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January 2018 - Vol. 20, No.1 The Employer E-Letter: Labor and Employment Law News from the Duluth, Minnesota law firm of Hanft Fride, P.A.

Have a Safe & Happy New Year!


January 2018 - Vol. 20, No.1

The Employer E-Letter:  Labor and Employment Law News
from the Duluth, Minnesota law firm of
Hanft Fride, A Professional Association.


Co-Editors, Scott A. Witty, saw@hanftlaw.com and Richard R. Burns, rrb@hanftlaw.com, or 218-722-4766. Please feel free to forward this e-mail or share it with others.  If there are other topics of interest to you or any other suggestions concerning this newsletter, please let us know.



This Month's Topics:

  • more employee-friendly nlrb is here 
  • unpaid interns are returning
  • Allegation the Employer Failed to Follow Policy is Not Pre-text
  • "micro-units" no more
  • Tip Of The Month









We are planning another interesting and informative day for seminar attendees in March. Contact Lynn Lach at lml@hanftlaw.com or 218.722-4766 with questions or a request to be added to our mailing list.


Schedule and registration materials will be mailed in February.



More Employee-Friendly NLRB is Here. 


The NLRB has made a marked retreat from the union-friendly approach of the Obama Administration Board.  Among the rulings in a more employer-friendly environment is a reversal of Lutheran Heritage Village – Lavonia, 343 NLRB 646 (2004).  In The Boeing Company, 365 NLRB No. 154 (December 14, 2017), the Board overruled Lutheran Heritage, which had established a standard that was liberally interpreted in favor of unions and served as the basis for invalidating many facially neutral policies under the NLRA.  As one may recall, among the common work rules and policies found unlawful were those restricting confidentiality, general workplace civility towards supervisors or fellow employees, interaction with the media (and social media in general), use of company logos, copyrights, and trademark, and photo and recording restrictions.  The Boeing ruling actually involved a no camera policy.  The Board created a new test for examining a facially neutral policy rule or handbook provision that "potentially could interfere with NLRA-protected activity.  Two factors are to be evaluated: (i) the nature and extent of the potential impact on NLRA rights; and (ii) legitimate justifications associated with the requirement(s)".  Now workplace rule evaluation is more balancing the employer's asserted justifications against any "invasion of employee's rights in light of the NLRA and its policies."  This balancing rule is to be applied retroactively in all pending cases.



Unpaid Interns Are Returning. 


In December 2017, the 2nd Circuit Court of Appeals decided a case involving individuals working as unpaid interns for Hearst Corporation's various print publications.  Wang v. Hearst Corp., N. 16-3302 (2nd Cir. 2017).  After weighing all factors under the "primary beneficiary test," the Court determined that the interns were not employees and were not entitled to minimum wage or overtime pay.  As shown below, there is a strong push in the "primary beneficiary test" to make sure there is significant educational benefit to the intern.  In Wang, the Court determined that educational training includes a broad gambit of "training," including "practical skills". 


Now, the United States Department of Labor, in Fact Sheet #71 (updated January 2018), rejects the prior standards and follows the courts in recognizing the use of a "primary beneficiary test" that allows a court to examine the "economic reality" of the intern-employer relationship to determine which party is the primary beneficiary.  The Wage and Hour Division has specifically set out the test that identifies the following seven facts:


1.         The extent to which the intern and the employer clearly understand that there is no expectation of compensation.  Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.


2.         The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including clinical and other hands-on training provided by educational institutions. 


3.         The extent to which the internship is tied to the intern's formal education program by integrated coursework or the receipt of academic credit.


4.         The extent to which the internship accommodates the intern's academic commitments by corresponding to the academic calendar.


5.         The extent to which the internship's duration is limited to the period in which the internship provides the intern with beneficial learning.


