Madigan, Dahl & Harlan, P.A.

Can any employee be required to sign a non-compete agreement?

2022-03-28T13:39:56Z

As a business owner who is expanding your workforce to meet demand, you want to have the new workers sign non-compete agreements when they come on. After you have invested time, effort, and capitol in training your workforce, you're looking to protect your company by preventing them from going to one of your competitors or starting competing businesses that could negatively impact your own revenue. But can you ask any type of employee to sign this agreement? Can you just make it part of the job? Or are such agreements only usable in some situations? The main key for the court, when deciding whether it will enforce a non-compete agreement, is considering whether or not the agreement is reasonable. This is why there are often time limits so that you can't set up a non-compete agreement for the rest of someone's life. There also may need to be geographical limitations so that you can't stop someone from starting a similar business in a location that is nowhere near yours. This reasonableness can also apply to the line of work the employee is in. After all, “courts generally disapprove of non-competition agreements as limitations on a former employee's right to earn a living.” What the court wants to see is an agreement that actually protects your business, your trade secrets or other forms of intellectual property. For instance, if you run a software company and one of your head developers wants to leave and create a competing software to sell to your customers, the court will probably enforce your agreement. The developer likely learned inside information and is now attempting to take it in a way that will harm your business. If you run a restaurant, however, and one of your waiters or waitresses wants to go work at another restaurant, even if it's a competing business, your non-compete agreement is less likely to hold up. That person has a right to make a living and to change jobs, and you can't infringe upon that. It's not directly hurting your business to lose that employee, who can be replaced by someone else, and you probably haven't lost any trade secrets or anything else of additional value that would warrant enforcement of the non-compete. Whether you're thinking about creating these agreements or trying to enforce them, it's very important to understand all of the legal steps to take.

What makes an employee dismissal illegal?

2024-10-04T05:31:02Z

Managing a workforce is not always an easy task for employers. They may have to make difficult decisions regarding hiring and firing workers. Sometimes these decisions can be unpopular, and sometimes they can trigger a lawsuit if an employee claims an employer violated their rights. For instance, a fired employee might accuse an employer of wrongful termination.

Elements of a wrongful termination

Because employment in Minnesota is generally at will, employers may usually fire a worker for any reason. However, there are certain elements that make a dismissal illegal. Illegal firings can include any that are discriminatory or retaliatory. Some examples include:

Firing a worker because of their race, gender, religion, or other protected class;
Firing a worker because they took family or medical leave;
Firing someone for reporting dangerous working conditions;
Firing someone for filing a sexual harassment claim; or
Firing someone for refusing to engage in illegal activity

Under these circumstances, a former employee may have grounds to take legal action against an employer.

Avoiding wrongful termination

As an employer, you can shield yourself from these types of allegations. Again, you have the right to fire an employee for any reason, so long as it is not for the reasons discussed above. But people have different perspectives of these situations. An employee may not see things the way you see them, so it can be important to cover your bases. When dismissing an employee, it is generally a good idea to:

Review your employment policies;
Have a legitimate reason for letting them go, whether that is poor performance or because they were the last person hired;
Prepare any documentation that supports your decision, like performance reviews or complaints against the employee;
Be truthful;
Be straightforward with the employee; and
Be respectful and avoid actions that might embarrass the employee

These measures can reduce or eliminate any confusion or misconceptions about the reason behind your decision. They can also make the situation less painful for both you and the employee. Employment decisions are not always easy or enjoyable. However, understanding wrongful termination and how to dismiss an employee lawfully can help you avoid costly litigation and hostile accusations.

4 lease clauses that affect how you run your business

2022-03-28T13:40:17Z

Business owners have a great deal of control over how they run their business. However, other parties can influence operations. For instance, if you open a business and lease commercial space, landlords can include terms in your lease that restrict or require things that affect how your manage your company. Below are four types of clauses to watch for if you are thinking of leasing commercial space.

