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1

GENERAL PRINCIPLES

Forums For Adjudicating Employment Disputes

There are no specialised labour courts in Minnesota. Employment disputes may be adjudicated in either federal or state courts, depending upon the legal claims involved. Unemployment law, workers’ compensation, federal discrimination claims and certain other disputes are handled first in administrative agencies, with appeal or other court action available in various federal and state courts.


The Main Sources Of Employment Law

All employment arrangements are governed by general common law principles of contract and tort law, but there are legislative requirements which over-ride those general principles in some instances. Individual employment contracts (whether written or oral), collective bargaining agreements and common practice all form part of any contractual relationship. The main sources of statutory employment law are found in §177, § 181 and § 363A of the Minnesota Statutes.


National Law And Employees Working For Foreign Companies

Minnesota and federal statutory rights apply to all individuals physically working in Minnesota, regardless of nationality, and regardless of the law governing their contract of employment.


National Law And Employees Of National Companies Working In Another Jurisdiction

Federal law generally applies to all employees working in the United States and, in some circumstances, to employees outside of the United States who work for U.S.-based companies. Whether or not a particular employer is covered by a particular federal law typically depends on the size of the employer.


Data privacy

Minnesota has a general data breach notification statute requiring businesses to notify affected individuals of any security breach involving personal information. Personal information includes an individual’s name combined with one or more data elements, such as a social security number, driver’s license number, or bank account number with a code allowing access to the account.

2

HIRING THE EMPLOYEE

Legal Requirements As To The Form Of Agreement

Minnesota employers are required to provide employees with a written and signed agreement of hire that includes:

    1. the date on which the agreement was entered into;
    2. the date on which the services of the employee are to begin;
    3. the rate of pay per unit of time, or of commission, or by the piece, so that wages due may be readily computed;
    4. the number of hours a day which shall constitute a regular day's work, and whether or not additional hours the employee is required to work shall constitute overtime and be paid for, and, if so, the rate of pay for overtime work; and
    5. a statement of any special responsibility undertaken by the employee, not forbidden by law, which, if not properly performed by the employee, will entitle the employer to make deductions from the wages of the employee, and the terms upon which such deductions may be made.

Mandatory Requirements
  • Trial Period

    • No requirements.

  • Hours Of Work

    • Under the federal Fair Labor Standards Act (“FLSA”) an employee classified as “non-exempt” who works more than 40 hours per week must be paid overtime compensation at one -and -one-half times the employee’s regular rate of pay. Under the Minnesota Fair Labor Standards Act, a nonexempt employee who works more than 48 hours per week must be compensated at one-and-one-half times the employee’s regular rate of pay. Under both the federal and state law, employers need not pay overtime to employees classified as “exempt.” However, the categories designated as “exempt” differ between the two laws. Where both federal and state statutes apply, the employee is entitled to application of the more favorable overtime compensation rule.

  • Special Rules For Part-time Work

    • No special rules for part-time work.

  • Earnings

    • The federal minimum wage is $7.25 an hour.

    Effective January 1, 2021, Minnesota’s minimum wage rates are $10.08 per hour for large employers (those with an annual gross revenue of $500,000 or more), and $8.21 per hour for small employers (annual gross revenue less than $500,000). Because the state rate is higher than the federal rate, employees covered by both rates are paid at the state rate.

    Cities may require higher minimum wages. For example, both Minneapolis and St. Paul (the state’s two largest cities) are currently phasing in $15 per hour minimum wage rates.

    Minnesota’s Equal Pay for Equal Work law specifically requires employers to pay male and female employees the same wages for work requiring equal skill, effort, and responsibility, and performed under similar working conditions.

    Minnesota employers with at least 40 employees must obtain an equal pay certificate before executing a contract likely to exceed $500,000 with the state or its metropolitan agencies. The certificate is valid for four years, and employer compliance will be audited.

    Under Minnesota’s wage theft law, employers must provide employees at the start of their employment a written notice containing the following information:

    • The rate and basis for calculating pay (for example, by hour, day, shift, week, or piece).
    • Paid vacation, sick time, or other paid time off accruals and the terms of their use.
    • The employee's employment status and whether the employee is exempt from minimum wage, overtime, and other provisions of Chapter 177 of the Minnesota Statutes, and the basis of any exemption.
    • A list of deductions that may be made from an employee's pay.
    • The number of days in a pay period, the regularly scheduled pay day, and the pay day the employee will receive their first payment of wages.
    • The legal name of the employer and the operating name if it is different from the legal name.
    • The physical address of the employer's main office or principal place of business, and a mailing address if different.
    • The telephone number of the employer.

