Important Legal Developments for Clients WITH OPERATIONS OR EMPLOYEES IN MINNESOTA

By Oyvind Wistrom

Minnesota Set to Invalidate All Future Non-Compete Agreements

 On May 24, 2023, Minnesota Governor Tim Walz signed into law a provision banning all future non-compete agreements in Minnesota.  The term “non-compete” is defined to include provisions restricting an employee (or independent contractor) from performing work for another employer for a specified period of time, in a specified geographical area, or in a capacity that is similar to the employee’s work for the employer.  The ban will be effective for all non-compete agreements (also known as a “covenant not to compete”) entered on or after July 1, 2023.

By enacting the Omnibus Jobs, Economic Development, Labor and Industry appropriations bill, Minnesota will become just the fourth state (joining California, Oklahoma and North Dakota) to ban non-compete agreements.  Although the new law bans the enforcement of all non-compete agreements entered into with employees or independent contractors, the law does allow covenants not to compete in connection with the sale or dissolution of a business.

It is also important to note that the law only renders void and unenforceable covenants not to compete; the balance of an otherwise enforceable contract or agreement is not affected.  This means that other types of restrictive covenants can still be enforced under Minnesota law, including non-disclosure agreements, agreements designed to protect trade secrets, agreements to protect confidential information, agreements restricting the ability to use client or contact lists, and non-solicitation agreements.

The newly passed legislation also prevents employers from seeking to circumvent the new law by prohibiting employers from requiring employees to agree to clauses designating choice of law and venue in any state other than Minnesota.  Employees seeking to enforce the non-compete ban will be allowed to recover reasonable attorneys’ fees.

The ban on non-compete agreements does not apply retroactively, meaning all existing non-compete agreements signed before the effective date will remain enforceable, as permitted under Minnesota law.  However, employers with employees or independent contractors in Minnesota should take action to ensure that their agreements are in compliance with the new law starting July 1.

Minnesota Paid Family and Medical Leave Law (starting in 2026) 

Paid Family and Medical Leave is a new program being launched in Minnesota in 2026.  It will provide for both paid family leave for an employee to care for a family member with a serious health condition, or for an employee to bond with a new baby or child in their family.  It will also provide for paid medical leave for an employee’s own serious health condition if it prevents the employee from working.  Additionally, Minnesota employees will be able to take leave to support a family member in the military deploying overseas, or if an employee or a family member is facing a significant personal safety issue.  The legislation breaks benefits into two categories: 1) medical leave, including for pregnancy or recovery from childbirth, and 2) all other kinds of leave, that is parental leave, safety leave, caregiving leave, and deployment-related leave. Workers can receive up to 12 weeks of leave in each of the two categories per benefit year; however, benefits will be capped at 20 weeks a year for employees who take advantage of both.

The law will cover nearly all employees in Minnesota, including both private sector and state and local government employees.  It will cover employees regardless of employer size and include both full-time and part-time workers, with a limited exception for certain seasonal workers.

The implementation of this new law is still some time away, but starting in mid-2024, most Minnesota employers will be required to submit a wage detail report, which will detail the quarterly wages received and hours worked for each employee.

Earned Sick and Safe Ordinance for City of Bloomington 

The City of Bloomington has adopted an Earned Sick and Safe Leave (ESSL) Ordinance for workers in the City that will go into effect on July 1, 2023.  The ordinance is similar to the City of Minneapolis ordinance that has been in effect since 2017.

The Bloomington ordinance will generally require employers to provide certain employees working in the City of Bloomington with up to 48 hours of paid ESSL per year.  The ordinance covers all employees (including part-time and temporary employees) performing work in Bloomington for at least 80 hours in a year for their employer.  A covered employee can use accrued ESSL beginning 90 calendar days following commencement of their employment.

Like the Minneapolis ordinance, the Bloomington ordinance requires employers with an employee handbook to include in their employee handbook a notice of employee rights and remedies under the law.  The rules clarify that this requirement also applies if the employer provides any type of “orientation material” to a new employee in lieu of a handbook.

ADDITIONAL UPDATES FOR CLIENTS WITH ILLINOIS OPERATIONS

By Daniel Finerty

There are several changes to Illinois that that, regardless of when the laws were passed, go into effect or have recently gone into effect in 2023, and place additional obligations on Illinois employers.