Term: A lease should clearly lay out the term or length of the lease either in months or years. Along with the initial term, the lease should contain information about renewal options, as well as termination options should either you or the landlord want to end the lease early or once the initial term is over.
Rent clauses: A lease should clearly spell out monthly or annual rent amounts, but that is not the only rent-related matter you may find in your lease. You might also find a clause that specifies rent increases and rent structures. For example, leases for many bars and restaurants contain clauses requiring the bar or restaurant to meet minimum monthly sales amounts, and there will be additional rent assessed based on a percentage of those minimum monthly sales. There should also be information detailing what happens if a tenant is late in paying rent, penalties for late or unpaid rent, and whether there are circumstances under which they have the right to stop paying.
Improvements and alterations: Every space can require maintenance and changes, and your lease should provide instruction for whether tenants have the right or responsibility to do these things. It will also address who pays the associated costs. Pay close attention to these guidelines, as they could have a significant impact on your operational expenses.
Use clauses: You might assume you can use the space you lease as you see fit. However, use clauses in your lease could change your plans. For instance, depending on the details of a use clause, you may not be able to put up the signs you want or expand into a new business in the space. There may also be clauses that restrict when and if you can cease operations, such as a go dark clause.
Dispute resolution rules: Should a dispute arise between a landlord and tenant, a commercial lease will typically dictate how parties should resolve the conflict. For instance, it might specify that parties must mediate or arbitrate a matter instead of going to court.
Personal Guarantees: Often times landlords will require an individual person, either the owner, officer or member of the business to sign a personal guarantee which obligates the guarantor to personally pay rent and/or other costs associated with the lease in the event the business defaults on the lease. The length of the personal guarantee and the extent of the obligations contained within it can vary greatly so be sure to review the terms carefully.

These clauses can dramatically impact the way you run your business, so it is crucial to be mindful of them and review them closely before signing a lease. If there are unfavorable terms, you might negotiate with the landlord or find a different space to avoid having a lease hold you - or your business - back.

Are you unintentionally discriminating against older workers?

2022-03-28T13:40:23Z

Discriminating against workers or job applicants can land an employer in hot water, so employers should make every effort to avoid discriminatory practices and policies. But even the best-intentioned employers may still be discriminating against workers unwittingly. For instance, some employers might be mistreating older workers or excluding them from employment opportunities without realizing it.

What is age discrimination?

Federal and Minnesota laws prohibit discriminating against workers because of their age. Some people view older workers as being slower or less tech-savvy. But assumptions and biases like these should not drive employment decisions.

Unintentional discrimination

Even if you are not intentionally treating older workers unfairly, you could be accused of inadvertent discrimination. Some actions that can trigger a complaint include:

Advertising job postings in places more senior candidates may not use
Using phrases like "recent college graduate" or "digital native" in job postings
Promoting younger workers over older workers to add "fresh perspective"
Conducting layoffs that disproportionately affect workers over 40 years of age
Referring to an employee as over-the-hill or ancient
Excluding older employees from work events and activities

Another way employers could be discriminating against older workers stems from the pandemic. As this Financial Times article discusses, some employers are laying off older workers first and bringing younger employees back to work sooner. Even if these actions are unintentional, they still might violate an employee's rights.

Avoiding legal claims

Regularly assessing your workplace and employment policies can ensure you are not violating employee rights. It can also help to provide regular anti-discrimination training to managers. These measures can be especially wise if you must lay off workers or you are looking to hire new people. If you are unsure whether something could be construed as discriminatory, you should consult an attorney for guidance. Even if age discrimination is unintentional or you disagree with someone's discrimination claims, employers must take accusations seriously and respond appropriately.

Can employers require vaccines for work?

2022-03-28T13:40:31Z

As an employer, you want to keep your employees and their workplace as safe as possible. After all, when employees are safe and healthy, they can do their jobs better. However, when you are making rules for your workplace, you need to consider both your employees' work and the potential impact for employees who are exempt from getting vaccinations. Here is what you should know about requiring your employees to have specific vaccinations in the workplace.

Know the morale of your employees

As an employer, you know that some employees embrace new rules better than others. Some employees may not need a requirement from you to decide to receive certain vaccinations. However, other employees may be wary of vaccinations or have other reasons they do not want to receive a specific (or any) vaccine. When you decide how to proceed with your employees, consider those who may have difficulty embracing change. While you cannot put others at risk because of some who will refuse, you should know what kind of fight you may have on your hands if you move forward with a vaccine requirement.

