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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:
- SAVE THE DATE FOR NEXT YEAR!
- HIPAA PRIVACY RULES
- PERMANENT REPLACEMENT FOR STRIKERS CAN BE AT WILL
- DISCRETION AND JUDGMENT REQUIRED FOR ADMINISTRATIVE EXEMPTION
- INDEPENDENT CONTRACTORS FOR TAX PURPOSES
- TIP OF THE MONTH
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SAVE THE DATE FOR NEXT YEAR!!!
The 15th ANNUAL EMPLOYMENT AND LABOR LAW SEMINAR will be held on Wednesday, March 11, 2009 at the Holiday Inn Downtown, Duluth.
Thank you to the 100-plus persons who were able to attend this year's seminar on March 19. We hope you found it interesting and informative. We appreciate all the valuable feedback from the post-seminar surveys.
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HIPAA PRIVACY RULES
It has been suggested by some human resource professionals that an employer is prohibited from disclosing the reason for or the observed condition of an employee who requires emergency assistance at work and/or leaves in an ambulance. HIPAA, however, only applies to medical information an employer has access to or obtains through its group health plan. It does not apply in situations where the employer observes that "Jack fell down and hit his crown and that is why he was taken to the hospital." The distinction, of course, is that when the employer only knows of the reason why Jack went to the hospital through medical records that it has access to through the group health plan, do HIPAA privacy rules prohibit it from disclosing such information.
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PERMANENT REPLACEMENT FOR STRIKERS CAN BE AT WILL
The National Labor Relations Board has issued a favorable ruling to employers who have replaced economic strikers. In general, an economic striker who unconditionally offers to return to work is entitled to immediate reinstatement unless the employer can show a legitimate and substantial business justification for refusing to reinstate the former striker. One such justification is the employer's permanent replacement of the economic strikers as a means of continuing its business operations. At issue was a case in which the employer had not been able to come to an original collective bargaining agreement with the striking employees. Finally, the union made an unconditional offer to return to work, but the employer sent a letter informing the union that it had a full complement of permanent replacement employees and that the returning workers would be placed on a preferential recall list. The NLRB determined that these replacements were at-will employees, but they were to be considered "permanent replacements." Of course, without a decertification of the union, the union still could negotiate a contract that ultimately could affect these so-called permanent replacements. Jones Plastic and Engineering Co., 351 NLRB 11 (2007).
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DISCRETION AND JUDGMENT REQUIRED FOR ADMINISTRATIVE EXEMPTION
In addition to earning an annual salary of more than $23,660, and performing office or non-manual work directly relating to the management or general business operations of the employer, to qualify as an exempt employee from overtime, an employee's primary duty "must include the exercise of discretion and independent judgment with respect to matters of significance". In a Seventh Circuit case, which controls Wisconsin employers, the Court concluded that automobile damage appraisers for insurance companies were exempt, because they did exercise the appropriate amount of discretion. Rowe-Midgett v. CC Servs, Inc., (7 Cir. 2008). On the other hand, a Colorado District Court determined that insurance claim analysts were wrongly classified as administrative, since they simply used a computer program to calculate settlement amounts with insured clients and had no real authority to negotiate a different result. In Re: American Mutual Insurance Litigation, (D.C. Colorado 2007). These cases show that the administrative exemption does not apply to all salaried employees that work in an office environment, and that the exemption is remarkably fact specific. In these cases, a primary difference was the amount of authority and input in decisions each adjuster had. The standard of discretion and independent judgment is a much higher hurdle than most employers realize.
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INDEPENDENT CONTRACTORS FOR TAX PURPOSES
The Internal Revenue Service has given notice that during 2008 it will focus on the issue of whether persons classified as independent contractors should be classified as employees, suggesting that there has been a steady increase in attempts to avoid certain Federal taxes. Recently, the IRS claimed more than $300 million in back taxes for one year from FedEx for misclassifying delivery drivers as owner/operators, not employees. The IRS has also begun an informational sharing effort with 29 state agencies to identify employers that use inappropriate means to avoid employment taxes. Any employers that treat persons who are part time or temporary employees as independent contractors should learn the factors the IRS uses to make classification decisions. This can be done informally by filling out Form SS-8 (www.irs.gov/pub/irs-pdf/fss8.pdf)
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TIP OF THE MONTH: Although we keep emphasizing that in Minnesota and Wisconsin non-compete agreements are enforceable if reasonable in duration and scope, many employers believe they are of limited enforceability and employees are hesitant to sign such agreements. An alternative approach, which also is enforceable by injunctive relief, is to have an employee sign covenants to (1) Not solicit employees of the employer, and (2) Not solicit or transact business with customers of the employer at the time of termination. Such a non-solicitation period would be for a limited period of time – a minimum of 6 months to a maximum of 12 months. Such agreements are enforceable and it is difficult for the employee to argue it is unreasonable for them to be restricted from business relationships that only existed because of their employment.
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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 Tom Torgerson, Rob Merritt, Scott Witty and Richard Burns.
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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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