Additional Paid Leave Obligations

 In addition to the Illinois Paid Leave for All Workers Act that goes into effect on January 1, 2024,  Illinois employers are now obligated to provide unpaid leave for absences resulting from a pregnancy loss, unsuccessful IVF treatment, a failed adoption or surrogacy, or a diagnosis that impacts pregnancy. In this way, this unpaid leave obligation may, after January 1, 2024, act as an additional or alternative leave obligation once paid leave has been exhausted.

In addition, Section 21 of the Employee Sick Leave Act was recently amended to provide that  “[t]he rights afforded under this Act serve as the minimum standard in a negotiated collective bargaining agreement.” That provision went into effect on January 1, 2023.

Mandatory Time-Off and Breaks

 Effective January 1, 2023, Illinois’s One Day Rest In Seven Act (ODRISA) requires employers to provide employees with at least 24 hours of rest in every consecutive 7-day period. Should an exception be sought or necessary for business reasons, ODRISA allows an employer to secure permits from the Illinois Department of Labor (IDOL) for employees to work on the 7th day provided the employee seeking work on that day has voluntarily agreed to work and, in cases where the employee will be working over 40 hours, is paid at the applicable overtime rate. According to the IDOL FAQ, any such exemption should be sought in advance and, if IDOL grants an exemption, the employer’s statement must demonstrate that all employees have volunteered to work the seventh days in a row. The IDOL application for a permit can be submitted online.

Employees are also entitled to a mandatory meal period of at least 20 minutes for every 7.5-hour shift. The 20-minute break must begin no later than 5 hours after the start of the shift. An additional 20-minute meal period must also be provided if the employee works a shift that is 12 hours or longer. Reasonable restroom breaks, in addition to the meal break must be provided.

For union employers, the day off and meal break obligations do not apply if days off and meal periods are governed by their collective bargaining agreement. However, if a collective bargaining agreement does not specify days off and meal periods, the ODRISA provisions may apply.

Effective January 1, 2023, employers that currently file EEO-1 reports are required to submit similar reports to the state of Illinois, and includes new pay data reporting and certification requirements, among other obligations.

Equal Pay Certification Requirement

 The Equal Pay Act of 2003, 820 ILCS 112 et seq., was recently amended to require that all private employers with 100 or more employees in Illinois submit demographic and wage data to IDOL, along with a filed Annual Employer Information Report EEO-1 and an Equal Pay Compliance Statement certifying that, among other things, the average compensation for its female and minority employees is not consistently below the average compensation for its male and non-minority employees. These legislative changes are intended to promote pay transparency and ensure that all Illinoisans, regardless of their background, receive equal pay for substantially similar work they do on behalf of an employer.

The filing deadlines required for 2023 were suspended; however, for most businesses, IDOL will provide A 120-day advanced notice of an Initial certification deadline, according to the IDOL FAQ page. Generally, businesses with 99 or fewer employees and businesses that are not required to file an Annual Employer Information Report EEO-1 with the Equal Employment Opportunity Commission are exempt from this obligation.

Illinois businesses should note that this reporting is in addition to that which has been in place since July 1, 2020, has continued and is continuing each July 1 thereafter, which requires an employer to disclose annually to the Illinois Department of Human Rights “an adverse judgment or administrative ruling against it in the preceding calendar year […] the following information: the total number of adverse judgments or administrative rulings during the preceding year; whether any equitable relief was ordered; and the number of adverse judgments or administrative rulings entered against the employer within specific categories outlined in Section 2-108(B) of the Illinois Human Rights Act.” Resources for this reporting can be found on the Illinois Department of Human Rights website.

Minimum Wage Increase

 On January 1, 2023, due to amendments to 820 ILCS 105/4(a)(1), the Illinois Minimum Wage increased from $12.00 per hour to $13.00 per hour. This rate will increase each year with another change on January 1, 2024 to $14.00 per hour and a final increase slated to occur on January 1, 2025 when the minimum hourly rate increases to $15.00 per hour. There are additional changes to employer obligations regarding tipped employees, paying a training wage to tipped employees, and for youth workers. A description of those changes can be found on the IDOL FAQ page and another IDOL resource that provides the minimum wage chart by year.