Understand the exceptions

Employers can set requirements that an individual not pose a direct threat to the health or safety of individuals in the workplace and can legally require employees to get vaccines and fire employers if they refuse. However, there is an exception for nearly every rule, and requiring employee vaccinations is a time when there are exceptions. Some of your employees might be exempt from getting a vaccine for reasons, including:

Disability
Religious beliefs
Other medical reasons

If an employee claims an exemption or exception, based on one of the above reasons, the burden shifts to the employer to show that an unvaccinated employee poses a significant risk of substantial harm to the health or safety of the individuals or others in the workplace. Employers are also required to provide “reasonable accommodation” to employees who claim an exemption. If an accommodation is not possible or places an undue hardship on the employer, the employer can exclude the employee from the workplace. However, “exclusion” does not equal automatic termination, you should be sure to review all federal, state and local employment laws or consult an attorney before terminating an employee who claims and exception to ensure you are not in violation of anti-discrimination laws. Bottom line. You have an obligation to protect the health and safety of all of your employees and requiring vaccines can be one of the methods for achieving this goal. Best practices dictate that before deciding on a vaccination mandate for your employees, consider whether they will have exemptions and what obligations you may have to accommodate exempt employees.

What are the overtime rules in Minnesota?

2022-03-28T13:40:36Z

Overtime can be a challenge as an employer. While your business has specific needs, overtime adds up quickly and can get expensive. When your employees know they can count on you to pay overtime wages, they are more likely to agree to work extra hours. As an employer, you have important obligations to your employees to follow federal and state overtime rules. Here is what you should know about the overtime rules in Minnesota:

Minnesota Overtime Laws

In some states, there is a maximum number of hours an employee can work before requiring overtime pay. Minnesota does not have a daily maximum of working hours. Keep in mind that your employees can work more efficiently when they are well-rested than when they become exhausted. When you provide reasonable shifts and break periods, your employees will be more successful. Employers are responsible for following both the Minnesota overtime rules and the federal Fair Labor Standard Act. The Minnesota Department of Labor maintains a summary of the applicable statutes and requirements here.

When does overtime start?

In Minnesota, an employee is not entitled to overtime pay if they do not work more than 48 hours in a seven-day work week. Overtime hours are based on actual hours worked in a seven-day workweek so holiday hours, vacation time and sick leave are not counted. Keep in mind that even though you, as the employer, can decide what seven-day period counts as a workweek, but your chosen days must be consistent week to week. Some employers in Minnesota may be required to follow the more stringent requirements of the federal Fair Labor Standards Act which says that employees who work more than 40 hours in a seven-day work week are entitled to overtime pay. These employers include:

Employers that produce or handle goods for interstate commerce;
Businesses with gross annual sales of more than $500,000; and
Hospitals and nursing homes, private and public schools, federal, state and local government agencies.

It is important to know when you will need to begin calculating and paying your employees for overtime, so be sure to know whether you are required to being counting overtime hours at 40 or 48 hours in a seven-day work week.

Compensation for overtime

Overtime pay is not discretionary. Both Minnesota and Federal law prohibit any agreement to not pay overtime to employees. Employees must be compensated appropriately for overtime, even if you did not authorize extra hours. It is essential to discuss overtime with your employees so that they understand your policies and when overtime applies. Employees are entitled to be paid time and a half for any overtime hours they work. In other words, they must be paid one-and-one-half times their regular rate of pay. The overtime rate can be calculated by dividing the total pay in any work week by the total numbers of hours worked in that week. Some employees are exempt from Minnesota and Federal overtime wages these include, but are not limited to the following:

Executive, administrative or professional employees who meet the salary and duty requirements of the department’s rules;
An outside salesperson;
A salesperson, parts person or mechanic for a vehicle dealership who sells or services automobiles, trailers, trucks or farm implements, and is paid on a commission or incentive basis, and is employed by a dealer selling to the consumer; and
An agricultural worker paid a salary of at least $724.71 a week for large employers grossing $500,000 a year or more, or $590.94 a week for small employers grossing less than $500,000 a year.