    Minneapolis also has a wage theft law that requires employers to notify employees of information regarding the city’s sick and safe leave law.

    Under Minnesota’s wage disclosure protection law, employers may not, as a condition of employment, prohibit employees from disclosing their wages. Under this law, employee handbooks must include a notice of employee rights under this disclosure protection law.

    Minnesota employers cannot take deductions from an employee's wages for lost or stolen property, damage to property, or to recover debts of the employee to the employer, unless the employee expressly authorizes the deduction or has been found liable for the loss by a court.

  • Holidays/Rest Periods

    • The Minnesota FLSA requires that an employer allow each employee a meal break for every eight consecutive hours worked but does not require that the meal break be a paid if the employee is relieved of all work duties during the break. The Minnesota FLSA also requires an employer to allow each employee a break to use the restroom once every four hours. No other rest or break times are required, but if an employer provides additional rest breaks that are under 20 minutes, those breaks must be treated as hours worked.

    There are no statutes that provide for mandatory holiday allowances.

  • Minimum/Maximum Age

    • A minor must be at least 14 years of age to work in Minnesota, subject to some exceptions. State law also regulates the hours and types of work which employees under 18 years of age may work.

  • Illness/Disability

    • There are no requirements under Minnesota state law for employers to provide employees with sick leave benefits. However, if a Minnesota employer elects to provide its employees with paid time off, the employee may use personal sick leave days for absences due to illness or injury of the employee’s child, spouse, sibling, parent, grandparent, or stepparent.

    Although there is no statewide requirement, three of Minnesota’s largest cities—Minneapolis, St. Paul, and Duluth—now have laws requiring employers with employees working in those cities to provide paid sick leave at various accrual levels for specified reasons.

  • Location Of Work/Mobility

    • No requirements.

  • Pension Plans

    • No requirements.

  • Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)

    • Minnesota has a parental leave law, which provides eligible employees the right to take up to 12 weeks of unpaid leave for the birth, adoption, or foster care placement of a child in addition to leaves or in conjunction with permitted under federal law. The law applies to employees who work for a company with at least 21 employees and have worked for that company for at least 12 months.

  • Compulsory Terms

    • No requirements.

  • Non-Compulsory Terms

    • Parties are free to agree to other non-compulsory terms. However, certain terms may not be enforceable if they are contrary to public policy.


Types Of Agreement

Minnesota recognizes at-will employment, and, therefore, a Minnesota employer is free to establish an at-will relationship rather than a contractual relationship with an employee. If a contract is formed, Minnesota law does not provide different rules for different types of agreements. However, many categories of employees are protected from discrimination and retaliation for engaging in protected activities (see below). Collective bargaining agreements in the private sector are generally subject to the jurisdiction of the National Labor Relations Board under the federal labor law known as the National Labor Relations Act, which requires that where a union has been certified to represent employees, the union and the employer must bargain in good faith for agreement on terms and conditions of employment and other matters.


Secrecy/Confidentiality

Employees have a common law duty of loyalty while employed. In addition, Minnesota’s Trade Secrets Act prohibits employees from using or disclosing “trade secrets” either during or following employment.


Ownership of Inventions/Other Intellectual Property (IP) Rights

Under Minnesota law, if an employment agreement provides that an employee must assign to the employer the employee’s rights in an invention, that provision cannot apply to any invention that is (a) developed entirely on the employee's own time without employer's equipment, supplies, facilities, or trade secrets, (b) does not relate directly to the employer’s business, research or development, and (c) does not result from work performed by the employee for the employer. This law applies only to invention provisions in written agreements.


Pre-Employment Considerations

Under Minnesota’s “ban the box” law, employers are prohibited from asking about or requiring disclosure of an applicant’s criminal record prior to a job interview. As such, written job application forms used in Minnesota typically may not include a question about criminal background. Employers may still inquire about and consider relevant criminal background information in making a hiring decision but must wait until at least the interview stage to inquire about criminal history. Certain employers that are required by federal or other Minnesota law to conduct criminal background checks for a particular job position are exempt from the “ban the box” law.An employer cannot obtain a consumer report for a job applicant without disclosing in writing to the applicant that such a report is being obtained. If the employer uses a written employment application, the disclosure must accompany that application. The disclosure must include an option for the applicant to indicate that they want a copy of the report.

Minnesota employers may not require job applicants to take a polygraph test or any other test designed to test honesty. If an employee asks to take polygraph test, the employer must inform the employee that taking the test is voluntary. The employer would also be prohibited from disclosing to anyone else that the employee had taken a polygraph test.