Hairstyle Discrimination

 The amended Illinois Human Rights Act (IHRA) prohibits employers from engaging in discrimination based on an expanded definition of “race” to include traits associated with race, including but not limited to hair texture and protective hairstyles such as braids, locks, and twists.

The Illinois Paid Leave for All Workers Act provides employees with paid leave from work for any reason and without any documentation

By Daniel Finerty

Effective January 1, 2024, the Illinois Paid Leave for All Workers Act (Act) will grant most Illinois employees the right to earn up to 40 hours of paid leave annually, setting a minimum paid leave standard for all Illinois employers. According to Governor Pritzker’s press release, the Act will provide about 1.5 million employees with the right to earn paid time off starting in 2024. We previously discussed the new Act here.

Minimum Leave

Under the Act, covered employees, defined to include part-time and temporary employees, are entitled to earn up to 40 hours of paid leave in a 12-month period. Paid leave is earned at a rate of one hour of leave per 40 hours worked. While exempt employees are deemed to work 40 hours per week, both hourly and salaried employees who work less hours are entitled to proration. While an employer may set a reasonable minimum increment for an employee’s use of paid leave not to exceed 2 hours per day, it is the employee who “shall determine” how much paid leave is necessary. While the obligations under the Act explicitly cover domestic workers, independent contractors are not included.

Advanced Access

As opposed to ongoing accrual as an employee works, an employer can elect to provide employees with the minimum number of hours of paid leave on the first day of employment or the first day of the 12-month period. As an incentive, employers that choose this method are not required to carryover paid leave from one 12-month period to the next and may require employees to “use it or lose it” by the end of the year. Regardless of method, employees are entitled to begin using paid leave 90 days following commencement of employment or 90 days following the effective date of this Act, whichever is later. As applicable here, an employee that begins accrual under the Act on January 2, 2024, the first workday of the year, will not be able to access paid leave until April 1, 2024.

Designation of “Year”

Provided it does so at the time of hire in writing, an employer may designate any 12-month period it chooses. Should an employer wish to modify the 12-month period, notice must be given to employees in writing prior to the change. That said, an employer’s modification of the 12-month period may not reduce the eligible accrual rate or reduce the paid leave available, like a transition between the calendar method and the rolling method under the Family and Medical Leave Act (FMLA). Advanced, written notice must be provided to employees and implementation must not reduce eligible accrual rates or each employee’s available paid leave.

Differences from FMLA

Outside of the administrative basics, the Act may also create some operational challenges. First, an employee may take leave under this Act for any reason of the employee’s choosing, which broadens the reasons for which leave may be requested or taken well beyond the FMLA. Second, an employee is not required to provide the employer with a reason for the leave. Third, an employer may not require an employee to provide documentation or certification as proof of the need for the leave or in support of the leave. Fourth, while most employees must be compensated at their regular hourly rates for paid leave, employees engaged in gratuity- or commission-based employment must be paid at least the full minimum wage in the jurisdiction in which they are employed when paid leave is taken.

Similarity to FMLA

Like other acts under state or federal law, nothing in the Act precludes an employer from providing greater leave than that required by the Act. Likewise, nothing in this Act shall be construed to waive or otherwise limit an employee’s right to final compensation for any type of leave promised to be paid under a contract of employment or employment policy and earned by the employee.

Notice

The Act requires an employer to provide paid leave upon an employee’s oral or written request in accordance with the employer’s reasonable paid leave policy notification requirements which may contain certain requirements. First, where paid leave is foreseeable, an employer may require the employee to provide seven (7) calendar days’ notice before the date the leave is to set to begin. Second, where paid leave is not foreseeable, the employee can be required to provide such notice as soon as is practicable after the employee is aware that leave is necessary provided the employer has a written policy that contains a notice procedure applicable to requiring leave that is not foreseeable. Third, regarding any employer policy detailing the Act’s paid leave obligation, an employer must provide at least five (5) days’ notice of any policy change(s). Notices regarding the Act must also be posted in the employer’s workplace.