6.         The extent to which the intern's work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.


7.         The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship. 


The DOL's Fact Sheet concludes that whether or not an intern or student is an employee under the FLSA necessarily depends on the unique circumstances of each case, that no single factor of the "primary beneficiary test" is determinative and that the list is not intended to be exhaustive.  The DOL had not, until the last several years, really spent any time enforcing the prior onerous test, but plaintiff attorneys forced the issue claiming interns' entitlement to minimum wage and overtime pay.  Fact Sheet #71 is a common sense approach, and it now provides employers with some reasonable flexibility in providing internship opportunities to students and others seeking internships. 



Allegation the Employer Failed to Follow Policy is Not Pre-text


An employee brought a claim stating she was discriminated against because she took FMLA leave. The federal District Court in Minnesota determined there was prima facie evidence of retaliation and discrimination because of the temporal proximity of the adverse employment action to the protected act of taking permitted leave, but concluded that the employer established a non-pretextual reason for the adverse action. The employee argued the employer’s failure to follow an internal policy regarding FMLA leave was evidence of pre-text. The Court ruled that even if true, an employer's failure to follow its own policies is not on its own sufficient to prove pre-text.  The Court used the example of an employer who has not fully investigated an employee’s claim in accordance with its policy. The Court stated that failure to do so is a business judgment decision and not pre-text. Harrell v. Handi Med. Supply, Inc., Civ. No. 16-737 (D. Minn. 2017).



“Micro-Units” No More


In 2011, the NLRB dramatically changed the way it determined who would be included in union bargaining units.  The test established in Specialty Healthcare & Rehabilitation Center of Mobile, 357 NLRB 934 (2011), made it nearly impossible for employers to effectively challenge which workers (or types of workers) would be included in a proposed bargaining unit.  The change resulted in “micro-units,” or small bargaining units representing a single department or narrowly-defined type of employee within one company.  The change also allowed unions to cherry pick employee groups that were favorable to voting in a union in order to "get a foot in the door" at the worksite.  The change caused unnecessary and inefficient contract negotiations for employers, who in some cases had multiple bargaining units represented by different unions.  Last month, the NLRB overturned the Specialty Healthcare decision, opting to return to the traditional “community of interest” standard that existed before 2011.  PCC Structurals, Inc., 365 NLRB 160 (Dec. 15, 2017).  Going forward, the Board will consider the following “community of interest” factors when determining whether a proposed bargaining unit includes the appropriate employees: whether the employees are (1) organized into a separate department; (2) have distinct skills and training; (3) have distinct job functions and perform distinct work; (4) are functionally integrated with the employer’s other employees; (5) have frequent contact with other employees; (6) interchange with other employees; (7) have distinct terms and conditions of employment; and (8) are separately supervised.  This test allows employers to have a meaningful role in determining the composition of a bargaining unit. 



TIP OF THE MONTH:  Emailing employee policies should only be done if you can pre-assist them to verify receipt, which can certainly be done by requiring acknowledgement by return email and following up to make sure it is done.  A recent case, however, suggests that if you are dealing with major changes in policies, such as requiring arbitration, you should be sending this information by paper. 



Hanft Fride's business and trial lawyers are located at 1000 U.S. Bank Place, in Duluth, Minnesota.  Visit our website at www.hanftlaw.com for general information on the firm and our attorneys. Our employment lawyers include Tom Torgerson, Rob Merritt and Scott Witty.  Richard Burns is now of Counsel.



The information provided in this E-letter is general in nature and should not be used as a substitute for professional services and advice.  The communication and receipt of this information is not intended to create an attorney-client relationship.  Readers should consult with their legal counsel  before taking any action on matters covered in this E‑letter.



To subscribe or unsubscribe to Employer E-Letter, e-mail your request to lml@hanftlaw.com or call Scott Witty at 218.722.4766.



Copyright 2018 by Hanft Fride, P.A.  All rights reserved.  Hanft Fride, A Professional Association, 1000 U.S. Bank Place, 130 W. Superior Street, Duluth, MN 55802.  Phone 218.722.4766; Fax 218.529.2401.



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