In a recent decision issued in late February 2023, the National Labor Relations Board (“NLRB”) held that the “mere proffer” of severance agreements with broad non-disparagement and confidentiality provisions violate the National Labor Relations Act (“NLRA”).  In McLaren Macomb, the employer-hospital provided severance agreements to 11 furloughed employees; [1]. the severance agreements contained the following provisions:

• Confidentiality Agreement. The Employee acknowledges that the terms of this Agreement are confidential and agrees not to disclose them to any third person, other than spouse, or as necessary to professional advisors for the purposes of obtaining legal counsel or tax advice, or unless legally compelled to do so by a court or administrative agency of competent jurisdiction.
• Non-Disclosure. At all times hereafter, the Employee promises and agrees not to disclose information, knowledge or materials of a confidential, privileged, or proprietary nature of which the Employee has or had knowledge of, or involvement with, by reason of the Employee’s employment. At all times hereafter, the Employee agrees not to make statements to Employer’s employees or to the general public which could disparage or harm the image of Employer, its parent and affiliated entities and their officers, directors, employees, agents and representatives.

McLaren holds that both of the above fairly standard provisions have the tendency to “chill” employees’ rights under Section 7 of the NLRA.  Protected conduct under Section 7 includes employees’ rights to talk with co-workers about wages, benefits or other working conditions, and rights to talk to the government or the media about problems in the workplace. Employees in both unionized and non-unionized workplaces have Section 7 rights.

The NLRB’s decision found the above confidentiality provision unlawful in part because it would prohibit the employees from discussing the terms of the severance agreement with former coworkers.  The non-disclosure provision was found to be unlawful in part because it prohibited employees from making any statements to the media, the NLRB, or other government agencies about any potential unlawful workplace conditions.

Importantly, employers may generally still use such provisions in agreements with supervisory or managerial employees, because those employees do not have Section 7 rights.  Keep in mind that assessing whether an employee is a supervisor under the NLRA may be a fact-intensive inquiry.

For agreements with non-managerial/supervisory employees, employers may still enter into agreements to protect confidential proprietary information and trade secrets, but keeping the terms and conditions of the agreement itself confidential will generally not be permissible. Additionally, broad non-disparagement provisions should be narrowed in accordance with prior NLRB precedent, which permits the prohibition of statements that are “knowingly false or made with reckless disregard for the truth.”

The McLaren decision is still subject to appeal, but employers should act now to review not only their severance agreements, but other common employment agreements that may contain language that runs afoul of the NLRB’s ruling.  Moving forward, employers may need to consider narrowing the extent of their confidentiality and non-disparagement clauses for non-managerial/supervisory employees.

Winthrop & Weinstine continues to monitor the situation, and we will provide updates on this topic if the NRLB General Counsel provides advisory memoranda with more specific guidance. For more information about employment agreements, including severance agreements, please feel free to reach out to any member of our Employment Counseling team.

[1] 372 NLRB No. 58 (2023)

First Legislative Deadline

Today marks the first deadline that legislation must meet in order to be considered this session. By today, bills must be heard in committee in their chamber of origin (this deadline generally does not apply to finance bills). As a result, this past week has been a flurry of committee activity, with several meetings extending late into the evening and plenty of Friday hearings. Committees will begin to hear bills nearly around the clock as we approach the second deadline on March 24.

Bonding Bill Passes the House

On Monday night, the House passed a $1.9 billion bonding bill off of the floor and sent it to the Senate for a vote. This is exceptionally early in session for passage of a bonding bill. Senate Minority Leader Mark Johnson (R-East Grand Forks) has indicated his caucus will not support the bill—which requires a supermajority of votes, necessitating support from both parties—until tax cuts are passed. Senate Republicans have sought a variety of initiatives to cut taxes, including social security tax relief and direct rebate checks. Meanwhile, both chambers’ capital investment committees continue their work to assemble additional bonding proposals.

Fairview/Sanford Merger

The Senate Health and Human Services committee held an informational hearing on Tuesday night regarding the proposed merger of Fairview Health Services and South Dakota-based Sanford Health. Because Fairview has a long-standing partnership with the University of Minnesota, observers, including former DFL Governor Mark Dayton and Republican Governor Tim Pawlenty, offered concerns that an out-of-state business would have a say in the operations of Minnesota’s state university. Attorney General Keith Ellison also testified about the ongoing legal investigation into the proposal.

Social Security Benefit Taxation

Minnesota is one of 11 states in which social security benefits are taxed. While our state’s model only taxes those who reach a certain income threshold, a proposal to remove this tax for all payers was a top campaign issue for lawmakers of both parties last year. The House Taxes committee held a hearing this week on two similar proposals offered by DFL lawmakers to subtract these taxes, at a cost of $300 million to $1.3 billion per biennium. The proposals are set to be voted on in committee next week. While it doesn’t yet appear to have majority support, this issue could become a key bargaining chip in end-of-session negotiations.