Interference/Retaliation

Like similar Illinois provisions, the Act provides that it is “unlawful for any employer to threaten to take or to take any adverse action against an employee because the employee (1) exercises rights or attempts to exercise rights under this Act, (2) opposes practices which the employee believes to be in violation of this Act, or (3) supports the exercise of rights of another under this Act.” Violations, such as where an employer considers an employee’s use of paid leave as a negative factor in any employment action that involves evaluating, promoting, disciplining, or counting paid leave under a no-fault attendance policy, are filed with the Illinois Department of Labor, and may subject an employer to civil penalties as outlined in the Act as well as “all legal and equitable relief as may be appropriate.” One noted example of interference would be requiring an employee to find a replacement for his or her shift during which leave under the Act is requested.

Conclusion

Employers that will be required to provide leave must plan in advance of January 1, 2024, to prepared for the impact of the Act upon operations to ensure that all aspects of the Act, including administration, policy development, providing leave and all other aspects, can be addressed prior to implementation and that existing leave policies can be modified accordingly. The Illinois Department of Labor has created a Frequently Asked Questions page with additional helpful information.

New misconduct standard set by NLRB gives employees significant leeway in tone of communications with management

By Kristofor L. Hanson

On May 1, 2023, the National Labor Relations Board returned to its prior standard for analyzing the legality of disciplining employee misconduct related to protected concerted activity. In Lion Elastomers LLC II, 372 NLRB No. 83, the Board overruled its decision in General Motors, 369 NLRB No. 127 (2020) and reverted to its pre-2020 standard for determining whether an employer may lawfully discipline employees whose actions and/or words cross the line into abusive conduct. General Motors applied the three-part Wright Line standard — under which the employer can lawfully discipline an employee if it can show it would have taken the same action absent the employee’s protected activity — in all abusive conduct circumstances. For employers, that standard lasted just three years and with its decision in Lion Elastomers LLC II, the Board will once again apply one of three different standards, depending on whether the conduct involves: 1) communication to management; 2) communication in social media posts or in conversations among employees; or, 3) picket-line conduct. As a result, employers must evaluate different standards in determining whether it can lawfully impose discipline based on the context in which the misconduct occurred.

This decision returns employers to an environment where offensive or abusive actions that go beyond the bounds of proper workplace conduct will be considered lawful in most instances if the conduct arguably occurs in the context of exercising protected activity (grievance meetings, collective bargaining, intra-employee communications, social media discussions about the employer, etc.). The decision also engenders workplace environments that lack professionalism among workers and places employers in the difficult position of risking unfair labor practice charges for disciplining unruly behavior or allowing such behavior and creating an atmosphere where such behavior is condoned.

As a result, employers must be cautious when disciplining employees who engage in behavior that they deem unprofessional or disrespectful. Therefore, employers would be wise to consult with labor counsel before taking any disciplinary action under such circumstances.

EEOC Issues Update Relating to Artificial Intelligence

By Alexandra “Sasha” Chepov

In recent years, employers have adopted a wide variety of algorithmic decision-making tools to assist them in making employment decisions such as recruitment, hiring, retention, promotion, transfer, performance monitoring, demotion, dismissal and referral. These tools have been increasingly utilized by employers in an attempt to save time and effort, increase objectivity, optimize employee performance and decrease bias.

On May 18, 2023, the EEOC issued guidance clarifying the potential risks employers may face if the artificial intelligence tool being used results in an adverse discriminatory impact under Title VII of the Civil Rights Act of 1964 (“Title VII”). The purpose of the EEOC’s publication is to ensure that the use of new technologies complies with federal EEO law by educating employers, employees and other stakeholders about the application of these laws to the use of software and automated systems in employment decisions.

Definitions:

  • Software: Refers to information technology programs or procedures that provide instructions to a computer on how to perform a given task or function.
    • Many different types of software and applications are used in employment, including automatic resume-screening software, hiring software, chatbot software for hiring and workflow, video interviewing software, analytics software, employee monitoring software, and worker management software.
  • Algorithm: An “algorithm” is generally a set of instructions that can be followed by a computer to accomplish some end. Human resources software and applications use algorithms to allow employers to process data to evaluate, rate, and make other decisions about job applicants and employees. Software or applications that include algorithmic decision-making tools are used at various stages of employment, including hiring, performance evaluation, promotion and termination.
  • Artificial Intelligence (“AI”): Some employers and software vendors use AI when developing algorithms that help employers evaluate, rate and make other decisions about job applicants and employees. Congress has defined “AI” to mean a “machine-based system that can, for a given set of human-defined objectives, make predictions, recommendations or decisions influencing real or virtual environments.

