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March 2008 - Vol. 10, No. 3
The Employer E-Letter: Labor and Employment Law News from the Duluth, Minnesota law firm of
Hanft Fride, A Professional Association.
Editor, Richard R. Burns, rrb@hanftlaw.com or 218.529.2433.
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.
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THIS MONTH'S TOPICS:
- 14th ANNUAL EMPLOYMENT LAW SEMINAR
- HEALTH BENEFIT COORDINATION WITH MEDICARE RESOLVED
- YOU SAY NO CONTRACT, THEN NO CONTRACT
- OFFICER LIABILITY
- EMPLOYER AVOIDS HARSH DAMAGE AWARD
- TIP OF THE MONTH
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14th ANNUAL EMPLOYMENT AND LABOR LAW SEMINAR
WEDNESDAY, MARCH 19, 2008
HOLIDAY INN DOWNTOWN, DULUTH
We are planning another interesting and informative day for seminar attendees in March. Some of the issues that will be covered at this year's seminar include:
- Exempt and Non-exempt Employees
- Military Leave
- Disability Accommodation
- Workers' Compensation Overview
- Employee Competitive Restrictions
Contact Debi Persson, dap@hanftlaw.com or 218.722.4766 with questions.
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HEALTH BENEFIT COORDINATION WITH MEDICARE RESOLVED
The day after Christmas in 2007, the EEOC released a final regulation of a rule that has been in controversy for a number of years. After termination of all litigation, the final regulation specifically states that health benefits under plans for retired employees are not in violation of the Age Discrimination in Employment Act if they are "altered, reduced or eliminated" when the participant is eligible for Medicare health benefits or for health benefits under a comparable state benefit program. The regulation also makes it clear that the employer is not required to have a medical plan for retirees, but, if they do have one, they can certainly coordinate with Medicare.
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YOU SAY NO CONTRACT, THEN NO CONTRACT
A recent Federal District Court in Minnesota has determined that an employee handbook provision that provided for an arbitration procedure is not enforceable, but the arbitration provision that was contained in the employment application was enforceable. At issue was an action in which the plaintiffs claimed employment discrimination and retaliation, and the employer desired to have these claims arbitrated. The disclaimer in the application only suggested that the employment application did not create a contract for either employment or the provisions of any benefit, but it did not disavow or imply that the arbitration provision on the application was not a contract. On the other hand, the handbook included a more general disclaimer suggesting that it was not an employment contract and was not intended to create contractual obligations of any kind. Therefore, the Court determined that the arbitration provision was not an enforceable contractual provision. Nabry, et al. v. MV Transportation, Inc. (D.C. Minn. 2007). Therefore, if you want any certain provisions in the handbook or employment application to be enforceable against employees (such as arbitration), you must specifically limit your disclaimers.
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OFFICER LIABILITY
A recent Minnesota Federal District Court decision by Judge Donovan Frank, who used to be a State District Court Judge in Northern Minnesota, reminds us of the fact that individual officers can be held personally responsible for violations of employee rights under many Federal Laws, including the Fair Labor Standards Act. At issue was overtime compensation and minimum wage payments to persons who were originally paid exclusively on commissions as mortgage brokerage officers. Judge Frank suggested that the FLSA defines employer in broad terms, but the overarching concern is whether the alleged employer possessed the power to control the workers in question, with an eye to the "economic reality," presented by each case. Under this standard corporate officers with operational control of a company can be liable as an employer. The individual's ownership interest, degree of control over the corporation's financial affairs and compensation practices and his/her role in causing the corporation to compensate or not compensate are important to a determination as an employer. Although in this case the individuals involved were not continually monitoring employees or looking over their shoulders, and did not have absolute control, the control was sufficient to make them employers under the FLSA. Saunders et al v. Ace Mortgage Funding, Inc. (D.C. Minn. 2007)
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EMPLOYER AVOIDS HARSH DAMAGE AWARD
The Eighth Circuit Court of Appeals, which includes Minnesota, set out a difficult standard for an employee to be awarded punitive damages, but otherwise upheld a jury's award of damages to an employee who terminated employment because of claimed sexual harassment. The evidence was in dispute as to whether or not there had been sexual advances by a supervisor against a supervised accounting employee, but it was also clear that the company had an acceptable written sexual harassment policy and followed those procedures, including having an independent investigation done by a law firm. This investigation resulted in action being taken against the harassing employee and providing the employee with certain protections against further harassment. The jury awarded the employee $50,000 in compensatory damages on a negligent supervision claim, $50,000 in compensatory damages on the sexual harassment and retaliation claims, and $13,000 in lost wages and benefits. An additional verdict for $250,000 in punitive damages, however, was reversed as the actions of the employer were not, in the view of the Court, such that the employer engaged in intentional discrimination or acted with "malice" or "reckless indifference" to the employee's federally protected rights. Dominic v. DeVilbiss Air Power Co., 8th Cir. 2007.
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TIP OF THE MONTH
We previously talked about the importance of keeping track of hours, as it related to salaried employees, and any future claims of misclassification and entitlement to overtime. A recent Federal District Court in Florida has ruled that the burden on employers would be the same in an FMLA case in trying to show that the person did not work 1,250 hours. If you do not have the employee's time records, the employee's word will probably prevail.
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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. In addition to general information on the firm and our attorneys, you can find past issues of this newsletter. Keep checking back for new information, and let us know if there is anything you would like to see added to the site that would help you and your organization. Our employment lawyers include Richard Burns, Tom Torgerson, Rob Merritt and Scott Witty.
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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.
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To subscribe or unsubscribe to Employer E-Letter, e-mail your request to Richard R. Burns, rrb@hanftlaw.com or call 218.529.2433.
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Copyright 2008 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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