Antitheft Investigation for Automakers

Attorney General Keith Ellison announced this week that his office is launching a civil investigation into Kia and Hyundai for failing to include standard antitheft measures on some oldermodel cars. These vehicles have disproportionately fallen victim to a recent rash of thefts in Minnesota. Automakers have begun rolling out solutions, including software updates and steering wheel locks, in recent months.

February Budget Forecast

This week, Minnesota Management and Budget released their February budget forecast, which is the last projection of state revenues and expenditures that the Governor and legislature will use to help them craft their budget bills. This forecast is the first to incorporate projected inflationary costs, and shows a stable outlook with a $17.5 billion balance projected for the upcoming biennium. Income tax revenues are up significantly compared to the previous forecast, giving lawmakers even more surplus to work with.

Legislative Deadlines

The first legislative deadline is next Friday, March 10. All policy bills must be heard in committee in their chamber of origin by that date or risk being eliminated from consideration this session. An historic number of bills being introduced in both chambers, combined with a three-day break in committee hearings due to last week’s snowstorm, has caused committees to ratchet up the pace of hearing policy bills. This past week, evening hearings and Friday hearings were scheduled as chairs raced to accomplish their business.

Adult-Use Recreational Cannabis Continues Moving

The bill to legalize adult-use recreational cannabis (H.F. 100/S.F. 73) continued its lengthy path through committees in both chambers this week with three hearings. The bill must still be heard in at least a dozen committees before it can move to a floor vote.

New Penalties for Catalytic Converter Theft

This week, the Senate passed a version of the bill to increase penalties for crimes related to catalytic converter theft (H.F. 30). The House recently passed a similar bill, and must approve the Senate’s language before the legislation is sent to the Governor’s desk for signature.

Historic Funding for Housing

House and Senate Housing committee chairs, Sen. Lindsey Port (D-Burnsville) and Rep. Mike Howard (D-Richfield), held a press conference this week to announce their $3 billion package dedicated to alleviating the housing shortage and working to end homelessness, particularly for children. The package would allocate $750 million for housing construction, $350 million per year for rental assistance, and $175 million in down payment assistance for first-time homebuyers. The package is nearly double the Governor’s proposal; it’s unclear if budget targets will allow for the full dollar amount.

On February 7, 2023, Governor Tim Walz signed into law new legislation requiring that 100 percent of electricity generated or procured for use in Minnesota must be from carbon-free resources by 2040. Minnesota joins ten other states, the District of Columbia, and Puerto Rico to establish 100 percent carbon-free or renewable generated electricity laws. The bill passed in both the House and the Senate by straight party line votes, with all members of the DFL Party voting in favor, and all members of the Republican Party voting against. While the carbon-free requirement has gained significant attention, the legislation includes more requirements in addition to the 100% carbon-free mandate.

The new law requires all electric utilities, including investor-owned utilities, municipalities, and rural electric cooperatives, to generate or procure 100 percent of the electricity they provide to retail customers in Minnesota from carbon-free technologies. The law ramps up to the 100 percent mandate, requiring carbon-free technology to provide:

• 80 percent of electricity for public utilities, and 60 percent for other electric utilities by 2030; and
• 90 percent of electricity for all utilities by 2035.

Utilities are permitted to purchase renewable energy credits to offset electricity acquired through fossil-fuel generation.

The new law also requires all electric utilities to generate or procure 55 percent of their electricity from eligible energy technology by 2035, an increase from the previous top-out of 25 percent by 2025. Eligible technology includes: solar, wind, hydropower with a capacity of less than 100 megawatts, biomass, and hydrogen generated from another eligible energy technology. Hydropower with a capacity greater than 100 megawatts is also eligible if the facility was operational when the law took effect. Of note, the new law does not include battery storage in the list of eligible energy technology. Whether co-located energy storage with wind or solar installations satisfies the requirement is an issue Winthrop and Weinstine is continuing to monitor and will provide additional updates as more guidance is issued

The new legislation also establishes ”Environmental justice areas”,  which are defined as areas, based on Census data, that meet threshold racial , income, or English proficiency parameters, or are located within Indian country as defined by federal law. The new clean energy law requires utilities to consider impacts on these areas in future resource plans, and directs the Minnesota Public Utilities Commission to consider the economic and environmental impact of its decisions on these areas

Expect to see increased investment in eligible energy technologies to meet the demands of electric utilities aiming to meet the law’s mandate. Further, the legislation recognizes that capacity constraints currently exist in the transmission system, and will likely be exacerbated by the increase in less-localized generation. We anticipate this will lead to increased investment and development of transmission and distribution projects in Minnesota. This could also likely spur new distributed energy resource projects that avoid or minimize connection with transmission systems and provide electricity through interconnection to the distribution system.