Under Minnesota law, an employer can conduct a physical examination to determine an individual’s capability of perfomring the job, provided (a) that the job offer has been made conditional upon passing the exam, (b) that the exam only tests for job-related abilities, (c) that the exam is required of all individuals conditionally offered that job, and (d) that the information is kept confidential.

Minnesota law strictly regulates applicant and employee drug or alcohol testing. Employers must have a specific form of written policy to conduct testing and must comply with certain testing consent procedures. Pre-employment testing of all job applicants for a given position is allowed after a conditional offer of employment has been made.


Non-Compete Agreements

Minnesota courts read non-competition restrictions in employment agreements narrowly, and construe ambiguities against the employer that drafted the employment.

A non-compete agreement is enforceable in Minnesota if the employer shows that the agreement was reasonable, balancing the employer’s legitimate business interests against the employee’s right to work. Moreover, an employee’s promise not to compete must be supported by adequate consideration. Non-compete agreements are generally not valid in Minnesota unless they are signed before the start of employment and the agreement makes clear that employment is contingent upon signing the non-compete.


Hiring Non-Nationals

There are no specific rules unique to Minnesota regarding hiring of non-nationals.

 

Hiring Specified Categories Of Individuals

There are no specific rules in Minnesota about hiring any other specified categories of individuals other than non-discrimination laws.


Outsourcing And/Or Sub-Contracting/Temporary Agency Work

There are no restrictions placed on outsourcing and subcontracting, unless a collective bargaining agreement contains such restrictions. In such cases, the agreement would be governed by the federal labor law as noted above.

3

MAINTAINING THE EMPLOYEE RELATIONSHIP

Changes To The Contract

Most employment relationships are “at-will,” and in these cases employers are free to prospectively alter the terms and conditions of the employment relationship. When the relationship is governed by a contract, the employee’s consent is required in order to alter the terms unless the contract expressly reserved discretion to the employer.


Change In Ownership Of The Business

There are no specific rules which apply or specific steps which need to be followed in the event of a change of ownership in a business. Unless the employee has an employment contract which states otherwise, employment in Minnesota is at-will, and thus employees are not allowed to refuse changes in ownership of the business. If only the assets of a business are sold, however, as opposed to its stock, employees do not necessarily retain their employment. In those situations, the decision of whether to continue the employment relationships lies entirely with the new owner.


Social Security Contributions

Federal law provides for compulsory social security contributions by both employer and employee.


Accidents At Work

Minnesota’s workers’ compensation law may apply if the employee is injured while at work. Other laws may also apply to the employer’s treatment of an employee as a result of the injury, including disability laws and access to leave. Employers are prohibited from retaliating against an employee for seeking workers’ compensation benefits.


Drug and Alcohol Testing

Minnesota law strictly regulates applicant and employee drug or alcohol testing. Employers must have a specific form of written policy to conduct testing and must comply with certain testing consent procedures. In addition, employers may only conduct tests in one of the following five instances: (1) pre-employment testing of all job applicants for a given position after a conditional offer of employment has been made; (2) reasonable suspicion testing; (3) treatment program testing; (4) routine physical examination testing; and (5) random drug testing of “safety sensitive” positions. Employers are limited as to the employment actions that may be taken based on a first-time positive test result. Employers may discipline employees for a first positive test result, but they must offer the employee the opportunity for treatment in lieu of termination.

Medical marijuana is legal in Minnesota. An employer must allow an applicant or employee who has a positive drug test to provide proof of their enrollment in the state medical marijuana registry. Employers are prohibited from discriminating against an applicant or employee who is enrolled in the state registry for testing positive for medical cannabis, unless the individual used, possessed, or was impaired by medical cannabis while at work.

Minnesota law also protects the lawful use of lawful consumable products. such as alcohol and tobacco off the employer premises and during nonworking hours. An employer may not take disciplinary action for such lawful behaviour. As such, it is typically inappropriate to conduct alcohol testing on job applicants in Minnesota.


Discipline And Grievance

Unless a collective bargaining agreement or a specific contract provision applies, state and federal law do not govern discipline or grievance procedures.


Harassment/Discrimination/Equal pay

The Minnesota Human Rights Act (MHRA) prohibits discrimination in employment by reason of race, colour, creed, religion, national origin, sex, marital status, status with regard to public assistance, membership or activity in a local commission disability, sexual orientation (including gender identity), age or familial status .Retaliation against an employee who reports a violation of the MHRA, testifies, assists, or participates in any investigation or proceeding under the MHRA, or associates with a person or group of persons in a protected class also is prohibited.

