 2). There are certain exceptions to this prohibition if a restriction on the use of a lawful product during non-working hours relates to a bona fide occupational requirement, or is necessary to avoid the appearance of a conflict of interests between the employee’s job responsibilities and the employer (Minn. Stat. § 181.938, subd. 3).

Gun rights
Are there state rules protecting gun rights in the employment context?

Employers may generally prohibit employees from carrying firearms while in any building or structure owned, leased, controlled or operated by the employer, so long as the appropriate notice and signage is posted. However, an employer cannot ban firearms from any parking facility or area (Minn. Stat. § 624.714, subd. 17).

Trade secrets and restrictive covenants

Intellectual Property
Who owns IP rights created by employees during the course of their employment?

In the absence of an enforceable assignment of inventions agreement, the employee owns the IP rights of any intellectual property that he or she creates or invents, even while at work. An employer that wants to secure enforceable rights to intellectual property created or invented by its employees should enter into an assignment of inventions agreement with its employees. Additionally, Minnesota has adopted its own version of the Uniform Trade Secrets Act, and an employer may take action against any employee who misappropriates the employer’s trade secrets (Minn. Stat. §§ 325A.01-.08).

Restrictive covenants
What types of restrictive covenants are recognized and enforceable?

Restrictive covenants are legal in Minnesota, even though they are generally looked upon with disfavor and are carefully scrutinized by the courts. Restrictive covenants are lawful if the restraint is necessary for the protection of the business or good will of the employer, so long as the restraint is no greater than reasonably necessary to protect the employer’s business. In determining the reasonableness of a restraint, the courts will examine the nature and character of the employment relationship, the time restriction, and the geographic restriction (Bennett v. Storz Broadcasting Co., 134 N.W.2d 892, 899 (Minn. 1965)).

Additionally, a restrictive covenant must be supported by independent consideration. A job offer is sufficient consideration to support a restrictive covenant before entering into an employment relationship. However, once employment commences, a restrictive covenant will not be valid unless it is supported by additional independent consideration beyond mere continued employment (Overholt Crop Ins. Service Co., Inc. v. Bredeson, 437 N.W.2d 698, 702 (Minn. Ct. App. 1989); Davies & Davies Agency, Inc. v. Davies, 298 N.W.2d 127, 130-131 (Minn. 1980)).

Non-compete
Are there any special rules on non-competes for particular classes of employee?

Non-compete agreements are unenforceable on attorneys (Minn. R. Prof. Conduct 5.6(a)).

Minnesota courts may “blue pencil” restrictive covenants and enforce an overly broad restrictive covenant to the extent that it is reasonable. Alternatively, a court may choose to invalidate an unreasonable restrictive covenant. 

Labor relations

Right to work
Is the state a “right to work” state?

No, Minnesota is not a right to work state. It is lawful for an employer and a union to agree to a clause in a labor agreement which requires union membership as a condition of employment. 

Unions and layoffs
Is the state (or a particular area) known to be heavily unionized?

In 2015 Minnesota’s union membership rate was approximately 14.2%, which is above the national average of 11.1%. In the private sector, Minnesota’s union membership rate in 2015 was approximately 8.0%, which is above the national average of 6.7%. In the public sector, Minnesota’s union membership rate in 2015 was 47.2%, which is also above the national average of 35.2% for public employees.

What rules apply to layoffs? Are there particular rules for plant closures/mass layoffs?

Minnesota has a plant closing law, but it does not mirror the Federal Worker Adjustment and Retraining Notification Act and it does not mandate that employers provide either notice or severance pay upon plant closure. Instead, the Minnesota law uses an “early warning system” aimed at easing the effects of a potential plant closing. Employers anticipating plant closings or substantial layoffs are encouraged, but not required, to provide advance notice to the commissioner of employment and economic development, affected employees, any labor union that represents affected employees, and the local government unit where the affected establishment is located (Minn. Stat. § 116L.976).

Additionally, any employer required to provide notice of an impending employment loss under the act must report to the commissioner the names, addresses, and occupations of those employees who will be terminated (Minn. Stat. § 116L.976).

Discipline and termination

State procedures
Are there state-specific laws on the procedures employers must follow with regard to discipline and grievance procedures?

No.

At-will or notice
At-will status and/or notice period?

Under Minnesota common law, employees are generally considered to be employed at will.

What restrictions apply to the above?

At-will employment is limited by many state statutes, including the following:

  • Minnesota Human Rights Act (Minn. Stat. § 363A.08);
  • Minnesota Notice of Termination Law (Minn. Stat. § 181.932);
  • Minnesota Lawful Consumable Products Act (Minn. Stat. §181.938);
  • Minnesota Drug and Alcohol Testing in the Workplace Act (Minn. Stat. § 181.953, subd. 10); and
  • retaliatory discharge for filing a worker’s compensation claim (Minn. Stat. § 176.82).

There are also a variety of common law exceptions, such as:

  • termination in breach of contract, whether written or oral (Pine River State Bank v. Mettille, 333 N.W.2d 622 (Minn. 1983));
  • promissory estoppel (Grouse v. Group Health Plan, Inc., 306 N.W.2d 114 (Minn. 1981));
  • tortious interference with contract (Kallok v. Medtronic, Inc., 573 N.W.2d 356 (Minn. 1998); Nordling v. Northern States Power Co., 478 N.W.2d 498 (Minn. 1991)); and
  • public policy common law tort exception to at-will employment (Phipps v. Clark Oil & Refining Corp., 408 N.W.2d 569 (Minn. 1987)).

Final paychecks
Are there state-specific rules on when final paychecks are due after termination?

An employer must pay a discharged employee all wages which are due but unpaid within 24 hours of an employee’s demand. An employer that fails to pay within this 24-hour period may be liable for a penalty of up to 15 days of additional wages (Minn. Stat. § 181.13).

An employer must pay an employee who resigns on the first regularly scheduled payday after the final day of employment (Minn. Stat. § 181.14).