To paraphrase Heraclitus, the only constant is change. That is certainly true in employment law. Here are a few of the most notable recent legal developments affecting area employers and employees.
Minimum Wage Ordinance Upheld
On January 22, 2020 the Minnesota Supreme Court upheld the new Minneapolis minimum wage law in Graco v. The City of Minneapolis.
Defamation Law Clarified
In September, the Minnesota Supreme Court reiterated the basic principles of defamation law while holding that a school basketball coach was not a public official. The case is McGuire v. Bowlin. To prove a defamation claim, a plaintiff must show that the defendant made a false and defamatory statement, the statement was published to a third party and not privileged, the statement had a tendency to harm the plaintiff’s reputation, and the defendant was at least negligent. However, if the subject of the statement in question is a public official, the plaintiff must prove actual malice. To prove malice, plaintiff must show the defendant knew the statement was false or recklessly disregarded whether it was false or not.
In December, the Minnesota Supreme Court held that a corporate officer may be personally liable for a defamatory statement in a corporate press release he approved. Significantly, the court held he could be liable even though he did not author the statement. The case is DeRosa v. McKenzie. The Court also noted that even an internal document never shown to anyone outside the corporation could support a claim unless the statement was privileged and made without malice.
In February 2020, the Minnesota Court of Appeals addressed when in-house corporate communications are privileged. In Zean v. Reveling the court held that statements made by employees in the course of their business are protected by a qualified privilege if the statements are made on proper occasion, from a proper motive, and based on reasonable or probable cause. If protected by a qualified privilege, the statements are protected if they are made without malice. However, accusations cannot be based on pure speculation or unnecessarily distributed.
In Zean, housekeepers reported to a hotel manager that items were missing and were probably taken by the last guests to use the room. The manager confirmed via electronic records that the accused guests’ key card was the last card to access the room before the items were found missing. The manager charged their card. When the guests asked about the charge, the manager explained they were charged for taking (stealing) items from the room. The court held the guests could not maintain a defamation claim even if they were entirely innocent. The court found these were proper circumstances because housekeeping had a duty to report the missing items and explain the circumstances and the manager had a duty to answer the guests’ questions about the charge. The statements were deemed reasonable conclusions from the facts known and investigated. There was no evidence of malice. Therefore, the case was properly dismissed.
Finally, in the Kesha versus Dr. Luke saga, a New York court recently held that Kesha could be liable for a single private text message she sent to Lady Gaga.
New Rules Determining Regular Rate
The United States Department of Labor established new rules for determining an employee’s regularly hourly rate, effective January 15, 2020. This is the first comprehensive update to the rules since 1968. The update is important because the statutory “regular rate” must be used to determine overtime pay. If the employer miscalculates, even innocently, the employer and the individuals making pay decisions may be exposed to significant legal liability such as fines, litigation fees and civil judgments.
Some employers assume an employee’s regular rate is their normal or base hourly rate. This is incorrect. An employee’s regular rate includes all remuneration paid to, or on behalf of, an employee unless a specific statutory exception applies. In fact, an improperly structured bonus intended to recognize extra hours worked could actually increase an employer’s overtime liability by increasing the regular hourly rate. Many benefits provided to employees are excluded by regulation, but no regulation is perfect.
The new rule reflects modern changes in the workplace. The new regulations are not a radical departure but they do help clarify the law. According to the Department of Labor, in 1950 fringe benefits constituted only five percent of employee’s total compensation. Today, benefits make up approximately one-third of total compensation. The nature of benefits has also changed. Perks like cell phone reimbursement and wellness incentives are growing. New legally mandated benefits like Earned Sick and Safe Time are being adopted. The regulations are intended to adapt to these changes.
SECURE Act
The SECURE Act made significant changes to benefit plans. For example, the SECURE Act encourages automatic enrollment in retirement plans, increases the allowed automatic enrollment escalation, and provides incentives to small employers for start up costs. The Act also requires many employers to expand 401(k) eligibility to include part-time workers with three consecutive 500+ hour years-of-service. The permissible uses of 529 plans were expanded to include some apprenticeship costs and some student loan repayments. Penalty-free withdrawals are now allowed from certain retirement plans for qualified birth and adoption expenses. The required minimum distribution age has increased to 72 instead of 70.5 and plans may permit distributions as early as age 59.5 instead of 62. On the other hand, beneficiaries of certain inherited plans are now required to take distributions within 10 years.
Repeal of the Cadillac Tax
The additional tax on high cost health plans has been eliminated.
New I-9
A new I-9 form, Rev. 10/21/2019, was released on January 31, 2020. Employers are required to use the new Rev. 10/21/2019 after April 30, 2020. Employers may continue to use Rev. 07/17/2017 until then. Employees who have already completed I-9 paperwork do not have to complete a new I-9.
New Joint Employer Rules
When an employee performs work that simultaneously benefits another individual or entity, both entities may face legal liability as joint employers under the Fair Labor Standards Act. On January 12, 2020, the United States Department of Labor announced a new rule updating regulations determining joint employer status and liability. The new regulations are effective March 16, 2020.
Website ADA Compliance
In Domino’s Pizza LLC v. Robles, the United States Supreme Court declined review of a decision applying the Americans with Disabilities Act to websites. The lower court held that the Domino’s Pizza’s website and mobile app must comply with the ADA. The lower court reasoned the website and app connected customers to the goods and services of physical restaurants.
Thomas Witt is an attorney with Fryberger, Buchanan, Smith & Frederick, P.A., practicing in the areas of Employment Law, Family Law and Civil Litigation. This article is not intended to provide legal advice. You should always consult with an attorney about your specific circumstances.