The failure to pay overtime wages in Minnesota can be considered wage theft and subject an employer to civil and criminal penalties. Therefore, it is important to ensure that all of your employees are properly classified and that you are properly tracking overtime.

How does a personal guaranty impact a commercial lease?

2022-03-28T13:40:43Z

Moving forward on a commercial lease can be an exciting time for you and your business. A new or expanded location can help you build your business and develop your customer base. As you start looking at commercial leases, however, it is essential to also look at the personal guaranty the landlord requires. The personal guaranty is meant to protect your future landlord. Still, if you do not negotiate the agreement, your personal assets could be at stake. Here’s what you should know before you sign a personal guaranty as part of a commercial lease.

What will it do?

In most transactions, your business entity protects your assets. This means that if your business fails, the person or company on the other end of the agreement cannot sue you personally. For commercial landlords, being unable to sue the business owner can be a substantial risk. Suppose you cannot complete your lease term, and your business does not have any remaining assets. In that case, the landlord has no recourse for the unpaid rent. A personal guaranty gives more security to the commercial landlord. If your business breaches the lease agreement, the landlord can go after your personal assets.

When does a personal guaranty go into effect?

The personal guaranty only goes into effect if there is a breach in the lease agreement. However, when you negotiate the personal guaranty, it is essential to pay attention to when the landlord considers an action a breach. Personal guaranties can have many variations in their terms. It is important to have knowledgeable support when you are negotiations the personal guaranty portion of your commercial lease.

What work can employees take with them?

2022-03-28T13:40:49Z

Intellectual property is one of the most important assets your company has. While you can assign value to your products and equipment, once your intellectual property gets out, it can be challenging to get it back. For better or worse, when your employees leave, they take the knowledge of your business with them. Depending on the type of work your employees do, some of their work content may belong to the employee. Here’s what you should know to protect your company’s intellectual property.

Employment Agreement’s with Non-Disclosure and/or Confidentiality Agreements

A common way to protect your intellectual property, is to ensure that employees enter into employment agreements containing confidentiality and non-disclosures obligations. Confidentiality and non-disclosures agreements can give the employee clear instructions regarding the information they may encounter while working and the limitations on what they can do with that information both during their employment and after their employment with company ends. It is important to note that if employees do not enter into an employment agreement at the commencement of their employment, you will need to provide additional consideration to make the agreement binding. Additional information regarding confidentiality and non-disclosure agreements can be found here. It is also a good idea to ensure that your policies and procedures which apply to all employees outline your company’s expectations regarding confidentiality. A common way to do this is through an employee handbook which is provided to all employees on their first day of employment. You should also make sure that employees sign an acknowledgment that they received a copy of the company’s policies and procedures.

Assignment Clause

Another option to protect Company intellectual property is to require that your employees enter into an assignment agreement. Assignment agreements require employees to assign the rights to any intellectual property they create during their employment to the Company. Commonly these agreements are included as a clause in an employment agreement. As discussed above, if an employment agreement isn’t entered into at the commencement of employment, you will need to ensure that the employee receives additional consideration at the time of signing in order for the agreement to be valid.

Work-for-hire

You can also keep the work your employees produce by designating what they do to be work-for-hire. Work-for-hire is commonly used when employees create something for a client, such as creative content. When you classify something as work-for-hire, typically, the work belongs to the client, and the employee no longer has rights to what they produced. No matter what method you choose to protect your business’s intellectual property, it is essential to talk to your employees about their obligations to keep company information confidential. If your employees do not know they have an obligation not to share certain information, they may have a difficult time helping you maintain company secrets.

What are the limits for employee uniforms?