The prohibition against discrimination based on sex includes discrimination due to pregnancy, childbirth, and disabilities related to pregnancy or childbirth. For purposes of discrimination based on sex, the term “discriminate” includes sexual harassment. “Sexual harassment” includes unwelcome sexual advances, requests for sexual favours, sexually motivated physical contact, or other verbal or physical conduct or communication based on one’s sex when either (1) submission to such conduct is made a term or condition of employment, or (2) such conduct has the purpose or effect of substantially interfering with an individual’s employment, or creating an intimidating, hostile, or offensive work environment.

The MHRA also establishes special requirements to obtain a release of any discrimination or retaliation claim under the MHRA. For such a release to be effective, an employee asked to release any MHRA claim must be given a fifteen -day period after signing the release agreement to revoke the release of MHRA claims unless the release is of a MHRA claim that was formally asserted in a state administrative or court action.


Compulsory Training Obligations

Employers must provide annual training regarding hazardous substances or harmful physical agents to employees who may routinely be exposed to such materials.


Offsetting Earnings

Except in limited circumstances, employers may not make deductions from wages for any claimed indebtedness.


Payments For Maternity And Disability Leave

For employers with 21 or more employees at one site, the Minnesota Parenting Leave Act provides for up to 12 weeks of unpaid parental leave for the birth or adoption of a child if the employee has worked at least half-time for 12 consecutive months for the employer before the leave is to begin. After returning from leave, the returning employee generally must be reinstated to the same position or to a similar position with comparable duties.

There are no Minnesota statutes that directly provide for disability leave. However, the Minnesota Human Rights Act requires employers to make reasonable accommodations to employees with known disabilities.


Compulsory Insurance

Most employers must participate in insurance plans for work-related injuries and for unemployment. Workers’ compensation is administered by the Minnesota Department of Labor & Industry. The Minnesota Unemployment Insurance Program is administered by the Minnesota Department of Employment & Economic Development.


Absence For Military Or Public Service Duties

Federal law provides leave for certain military service members, family members and caretakers. In addition, Minnesota provides paid leave for certain military activities, jury duty and court appearances, voting, and bone marrow and organ donation.

An employee elected to public office must be given leave to attend required meetings, but this time may be either paid or unpaid.

Employees may take up to 16 hours of unpaid leave within a 12-month period to attend school conferences or activities of the employee’s child.


Works Councils or Trade Unions

Minnesota has statutes that govern labor relations in the public and private sectors. As to the private sector, generally the state statutes will have effect only where the federal labor law, the National Labor Relations Act, does not reach. Such areas of state law coverage in the private sector in Minnesota are very limited as the federal law reaches the vast majority of private employers. The public sector is a different matter, because generally the federal labor law does not cover public employers. The state therefore regulates that sector significantly.


Employees’ Right To Strike

While private employees’ right to strike exists in virtually every instance, public employees’ right to strike is more limited. Those falling under the statutory definition of “essential employees” may not strike. Other public employees may strike only in certain circumstances. Where employees do not have a right to strike, they have a right to arbitration of bargaining and related matters, and other “substitute” procedural rights. The state does place some restrictions, which are generally not pre-empted by the federal labor law, on the conduct of strikes and related job actions whether they occur in the private or public sector.


Employees On Strike

Under federal law the employer can permanently replace striking private sector employees under certain circumscribed conditions. More generally, an employer under the federal law has an absolute right to hire and employ temporary replacements for striking workers. Workers cannot, however, be fired because they have participated in a strike or otherwise engaged in protected concerted activity.

Under Minnesota’s public sector labor law, the right to replace striking workers is significantly more restricted than under the federal law applicable to the private sector.


Employers’ Responsibility For Actions Of Their Employees

Employers may be liable to third parties for injuries inflicted by their employees under two broad theories. Employers may be vicariously liable for acts committed by their employees within the scope of their employment duties.

In addition, employers may be directly liable for their own negligence in failing to ascertain an employee’s propensity to inflict injury.

4

FIRING THE EMPLOYEE

Procedures For Terminating the Agreement

Unless otherwise specified in a collective bargaining agreement or employment contract, there are no specific rules relating to the specific forum for terminating the agreement or specific procedures that have to be followed.


Instant Dismissal

Unless otherwise agreed to contractually, employment in Minnesota is at-will, meaning that the employer can terminate the employee at anytime and for any lawful reason.


Whistleblower Laws

Private employers in Minnesota may not retaliate against an employee for making a good faith report to the employer, any governmental body, or a law enforcement official of a violation, suspected violation, or planned violation of any federal, state, or common law rule; for being requested to participate in an investigation or hearing; for refusing an employer’s order to perform an act the employee has an objective basis to believe violates any state or federal law; or for a good faith report of substandard healthcare.


Employee's Resignation

An agreement can be terminated by the employee’s resignation.