Employers sometimes rely on various software platforms that incorporate algorithmic decision-making at a number of stages throughout the employment process. For example, resume scanners may be used to prioritize applicants using certain keywords; employee monitoring software may be used that rates employees on the basis of their keystrokes or other factors; “virtual assistant” or “chatbots” may be used to ask candidates about their qualifications and reject those who do not meet pre-defined requirements; video interviewing software may be used to evaluate candidates based on their facial expressions and speech patterns; and testing software that provides “job fit” scores for applicants or employees regarding their personalities, aptitudes, cognitive skills, or perceived “cultural fit” based on their performances on a game or on a more traditional test.

Title VII:

Title VII generally prohibits employers from using neutral tests or selection procedures that have the effect of disproportionately excluding persons based on race, color, religion, sex or national origin, if the test or selection procedures are not “job related for the position in question and consistent with business necessity.” This is called “disparate impact” or “adverse impact” discrimination.

If the use of an algorithmic decision-making tool has an adverse impact on individuals of a particular race, color, religion, sex, or national origin, or on individuals with a particular combination of such characteristics, then the use of the tool will violate Title VII unless the employer can show that such use is “job related and consistent with business necessity” pursuant to Title VII.

Employers that are deciding whether to rely on a software vendor to develop or administer an algorithmic decision-making tool should determine whether steps have been taken to evaluate whether the use of the tool causes a substantially lower selection rate of individuals with a characteristic protected by Title VII. A “selection rate” refers to the proportion of applicants or candidates who are hired, promoted or otherwise selected. A selection rate for a group of applicants or candidates is calculated by dividing the number of individuals hired, promoted or otherwise selected by the total number of candidates in the group.

As a general rule of thumb, the four-fifths rule is used to determine whether the selection rate for one group is “substantially” different than the selection rate of another group. The rule states that one rate is substantially different than another if their ratio is less than four-fifths (or 80%). However, the four-fifths rule may not be appropriate in certain circumstances. For example, smaller differences in selection rates may indicate adverse impact where a procedure is used in making a large number of selections, or where an employer’s actions have discouraged individuals from applying disproportionately on a Title VII-protected characteristic. In any event, the four-fifths rule may be used to draw an initial inference that the selection rates for two groups may be substantially different and prompt the employer to turn to additional information about the procedure or algorithm in question.

If an employer is in the process of developing a selection tool and discovers that use of the tool may result in an adverse impact on individuals of a particular protected characteristic by Title VII, an employer can take steps to reduce the discriminatory impact or select a different tool in order to avoid undertaking a practice that violates Title VII.  Failure to adopt a less discriminatory algorithm that was considered during the development process may give rise to liability.

ADA:

Although not discussed in the EEOC’s May 18, 2023 publication, the EEOC has previously issued technical guidance on the use of AI and discrimination in the workplace under the Americans with Disabilities Act (ADA). The most common ways that an employer’s use of algorithmic decision-making tools could violate the ADA are:

  • Failure to provide a “reasonable accommodation” that is necessary for a job applicant or employee to be rated fairly and accurately by the algorithm.
  • Rely on an algorithmic decision-making tool that intentionally or unintentionally “screens out” an individual with a disability, even though the individual is able to do the job with a reasonable accommodation.
  • Adopt an algorithmic decision-making tool for us with its job applicants or employees that violates the ADA’s restrictions on disability-related inquiries and medical examinations.

Why does this matter? 

Where an employer administers a pre-employment test, it may be liable for any resulting Title VII or ADA discrimination, even if the test was developed by an outside vendor. Similarly, an employer may be held liable for the actions of their agents, which may include entities such as software vendors, if the employer has given them authority to act on the employer’s behalf.

If the vendor states that the tool should be expected to result in a substantially lower selection rate of individuals of a particular characteristic protected by Title VII or the ADA, then the employer should consider whether the use of the tool is job related and consistent with business necessity and whether there are any alternatives that may be implemented that reduce the disparate impact, yet still satisfy the employer’s needs. Even where a vendor is incorrect about its own assessment, and the tool results in either disparate impact or disparate treatment discrimination, the employer could still be liable.