2022-03-28T13:40:55Z

As a business owner, you invest a great deal of time and money building your company's brand. You know that a consistent, memorable brand is easy for your customers to identify and recognize. What your employees wear to work is one way to support the work you have done in developing your brand. Uniforms can give a cohesive look to your business and help clients recognize your support staff. In roles that are not client-facing, a uniform can also help you ensure your staff's safety. Here's what you should know about the rules regarding employee uniforms and how they could impact your business. Generally, you can require your employees to wear a uniform, or dress in certain attire, so long as you do not discriminate, and your requirements aren’t illegal. When considering a dress code for your company, take into consideration the type of workplace and the job duties your employees will be performing to ensure that your uniform requirements do not impede on your employee’s ability to do their job in a safe manner. Allowable requirements include:

Requiring employees to wearing clothing of a certain color;
Requiring employees to wear branded clothing with your company logo;
Banning inappropriate clothing such as shorts, jeans, tank-tops, baseball hats or sweatpants;
Banning clothing that might be unsafe in your company’s environment, such as open-toed shoes or sneakers.

You can also require your employees to maintain a clean, neat and professional appearance. This requirement can trigger a discussion of the treatment of men and women in the workplace as what is considered clean, neat and professional may not be identical for men and women. While there are differing opinions, the courts tend to agree that different genders can have different uniform requirements as long as one does not have a more significant burden than the other. For example, a workplace can require women to wear makeup while men must keep their hair trimmed above the collar. One thing to be mindful of as you consider your uniform policy, is the cost for the employee to change jobs and adapt to a new environment. For your employees, starting a new job that has extensive uniform requirements can be overwhelming and expensive. In Minnesota, you can deduct up to $50 from employee pay to cover purchased or rented uniforms, but you will have to pay it back when they leave. When an employee leaves (whether voluntarily or involuntarily), their last check must include reimbursement for their uniform expenses.

What protective equipment must employers provide?

2022-03-28T13:41:01Z

Employee safety is important both to the productivity of your business and the morale of your employees. When you provide the safety equipment your employees need, you communicate that you care about their wellbeing in the workplace. Safety is also a legal responsibility. OSHA and other state and federal agencies have requirements that you must follow to keep your employees safe. When you do not follow your industry's safety guidelines, you face the possibility of fines and penalties which could affect your reputation and cost your business. It is your obligation to perform a “hazard assessment” of the workplace to identify and control physical and health hazards.

Know your industry

Depending on your business, your employees could need a range of safety equipment while they are working. The type of safety equipment required by doctors and nurses could be significant different than the type of safety equipment required by farmers or employees who work in a manufacturing setting. When you are making safety protocols for your company, you should consult with experts in the field, such as:

Local OSHA representatives
Industry organizations
Equipment and product suppliers

When you discuss your company's needs with others in similar and related businesses, you can learn about the industry standards. If there is an incident in your workplace, taking the initiative to understand the local standards is beneficial. Minnesota maintains its own Occupational Safety and Health Administration (“MNOSHA”) plan which is approved by federal OSHA, to protect workers at private and public worksites. The Minnesota Department of Labor and Industry publishes guidelines put out by MNOSHA on its website which can be accessed here. Guidelines maintained by the federal OSHA including the top 10 most frequently cited standards can be found here.

Talk to your employees

You know your business well, but your employees see first-hand the risks in the workplace. Take time to talk to employees from different business areas about what they see as potential hazards and what near-miss accidents they have seen. Sometimes there are critical differences between how equipment should work and how it functions on a day-to-day basis. As you establish a trust relationship with your employees, they will be valuable assets to help you see your business's needs.

Personal Protective Equipment (“PPE”)

If your business operates in an environment that is considered hazardous, your employees may require personal protective equipment (“PPE”), such as gloves, foot and eye protection, protective hearing protection (earplugs, muffs), hard hats and/or respirators to help keep them safe. Common examples of industries where PPE may be necessary include hospitals, clinics, construction sites, and machine shops. If your employees require PPE it is your obligation as the employer to provide PPE and ensure that it is used properly. You may need to provide training to employees in the use and care of PPE. You cannot require that employees purchase their own PPE, it is your obligation as the employee to provide and maintain PPE.

Know your obligations

The bottom line is that it is your obligation as an employer to be aware of what safety equipment you are required to provide to your employees. Make sure you are monitoring state and federal laws and guidelines and periodically review and update your employee safety programs.