Termination On Notice

Minnesota's Early Warning System law encourages (but does not require) employers to give notice of a plant closing, substantial layoffs, and relocation of operations.


Termination By Reason Of The Employee's Age

Private sector employers in Minnesota may not discharge, dismiss, or demote any employee on the grounds that the individual’s age is less than 70, except where federal law or other state laws compel or authorize such actions. If an employer wishes to terminate an employee who is older than 65 but younger than 70 because they can no longer meet the requirements of the job, the employer must provide 30 days notice. Mandatory retirement at the age of 70 is permitted under Minnesota law for employers with fewer than 20 employees.


Automatic Termination In Cases Of Force Majeure

Minnesota law does not provide for automatic termination of an agreement in cases of force majeure.


Collective Dismissals

Minnesota's Early Warning System law encourages (but does not require) employers to give notice of a plant closing, substantial layoffs, and relocation of operations.


Termination By Parties’ Agreement

The parties are entirely free to agree to termination on any grounds they desire, except for a reason that would violate a law or public policy.


Directors Or Other Senior Officers

There are no separate rules for firing directors or other senior officials unless they are also minority shareholder and therefore subject to specific statutory protections.


Special Rules For Categories Of Employee

There are no other categories of employees for whom special rules apply on termination.


Specific Rules For Companies in Financial Difficulties

An employer must notify all of its employees in writing if it has filed for bankruptcy or has an involuntary bankruptcy petition filed against it.

A bankruptcy court may also impose other requirements in specific cases.


Special Rules For Garden Leave

No special rules for garden leave.


Restricting Future Activities

Minnesota courts read non-competition restrictions in employment agreements narrowly, and construe ambiguities against the employer that drafted the employment.

A non-compete agreement is enforceable if the employer shows that the agreement was reasonable, balancing the employer’s legitimate business interests against the employee’s right to work. Moreover, an employee’s promise not to compete must be supported by adequate consideration. Non-compete agreements are generally not valid in Minnesota unless they are signed before the start of employment and the agreement makes clear that employment is contingent on signing the non-compete.


Severance Payments

Employers are not required under Minnesota law to provide severance pay. Normal contract principles apply to severance payments included in a contract. If a separation agreement includes a waiver or release of rights under the Minnesota Human Rights Act, the employee can rescind the agreement within 15 days.


Special Tax Provisions And Severance Payments

Severance payments are normally taxed as wages.


Allowances Payable To Employees After Termination

Employers are not required to contribute towards any allowances payable to employees after termination. However, most Employers are required to pay a quarterly Unemployment Insurance (“UI”) tax on a certain amount of each employee’s wages. The tax is deposited in the Minnesota UI Fund, which is used to pay unemployment benefits to eligible applicants who are unemployed.


Reasons for Termination

An involuntarily terminated employee may request in writing the reason for termination within 15 working days of the termination. After receipt, the employer has 10 working days to provide a truthful written explanation of the reason for termination. This explanation may not be used as the basis for discharge defamation. Former employees may also request to review their personnel file once per year or obtain a copy of their personnel file free of charge for as long as the file is maintained.


Time Limits For Claims Following Termination

Claims under the Minnesota Human Rights Act must be commenced within one year after the occurrence of the alleged unlawful practice. The limitation period for breach of an employment contract is two years. The limitation period of intentional torts is generally two years while claims based on negligence generally must be commenced within a six-year period.


Additional Termination Matters

Any unpaid wages and commissions are immediately due upon demand of the discharged employee. If unpaid wages and commissions are not paid within 24 hours of the demand, the employer is in default and subject to penalties.

Accrued, unused vacation and paid time off are not required to be paid out upon termination unless an employer’s agreement, policy, or practices requires it to be paid out.

An employer may be liable for discharge defamation in Minnesota if it directly communicated false reasons for termination to others, or if the employee is compelled to self-publish false information to others, such as prospective employers.

5

GENERAL

Specific Matters Which Are Important Or Unique To This Jurisdiction

Private employers must permit employees to review their personnel record once every six months upon written request, and a former employee may review the personnel record once each year following separation. Upon receipt of the request, the employer must produce the records within seven working days or, if the file is located out of state, fourteen working days. Certain Minnesota employers are required to give all new hires written notice of their personnel file rights.



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Neil Goldsmith
Lathrop GPM
United States


Dion Farganis
Lathrop GPM
United States


Disclaimer:

© 2021, Lathrop GPM. All rights reserved by Lathrop GPM as author and the owner of the copyright in this chapter. Lathrop GPM has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this Guide.

The information in the How to Hire and Fire Guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: June 2021