For that reason, employers are encouraged to conduct an ongoing self-analysis to determine if the technology they are using could result in discrimination in any way or whether their employment practices have disproportionately large negative effects on a basis prohibited under Title VII or treat protected groups differently.

COURT FINDS EMPLOYEE’S TERMINATION FOR VIOLATION OF EMPLOYER’S ATTENDANCE POLICY CONSTITUTES MISCONDUCT FOR PURPOSES OF RECEIVNG UNEMPLOYMENT BENEFITS

By Sally A. Piefer

Under Wisconsin law, an employee is disqualified from receiving benefits if the employee engages in misconduct or substantial fault. In 2013, the Wisconsin legislature changed the definition of misconduct. With the change, Wisconsin law explicitly recognized that an employee’s absenteeism/tardiness can constitute misconduct, and therefore disqualified an employee from receiving unemployment compensation benefits:

Absenteeism by an employee on more than 2 occasions within the 120-day period before the date of the employee’s termination, unless otherwise specified by his or her employer in an employment manual of which the employee has acknowledged receipt with his or her signature, or excessive tardiness by an employee in violation of a policy of the employer that has been communicated to the employee, if the employee does not provide to his or her employer both notice and one or more valid reasons for the absenteeism or tardiness.

This particular provision was challenged Wis. Dep’t of Workforce Dev. v. Wis. Labor & Indus. Review Comm’n, 2017 WI App 29, ¶ 4, 375 Wis. 2d 183, 895 N.W.2d 77 (“Beres”). The employee in Beres worked for an employer whose written attendance policy stated that it could discharge an employee during the probationary period if the employee failed to call in at least two hours prior to the employee’s scheduled shift. The employee – Beres – was absent due to an illness and failed to comply with the employer’s 2-hour call in procedure during her probationary period. She was terminated for failing to follow the procedure.

When Beres applied for unemployment benefits, DWD concluded she was disqualified from receiving benefits because she violated her employer’s attendance policy. The Department of Workforce Development (DWD) determined the employer could enact a stricter attendance policy than the one outlined in the statute, and that Beres was not entitled to unemployment benefits because she violated her employer’s stricter requirement. When Beres appealed, the Commission reversed DWD’s decision and awarded unemployment benefits, concluding that an employee could not be denied benefits on the basis of an employer’s attendance policy that was stricter than the absenteeism policy in the statute. DWD appealed this decision, and the Circuit Court agreed with DWD’s interpretation of the law. The Wisconsin Court of Appeals then reversed the Circuit Court’s opinion and adopted the Commission’s position. The case went to the Wisconsin Supreme Court.

The sole issue before the Wisconsin Supreme Court was as follows:

Does Wis. Stat. § 108.04(5)(e) allow an employer to adopt an attendance or absenteeism policy that differs from that set forth in § 108.04(5)(e) such that termination of an employee for violating the employer’s policy results in disqualification for unemployment compensation benefits even if the employer’s policy is more restrictive on the employee?

The Court answered the question in the affirmative, finding that:

[T]he plain language of Wis. Stat. § 108.04(5)(e) allows an employer to adopt its own absenteeism policy that differs from the policy set forth if § 108.04(5)(e), and that termination for the violation of the employer’s absenteeism policy will result in disqualification from receiving unemployment compensation benefits even if the employer’s policy is more restrictive than the absenteeism policy set forth in the statute.

Because Beres was terminated for not complying with her employer’s absenteeism policy, she was not entitled to unemployment benefits. The Court explicitly stated that its interpretation of Wis. Stat. § 108.04(5)(e) “makes clear that an employer can opt out of the statutory definition of ‘misconduct’ and set its own absenteeism policy, the violation of which will constitute statutory ‘misconduct.’” The Court concluded that “an employee will be considered to have been terminated for ‘misconduct,’ and thus disqualified from obtaining unemployment compensation benefits, if the employee violates the statutory definition of absenteeism, except if the employee adheres to the employer’s absenteeism policy specified in the employment manual of which the employee acknowledged receipt” through a signature.

Immediately following the Beres decision, the Labor & Industry Review Commission (LIRC) repeatedly interpreted unemployment compensation law in accordance with Beres. Beginning in 2019, shortly after Tony Evers, a Democrat, took office, LIRC began to backtrack on this position. Initially, LIRC concluded that an employee who was terminated for violating an employer’s attendance policy was not discharge for misconduct, but instead was terminated for substantial fault.

