Minnesota employers, take note:  laws that impact you are changing this year. Not only did the Minnesota legislature recently expand the use of employee sick leave (as we blogged about here) and legalize same-sex marriage, but several other changes occurred this year that may directly impact your business.  Here's a quick round up of some of the most important new laws enacted by the legislature affecting Minnesota employers.

Criminal Background Checks

Perhaps the most notable change is, beginning January 1, 2014, most Minnesota employers must change their standard employment applications and hiring practices related to use of a job applicant's criminal history. The new "ban the box" law, which refers to the check box on most employment applications asking about an applicant's criminal history, will bar private employers from asking about or considering an applicant's criminal history until (1) the applicant is selected for an interview or (2) if there is no interview, the applicant receives a conditional offer of employment. Employers who have a statutory duty to conduct criminal history investigations or otherwise consider criminal history in the employment process, such as school districts and many health and human services providers, are exempt from the new law.

When the law goes into effect, Minnesota employers who previously required all applicants to disclose criminal history will need to defer the inquiry until further into the interview process.

Deductions from Paychecks

The legislature also amended Minnesota Statutes Section 181.14 which applies to deductions from final wages of employees entrusted with money or property. The new language provides that "[n]o employer shall make any deduction, directly or indirectly, from the wages due or earned by any employee, who is not an independent contractor, for lost or stolen property, damage to property, or to recover any other claimed indebtedness running from employee to employer, except as permitted by section 181.79."  The law went into effective on April 30, 2013.

Moreover, the Minnesota Supreme Court imposed another limitation on deduction from wages in the restaurant industry. In Karl v. Uptown Drink, LLC, No. A12–0166 (Minn. Aug. 14, 2013), the Court held that restaurants and bars may not deduct from employee's gratuities for bills of customers who left without paying or failed to sign credit card receipts.  Bars and restaurants may also not deduct from employee's gratuities to cover register shortages. 

These new laws highlight the very limited circumstances in which a Minnesota employer may make wage deductions.  Employers are advised to review any wage deduction policies and seek the guidance of counsel to ensure legal compliance. 

Whistleblower Protections

The Minnesota legislature also recently amended the Minnesota Whistleblower Act, which will increase the number of whistleblower claims while simultaneously making it more difficult for employers to defend against them.  Generally, the Act prohibits an employer from penalizing an employee because the employee made a good faith report of a violation or suspected violation of federal or state law.   Before the amendments, the Minnesota courts developed common law definitions of "good faith," "penalize," and "report," which were considered to be employer-friendly.  The amended law, however, changes the meaning of these terms to make it easier to bring and prove a whistleblower claim:

• Good Faith.  Under prior common law, to show that a report was made in "good faith," the employee needed to make the report with the intent to expose an illegality for the protection of a third party or the public in general.  Chial v. Sprint, 569 F.3d 850, 854 (8th Cir. 2009); Freeman v. Ace Tel. Ass'n, 404 F. Supp. 2d 1127, 1140 (D. Minn. 2005).  The amended statute, however,  excludes the requirement that a "good faith" report be made for the benefit of someone other than the employee.   To the contrary, now a "good faith" report is one that is not knowingly false or made in reckless disregard for the truth.  This change will likely lead to more whistleblower claims because an employee is more likely to make a report about acts affecting him- or herself than to make a report of acts affecting others or the public at large.

• Report.  Moreover, the amended statute greatly expands the definition of a statutorily-protected "report." Before the amendments, a report was protected if it brought forth a violation or suspected violation of the law.  Now, under the amended statute, an employee may make a protected report of planned  violations of the law, even if the act never takes place.  Again, this change is likely to lead to more whistleblower claims because an employee may make a protected report of acts that never even occurred. 

• Penalize. The Act has always prohibited an employer from penalizing an employee for making a protected report.  Under the new amendments, however, the Minnesota legislature for the first time defines "penalize" to include "conduct that might dissuade a reasonable employee from making or supporting a report, including post-termination conduct by an  employer or conduct by an employer for the benefit of a third party.  Minn. Stat. 181.931 sec. 2, subd. 5. While it has always been clear that discipline or discharge could dissuade an employee from making a report, employers now need to carefully consider any planned action against a reporting employee, including changing job duties or altering any other term or condition of employment.