Recently Proposed Legislation Stands to Significantly Change Business in Minnesota

Several pieces of legislation recently proposed in the Minnesota legislature would make it even harder to employ people in Minnesota. One piece of proposed legislation would invalidate non-compete agreements. Other proposed legislation includes an increase in the minimum wage, changes to wage payment statutes, new prohibitions on employers conducting criminal background checks, extension of parenting leave, and creation of a new class of discrimination.

Pending Legislation Threatens to Void Non-Compete Agreements
Minnesota businesses have routinely relied on non-compete agreements as an important and effective tool to protect proprietary business information from a competitor when an employee departs. However, a bill recently introduced in the Minnesota House of Representatives, H.F. No. 506, proposes to void non-compete agreements in Minnesota entirely with only three very narrow exceptions. Under the proposed legislation, non-compete agreements would only be enforceable to a limited degree upon the sale of a business, the dissolution of a partnership, or the dissolution of a limited liability company or the termination of one of its members. The language of the bill is expansive and could be interpreted to void in its entirety any agreement that contains a non-compete clause – including employment agreements. The proposed bill would not prohibit businesses from continuing to enter into confidentiality and non-solicitation agreements to protect confidential and proprietary business information. As of yet, no hearing or further action is scheduled regarding this bill, so it is unclear how much traction, if any, the proposed bill will gain in the legislature.

Proposed Increases to the Minimum Wage
The Minnesota House is considering increasing the minimum wage at large employers to $10.55 per hour by Aug. 1, 2015. The bill would raise the minimum wage to $9.00 per hour for workers at small firms by that date. The minimum wage in Minnesota is $6.15 an hour for large employers and $5.25 for small firms, although most employees qualify for the federal minimum wage of $7.25 per hour.

Making Wage Claims More Plentiful And Lucrative
A bill currently being considered in the Senate, S.F. 602, contains numerous changes to the wage payment statute that would for the first time allow employees to bring claims directly on their own behalf for what they view as misclassified work under contracts with prevailing wage provisions. The law would also encourage litigation by saddling employers with double damages for any failure to pay wages and eliminate the requirement that an employee who feels his or her pay is incorrect to make a request in writing to the employer for the shorted pay in order to be entitled to statutory remedies. The proposal goes on to eliminate the ability of employers to recover attorneys’ fees if an employee rejects a wage payment settlement offer that the judge determines would have met or exceeded their actual damages. Finally, it would disallow an offset of a wage payment claim for demonstrated employee theft.

Prohibiting Criminal Background Checks Early in Hiring Process
The Legislature is also considering a bill, S.F. 523, which would, except as otherwise required by statute, prohibit employers from asking about a job applicant’s criminal record until the applicant has been selected for an interview by the employer. This proposed legislation is commonly referred to as “Ban the Box” because it would prohibit employers from having a box on their applications which requires the applicant to notify the potential employer of their criminal history. As currently proposed, the law would allow applicants to bring a private civil action against the employer for any inquiry into a criminal record before the applicant has been selected for an interview.

Extending Unpaid Leave to Employees for Birth or Adoption
Proposals currently before the Minnesota legislature, S.F. 641 and H.F. 763, would extend the amount of unpaid parental leave certain employers must grant to qualifying employees from six weeks to twelve weeks. The parental leave statute requires employers with 21 or more employees to grant an unpaid leave of absence to qualifying employees in conjunction with the birth or adoption of a child. In order to qualify for parental leave, an employee must have been employed for at least 12 consecutive weeks, and must generally have worked 20 hours per week. During any parental leave under this section, employers are required to continue to provide group health insurance to the employee at the employee’s cost.

Creating a New Class of Discrimination, Unemployment Discrimination
Another proposed bill, H.F. 16, would make it unlawful for an employer to “discriminate against an individual based on unemployment status” by refusing to consider or offer employment based on that status or screening applicants based on unemployment status. It would also prohibit job applications from in any way suggesting that current employment was a job qualification or only those currently employed would be considered.

If you have any questions about these legislative developments, how they might affect your business should they become law and what you can do now to prepare for any changes, feel free to contact Martin D. Kappenman, Jessica N. Hofrichter or any other attorney at Peters, Revnew, Kappenman & Anderson, P.A..

At the close of the legislative session we will issue an updated LawFacts providing an outline of significant labor and employment related bills that were passed and signed into law.

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