In July 2022, LIRC issued a decision in which it found that an employee who was terminated for violating his employer’s attendance policy did not constitute either misconduct or substantial fault. On appeal, the Circuit Court in Waukesha County issued a decision reversing LIRC’s decision. The employer had its own attendance policy, which was published in the employee handbook. The employee had notice of the policy. Under the policy, the employee received points for certain attendance violations. Employees who exceed a certain number of points are subject to termination. The employee at issue had a history of attendance violations, and was eventually terminated after exceeding the threshold number of points for a second time.

The Circuit Court concluded that the statutory provision which discusses misconduct in connection with an employer’s own attendance policy was not ambiguous, and that the Wisconsin Supreme Court’s decision in Beres was controlling. In addition, the Court stated that Beres was decided in June of 2018, and that if the legislature believed Beres was wrongly decided, it had nearly five years to signal the decision was incorrect. The Circuit Court concluded the employee was terminated for misconduct and therefore ineligible for benefits. Stay tuned for further developments on this front—both LIRC and DWD have filed appeals and the case will now be decided by the Wisconsin Court of Appeals.

COVID-RELATED I-9 FLEXIBILITIES SLATED TO END ON JULY 31, 2023

By Samantha J. Wood

Due to precautions surrounding the COVID-19 pandemic, in March 2020, the Department of Homeland Security (“DHS”), announced flexibilities regarding Form I-9 compliance. Specifically, employers who hired employees to work exclusively in a remote setting were temporarily exempt from physically inspecting employee identification and employment authorization documents in the employees’ physical presence. Documents could be inspected remotely, such as over video link, fax, or email.

On July 31, 2023, DHS will end these COVID-related flexibilities, and require employers to inspect employee identification and employment authorization documents in-person.  Additionally, employers must complete in-person physical document inspections for employees whose documents were previously inspected remotely by August 30, 2023.

DOL Issues Opinion Letter Relating to Holidays for Employees on FMLA

By Alexandra “Sasha” Chepov

The Department of Labor (DOL) recently issued an opinion letter providing clarification as to how an employer is to calculate an employee’s leave entitlement under the Family and Medical Leave Act (FMLA) when such leave is taken during a week that includes a holiday.

The FMLA entitled eligible employees of covered employers to take unpaid job-protected leave for a qualifying family and medical reason with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave. Eligible employees are eligible to take up to 12 workweeks of leave in a 12-month period for various qualifying reasons, and up to 26 workweeks of leave in a single 12-month period to care for a covered servicemember. 29 U.S.C. § 2612(a)(1), (2). Under certain circumstances, an employee may use FMLA leave intermittently, meaning, the employee may use such leave in separate blocks of time, or on a reduced leave schedule by reducing the time worked in a day or week. 29 U.S.C. § 2612(b)(1); 29 C.F.R. § 825.202(a).

Where an employee takes FMLA leave for less than one full workweek, the amount of FMLA leave used is determined as a proportion of the employee’s actual workweek. For example, if an employee who would otherwise work 40 hours per week takes off 8 hours, the employee uses one-fifth (1/5) of a week of FMLA leave. 29 C.F.R. § 825.205(b)(1).

When a holiday falls during a week than an employee is taking a full workweek of FMLA leave, the entire week is counted as FMLA leave. 29 C.F.R. § 825.200(h). For example, an employee who works Monday through Friday takes leave for a week that includes the Fourth of July on Thursday would use one week of leave, rather than 4/5 of a week. However, if a holiday falls during a week when an employee is taking less than full workweek of FMLA leave, then the holiday is not counted as FMLA leave, unless the employee was scheduled and expected to work on the holiday and used FMLA leave for that day.

In sum, the DOL opinion letter clarifies that the actual workweek, for purposes of calculating FMLA leave taken, includes the day of the holiday. If a holiday were to be subtracted from the workweek when calculating the amount of FMLA leave used in a partial week of leave, this would result in an impermissible reduction of the employee’s leave entitlement because the employee would have to use a larger amount of FMLA leave when needed.

