Employment Termination in Minnesota: An Overview
Termination of the employment relationship in the State of Minnesota is governed by both the statutory code and common law. In general, Minnesota has embraced the notion that both employers and employees generally enter the employment relationship freely, are free to leave at any time, and can negotiate the terms of their departure. An employer is also free to terminate an employee at any time provided the discharge does not violate of Minnesota’s "Little" Davis-Bacon Act, which codified the common law called a "pretext rule." Minnesota courts have held that an employer can discharge an employee for any reason, or for no reason other than a prohibited practice. The pretext rule essentially provides that an employer cannot use a legitimate reason for discharge as a pretext for terminating an employee for a discriminatory reason, and claims of pretext are determined on a case-by-case basis. For example, an employer is free to discharge an employee for a well-documented failure to follow company policy, to quit work without notifying the employer, or for inadequate job performance, if the real reason for the termination was that the employee was suffering from an anti-discrimination complaint. The employment-at-will doctrine, now widely adopted in the United States, states that, unlike other contractual relationships, employment contracts are unilaterally terminable by either party. Minnesota follows the employment-at-will doctrine judicially, with a few notable exceptions. These exceptions are: The primary exception to the employment-at-will doctrine is an implied agreement not to terminate an employee except for just cause. An employer retains the right to discharge an employee under an implicit understanding that the employee could be discharged only after he or she had committed some form of fault . The common law courts have implied that such an agreement exists between employer and employee when: The second major exception is to the employment-at-will doctrine is the tort of wrongful discharge. Wrongful discharge occurs when the employer discharges an employee in violation of a clear public policy mandate articulated by Minnesota statute, duty imposed by the United States Constitution, or recognized by the common law. Because the wrongful discharge tort is so fundamental to the employment-at-will doctrine, Minnesota courts favor a narrow interpretation of the exception. For example, if an employee feels compelled to resign, he or she must show evidence that the employer acted so as to force the employee to quit, or felt he or she had no choice but to resign as a result of intolerable working conditions. Further, the termination must have been motivated by an action taken by the employer in violation of a clear mandate of public policy. For example, an employee discharged for refusing to commit perjury during testimony before Congress or State Legislature brings a claim of wrongful discharge if the employee can show that the employee was required to testify before Congress or Legislature by the company, or was threatened with discharge if he or she refused to testify. An exception to the employment-at-will doctrine is the breach of contract claim. This claim arises when an employee is terminated when the termination is in violation of either an implied or written employment contract, or when the termination was in violation of an employee handbook. A common situation involves termination in violation of an employee handbook or provision in the company handbook that gives the employee a certain right upon termination. For example, if the handbook provides that the employer will provide three days’ notice prior to termination, and terminates the employee without notice, the employee may have a claim for breach of contract.
Legal Reasons for Terminating Employment Under Minnesota Law
Termination of an employment at will under Minnesota law may be based on good cause, bad cause, or no cause. "Good cause" is the appropriate termination where the employer has reasonable grounds, reasonably believed to exist, for directing or allowing the employee’s discharge. On the other hand, a termination may also be based on "bad cause," such as rude behavior toward co-workers or customers. Further, there is no legal requirement that an employer have grounds for termination, as long as there is not an impermissible reason for the termination. In other words, regardless of the reason, an at-will employee can be terminated without notice or warning and without the employer having any reason for the termination, as long as such termination is not based on an impermissible reason.
As noted above, an employee may not be terminated for an unlawful reason. Among the many reasons not allowed to be the basis for termination are:
• Discrimination;
• Retaliation (such as reporting violations of law or some other protected activity);
• Union Activities;
• Whistleblowing; and
• Public Policy Violations.
Minnesota has an established public policy against discharging an employee who:
• refuses to commit a crime or violation of law;
• is absent from work due to illness, injury or disability protected by law;
• harbors a particular religious ideology;
• reports a violation or suspected violation of law to police or the proper government authority; or
• is a participant in a jury.
