Employment Law
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Employment Law
Multiple complex laws govern when workers are considered employees, how they should be treated, how much they must be paid, and much more. An attorney can help ensure your business is compliant with the myriad of laws and administrative rules.
Our services include:
- Worker classification
- Wage and hour advising
- Employee handbooks
- DOLI compliance
Employees or Independent Contractors
How a business classifies workers is not the final determination about the workers’ status. If the Department of Labor audits a business, the provisions of the Fair Labor Standards Act are applied to the employer-worker relationship. Those provisions will be used to make a determination based on the total activity of the situation and how much the employer controls the workers' activities.
Among the factors which the Court has considered significant are:
- The extent to which the services rendered are an integral part of the principal's business. If they are, then the relationship looks more like that of an employer-employee.
- The permanency of the relationship. The more permanent and exclusive a relationship is, the more it looks like that of an employer-employee.
- The amount of the alleged contractor's investment in facilities and equipment. If the business provides the worker with the facilities and tools with which to do their work, it looks like an employer-employee relationship.
- The nature and degree of control by the principal. When a business controls the time, place and methods of the worker's work, it looks like an employer-employee relationship.
- The alleged contractor's opportunities for profit and loss. When a worker is paid on an hourly basis, and cannot gain a profit by working more efficiently, it looks like an employer-employee relationship.
- The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor. If a worker is allowed to hold themselves out as being “for hire” by others then they appear to be an independent contractor.
- The degree of independent business organization and operation. If a worker has a business entity such as a Limited Liability Company (LLC) or Corporation, and operates it independently of the company being audited, then he or she appears to be a legitimate independent contractor.
None of these factors alone proves a worker should be classified as an employee or independent contractor. A determination is made based on the relationship as a whole. It is often helpful to have the assistance of an attorney when looking at the relationship a company has with workers.
At-Will Employment
Unless there is a contract stating otherwise, employment in Minnesota is considered “at will.” This means that an employer can terminate or fire an employee at any time and for any reason, as long as that reason is not illegal. Illegal reasons for termination in Minnesota include discrimination based on race, creed, color, sex, national origin, ancestry, religion, age, disability, sexual orientation, or marital status.
There is also a common misconception that a “two-week notice” must be given before an employee can quit or be laid off. Under Minnesota law, there is no need for any notice to be given before an employee leaves or is terminated from an at-will position.
Minimum Wage
Minnesota law and Federal law differ on minimum wage requirements. As of 2014, Minnesota law requires that employees of businesses grossing $500,000 or less be paid a minimum of $6.50 per hour. Further, an employer may pay $6.50 an hour as a “Training Wage” to new employees who are younger than age 20 during their first 90 consecutive days of employment. Permanent or current employees may not be displaced by new employees covered by the training wage.
However, most business fall under the federal Fair Labor Standards Act, which requires workers be paid a minimum of $7.25 per hour. Generally speaking, if both federal and state law apply to a given situation, it is safest to follow the law which is more protective of employees.
Employers are free to offer incentive pay, such as “double-time” pay for nights. However, neither state nor federal law requires any additional pay for holidays, nights, or weekends. There is also no limit on the total number of hours an adult employee can work in a work week as long as the employee is compensated properly for overtime.
Overtime
Minnesota law and the Federal Fair Labor Standards Act (FLSA) differ on overtime requirements. Some small businesses may only fall under Minnesota law, which requires overtime be paid at a "time-and-a-half" rate after 48 hours in each 7-day work week. Most Minnesota businesses fall under the FLSA, which applies to businesses that gross more than $500,000 per year OR “avail themselves of interstate commerce.” The FLSA requires that employees be paid time-and-a-half overtime for all hours worked over 40 hours in a 7-day work week.
A “7-day work week” is a period of 7 consecutive days which is designated by a business as their work week. There is no requirement that it be Sunday–Saturday; it can be whatever works best for the business. The work week can be changed from time to time, as long as the change is not designed to avoid paying overtime to employees.
At-Will Employment
Unless there is a contract stating otherwise, employment in Minnesota is considered “at will.” This means that an employer can terminate or fire an employee at any time and for any reason, as long as that reason is not illegal. Illegal reasons for termination in Minnesota include discrimination based on race, creed, color, sex, national origin, ancestry, religion, age, disability, sexual orientation, or marital status.
There is also a common misconception that a “two-week notice” must be given before an employee can quit or be laid off. Under Minnesota law, there is no need for any notice to be given before an employee leaves or is terminated from an at-will position.
Employee Handbooks
Employee handbooks are a way to explain company policies and procedures. They can provide employees with an overview of the company, its practices, and its work environment. A good handbook can also provide a business with some legal protection by setting clear standards and expectations that employees must comply with.
On the other hand, a poorly-written handbook can cause a lot of harm. Business managers and owners tend to want very rigid policies in place addressing almost every possible situation. Overly-specific policies can limit employers' flexibility in dealing with real situations. Conversely, overly-broad policies may make it hard for businesses to hold employees accountable.
Information on the following topics is important to include in your handbook:
- Conflict of Interest statements and any non-compete requirements
- Anti-discrimination policies
- Compensation, including overtime standards
- Taxes
- Workers’ compensation coverage
- Work scheduling policies
- Standards of conduct and behavior
- General employment information about working at the business
- Benefits information that is generally available to employees
- Safety and security information and policies
- Media and technology policies, including social media information
- Leave and vacation policies, including military duty, jury duty, sick leave, and bereavement leave
Fluctuating Work Week
Another method of compensating employees is the Fluctuating Work Week method. The employer pays an employee the same base rate each week the employee works (similar to a salary), but there is still an overtime payment that must be made when the worker exceeds 40 hours in a work week. In order to properly compensate an employee using the Fluctuating Work Week method, four criteria must be met:
- The employee’s hours must fluctuate from week to week
- The employee must receive a fixed salary that does not vary with the number of hours worked during the week (excluding overtime)
- The fixed-salary amount must be sufficient to provide compensation every week at a regular rate that is at least equal to the minimum wage and the employee must receive at least 50% of their regular hourly pay for all overtime worked
- The employer and employee must share a clear, mutual understanding that the employer will pay that fixed salary, regardless of the number of hours worked
These criteria may seem straightforward, but it is best to speak with an attorney when assessing whether paying employees using the Fluctuating Work Week is compliant for a business’s employees.