Therefore, under the FMLA, the employee’s normal workweek is the basis for the employee’s leave entitlement. If the holiday occurs during an employee’s workweek, and the employee works part of the week and uses FMLA leave for part of the week, the holiday does not reduce the amount of the employee’s FMLA leave entitlement unless the employee was required to report for work on the holiday. If the employee was not expected or scheduled to work on the holiday, the fraction of the workweek of leave used would be the amount of FMLA leave taken (which would not include the holiday) divided by the total workweek (which would include the holiday).

OFCCP HAS UPDATED MANDATORY DISABILITY SELF-IDENTIFICATION FORM

By Laurie A. Petersen

Federal government contractors and subcontractors, as part of their obligation under Section 503 of the Rehabilitation Act and 41 CFR Part 60-741.42, are required to invite applicants (pre and post offer) and employees (including every five years) to self-identify as an individual with a disability on a form approved by the Office of Federal Contract Compliance Programs (OFCCP).

On April 25, 2023, the OFCCP published a revised form.  While that form does not substantively change the contractor’s obligations, it updates the following:

  • The preferred language used for disabilities;
  • Additional examples of disabilities; and
  • More description on some of the previous examples of disabilities.

Contractors must implement the new form by July 25, 2023, and continue to use the previous form until implementing the new form.  The only portion of the form that contractors may modify or delete is the “For Employer Use Only” section.

NLRB Says that Non-Compete Agreements Should Be Deemed Unlawful

By Kristofor L. Hanson

Continuing a very aggressive employee- and union-friendly agenda, on May 30, 2023, NLRB General Counsel Jennifer Abruzzo sent a memo, GC 23-08, to all Regional Directors, Officers-in-Charge, and Resident Officers, setting forth her view that the offer, maintenance, and enforcement of non-compete provisions in employment contracts and severance agreements violate the National Labor Relations Act (NLRA) except in limited circumstances.

Though overbroad non-compete agreements are generally viewed as unlawful and subject to invalidation, the GC memo explains that within the context of the NLRA, overbroad non-compete agreements are unlawful because they chill employees from exercising their rights under Section 7 of the National Labor Relations Act. Section 7 protects employees’ rights to take collective action and engage in protected activity to improve their working conditions. Specifically, the memo explains that such agreements interfere with employees’ ability to:

  1. concertedly threaten to resign to secure better working conditions;
  2. carry out concerted threats to resign or otherwise concertedly resign to secure improved working conditions;
  3. concertedly seek or accept employment with a local competitor to obtain better working conditions;
  4. solicit their co-workers to go work for a local competitor as part of a broader course of protected concerted activity;
  5. seek employment, at least in part, to specifically engage in protected activity, including union organizing, with other workers at an employer’s workplace.

“Non-compete provisions reasonably tend to chill employees in the exercise of Section 7 rights when the provisions could reasonably be construed by employees to deny them the ability to quit or change jobs by cutting off their access to other employment opportunities that they are qualified for based on their experience, aptitudes, and preferences as to type and location of work,” said General Counsel Abruzzo. “This denial of access to employment opportunities interferes with workers engaging in Section 7 activity in a number of ways—for example, workers know that they will have greater difficulty replacing their lost income if they are discharged for exercising their statutory rights to organize and act together to improve working conditions; their bargaining power is undermined in the context of lockouts, strikes and other labor disputes; and their social ties and solidarity leading to improvements in working conditions at workplaces are lost as they scatter to the four winds.”

The memo preserves limited circumstances pursuant to which non-compete agreements could be lawful if the provisions clearly restrict only individuals’ managerial or ownership interests in a competing business, or true independent-contractor relationships. Moreover, there may be circumstances in which a narrowly tailored non-compete agreement’s infringement on employee rights may be justified by special circumstances.

Although General Counsel memos are not binding on employers, they reflect the Board’s prosecutorial intent. Accordingly, all NLRB regional offices are required by the GC to submit cases concerning “arguably unlawful” non-compete agreements, as well as special circumstances defenses, to the NLRB’s Division of Advice. The memo directs NLRB regions to seek make-whole relief for employees subject to unlawful provisions who can show lost employment opportunities as a result of such provisions. Once complaints issue, the GC will seek to convince the members of the NLRB to adopt her theory that such provisions violate the Act.

Employers, whether unionized or not, should consult with experienced labor counsel to thoroughly assess non-compete and non-solicitation agreements and severance agreements in light of Section 7 and the GC’s memo.