Notice for Termination in Minnesota
Notification in Minnesota: Legal Requirements Imposed on Employers for Termination of Employment Thereunder
Minnesota does not have any specific statutes or rules that govern the manner in which terminations may be carried out, and employers are free to enter into contracts and take whatever actions and implement those layoffs at the time piece needed. However, generally, if the severance is or was paid as part of a layoff, an employer may need to give the employee notice and/or pay severance in advance both bases on the basis of time and quitting by statute.
If a Minnesota employer meets AEG’s 100 employee threshold, it must notify the Department of Employment and Economic Development (DEED) a minimum of 60 days before it commences a general layoff of at least 100 employees. This does not apply to temporary layoffs, workforce reduction activity not anticipated to last more than six months, or a layoff that lasts less than six months in duration. Additionally, the notices must be copied by the employer to affected employees and their respective labor unions (if any). The employer may fulfill its notification obligation by paying an employee one month’s severance in lieu of the notice period. Further, if an employer does not fulfill its notification requirement to DEED, the action will be considered to be an act of disobedience under Minnesota Statute Section 13A.01, Subdivision 14, detailed below.
Minnesota Statute § 268A.06 offers definitions and guidelines applicable to AEG’s notification requirements. First, "layoff" means any cessation of employment or a situation where employment is suspended for both a significant period of time and without intent that the employment will not be renewed. A "general layoff" refers to a "layoff affecting at least 25 employees."214 On the other hand, an "employer" includes any owner of a business, manager, contractor, lessor, lessor or lessee, who participates in any manner in the controls of a business.
The statute also provides that all employers in the Minnesota Unemployment Insurance Program, must submit a notice to DEED, and pay severance upon a layoff to be assessed based on the employee’s average weekly wage.214 This payment is due before a general layoff, and within six months after a temporary layoff for which no notice was given to DEED.
The absence of a notice being given will lead to the following outcomes: (1) a misdemeanor criminal liability being imposed, (2) liability for the employer for any unemployment benefits, and/or (3) a denial of the employer’s participation in the program and the termination of the employer’s account.
Typically an employee will resign, and upon such resignation an employer is required to provide that resigning employee with his or her final paycheck within 24 hours of his or her resignation. Confidentially and lien provisions will often be included into resignations requiring that notice be provided prior to a voluntary termination. Otherwise, the Minnesota Resignation Statute governs an employee’s termination in Minnesota.
Employee Rights Following Termination in Minnesota
When an employee is terminated in Minnesota, they must be given their final paycheck on the next scheduled pay day after termination. Pursuant to Minnesota Statutes 181.101, an employer must also provide the employee with their last day worked, the actual date of their last day worked and a statement of whether they were discharged or resigned. When applicable, the next scheduled pay day must be noted as well. The employee must also receive a statement enumerating the reasons for the discharge. The employer may give the reason orally, however, it must be reduced to writing by the employer upon written request within 15 days after receipt of the request. If a former employee believes that they were illegally terminated, they may sue for wrongful termination. The Plaintiff has the burden of proof to demonstrate that there was intentional discrimination or retaliation. Remedies for such claims include reinstatement and back wages, recovery for emotional distress and mental anguish, or recovery for lost wages or benefits for the length of time for which the employee would have remained employed. If the Plaintiff wins a wrongful termination lawsuit, the employer may be liable for punitive damages as well.
Best Practices for Employers Terminating Lawfully in Minnesota
The Minnesota Department of Employment and Economic Development states on its website that voluntary quit is the "most common reason employees claim separation." In addition, last year the Minnesota Supreme Court issued a case that overturns a lower court’s precedent and now allows employees with an implied contract for continued employment to establish wrongful termination and seek damages. The last thing any employer wants to deal with, aside from turnover, is termination claims. And based on recent case law, there are several best practices recommended to ensure that the termination is lawful and to ensure that the employee’s subsequent claims against the employer are limited.
Documentation of Performance Deficiencies One way to ensure that any future claims are limited is to document the employee’s shortcomings at each step along the way. The best method is to go with a formal performance improvement plan that includes specific examples of the employee’s weak performance and how he or she must change to stay employed. The PIP should have a specific duration, like 30 to 90 days, and should establish what constitutes successful completion of the plan. Then , if after the duration of the PIP the employee has failed to meet the terms, the termination will be easier to justify.
Performance Reviews Another method to remind both the employer and the employee of the performance issues is through performance reviews. Review the employee’s file to see if and when the last performance review occurred and if the termination decision relates to that review. If the termination was immediate and no warning was provided, then it is important to draft another review that provides specific examples and details of the deficient issues. Next, it is also worth checking whether bonuses were awarded to the employee as well. As a defense, an employee may claim that the employer did not need to terminate them at all.
Exit Interviews If in the past the company has implemented exit interviews, then these must be reviewed as well to determine if the employee was lamenting any treatment by the employer that could be construed as wrongful. More importantly, prior exit surveys must be reviewed to see if this employee would be considered a "whistle blower" under public policy exceptions to employment-at-will. If so, this could support a larger wrongful termination claim finding its way into litigation.
Termination Laws in Minnesota During the COVID-19 Health Crisis
The COVID-19 global pandemic has brought about significant disruptions to all aspects of life, including the employment arena. In Minnesota, certain laws and regulations have been adjusted in response to the unprecedented challenges posed by COVID-19. This section examines some of those changes in the context of termination.
Temporary changes in law: Governor Walz’s Order 20-05, and subsequent extensions, temporarily modified previous rules governing unemployment benefits. Employers may be eligible for grants to cover 50% of an employee’s pay if the employee is terminated or laid off without misconduct due to the Governor’s stay at home order. Order 20-54 expanded unemployment benefits for people who are working reduced hours, are self-employed, or are laid off or terminated from employment because their employer’s place of business is closed due to COVID-19. The Wage Theft Prevention, Enforcement, and Remedial Act was expanded to protect employees from retaliatory discharge if they refuse to work in a condition that exposes them to COVID-19. This includes exposure even if protective equipment is available but is not provided by the employer.
Work-sharing plans and furloughs: Under Minnesota Statute § 268.14, Subdivision 3, an employer may offer voluntary separation benefits to an employee who wishes to leave work voluntarily with a benefit amount determined by the parties. This arrangement might take the form of any combination of severance, continuation of employee benefits (insurance, payment of accrued PTO, bonuses, and retirement benefits) or other appropriate compensation. If the employer agrees to this severance, it must pay unemployment benefits in addition up to a defined limit. A work-share plan allows an employer to reduce the number of hours worked by the group of employees participating in the plan and submit part-time voucher approvals for unemployment benefits to be paid to the employees in addition to the hours worked. A furlough is a temporary leave of an employee from duty without pay. The purpose of a furlough is to resize the labor force to prevent layoffs, or to minimize the financial loss of running a business.
How to Get Help with Termination Issues in Minnesota
If you have reason to believe that your rights surrounding termination of your employment were violated, you may want to seek out a lawyer to assist you with the process of seeking restitution. The attorney-client relationship is an important one, and discussing the situation with an experienced employment litigation attorney can help you to understand whether or not your case is worth pursuing. When trying to find an attorney to help with your case, you should take the time to consider the reputation, experience level, and success rate of area lawyers. You might start by asking local friends and family members who they went to when faced with a similar situation or who they would suggest you to speak with. You can also search websites that provide you with the reviews and ratings of actual clients of lawyers in the area . After narrowing down your list, you can start calling a few different lawyers to discuss your case with them and see if this is someone you want to hire to assist you. Before heading into your consultation with the lawyer, you will want to put together all relevant documentation and information. Bring along any and all correspondence between you and your employer surrounding your termination. Write down the name of everyone with whom you had spoken surrounding this issue, as well as their title with the company. You will also want to write down the details of the termination meeting itself and any other meetings that took place surrounding the termination. The more organized information you can provide to the lawyer, the better he or she will be able to assist you.