The first major objection to the law came from North Dakota. North Dakota Governor Doug Bergum has indicated he is continuing to try to reach an agreement with Minnesota to avoid impacts to North Dakota’s economy from the law, and has threatened to sue if those efforts fail.

Winthrop and Weinstine is closely following the impact of the new legislation. For more information, please feel free to reach out to any member of our Energy team.

In this edition of WIT AND WISDOM OF WINTHROP, our Employment Litigation Newsletter, we shine a spotlight on privacy in the hiring process – which has become even more complicated with the expansion of the remote workforce and remote recruiting, as well as new laws protecting the privacy of employees, contractors, and even job applicants. Featuring information from our colleague Lisa Ellingson, Data Privacy & Cybersecurity attorney, we cover three common ways employers can run afoul of privacy laws in the hiring process, and how to avoid them.

Click here to read the issue!

February Forecast

The Governor and Department of Management and Budget will release the state’s February Budget and Economic Forecast on Monday. This updated projection of state revenues and expenditures will be used by legislative leadership to calculate budget targets.

Bonding Bills Released

Over the past week, both the House and Senate Capital Investment committees released their $2 billion bonding bill proposals, primarily consisting of capital investment projects that failed to pass in the 2022 session. The bills require a supermajority to pass in each chamber, meaning a few Republicans in each body will need to vote for the bill in order for it to pass. Leadership has indicated additional bonding bills may yet be considered this session.

Sports Betting Legislation

Rep. Zack Stephenson (DFL-Coon Rapids) and Sen. Matt Klein (DFL-Mendota Heights) held a press conference Tuesday to announce the release of legislation (H.F. 2000 / S.F. 1949) to legalize and regulate sports wagering in Minnesota. The bill would grant sports betting licenses to each of the 11 tribal nations and impose a 10% tax on mobile betting revenues.

Paid Family & Medical Leave Bill Progressing

The bill requiring employers to offer a total of 24 weeks of paid family and medical leave (H.F. 2 / S.F.2) moved through committee stops in both chambers this week. Members of the Senate Human Services committee adopted an amendment proposed by Sen. Jordan Rasmusson (R-Fergus Falls) to require that an actuarial study be conducted and provided to the legislature by October 31, 2023.

Flurry of Activity Before the Snowstorm

On Tuesday night, the Senate was in session until 2 a.m. passing two major bills that form a cornerstone of the DFL’s legislative agenda. Legislation allowing undocumented immigrants to get driver’s licenses (H.F. 4) and another bill restoring the right to vote for people convicted of felonies after they have completed their prison sentences (H.F. 28) are expected to be signed into law in the coming days. In preparation for the snowstorm this week, the House and Senate canceled all business Wednesday through Friday.

Earned Sick & Safe Time

After hours of lively debate Thursday afternoon and evening, the Earned Sick & Safe Time bill, H.F. 19 (Rep. Liz Olson, DFL-Duluth), was passed off of the House floor with two amendments. The bill would allow nearly all employees in the state to accrue up to 48 hours of sick time per year, and includes carve-outs for federal government employees and independent contractors. The Senate is expected to pass the companion bill (S.F. 34, Sen. Sandy Pappas, DFL-St. Paul) in the coming weeks.

Commissioners Get Confirmed—And Get New Jobs

The week opened with the news that Department of Employment and Economic Development Commissioner Steve Grove is decamping for a new role as publisher and CEO of the Star Tribune. However, as of this week the Senate has now confirmed the appointments of 11 of Governor Walz’s commissioners. The remaining 10 confirmations are expected to proceed steadily over the coming weeks.

Governor Traveling

Governor Tim Walz spent a portion of the week in Norway on a trip dedicated to the military partnership between Minnesota and Norway, called the Norwegian Reciprocal Troop Exchange. Members of the Minnesota National Guard spent the last two weeks training with the Norwegian Home Guard. This is the 50th year of the partnership.

W&W Hosts Speaker Hortman at Breakfast

We wish to offer special thanks to Speaker Melissa Hortman, who was the most recent featured speaker at the Winthrop & Weinstine Client Legislative Breakfast Series this past Wednesday. She shared her thoughts with our team and firm clients in attendance about the general arc of the legislative session, as well as major budget and bonding bills to come. Stay tuned for information on our final client breakfast for 2023 in the coming weeks.

A Return To Normalcy

While both chambers continue to work on major legislation, the Capitol has seen a return to normalcy with perhaps the best feature of session life: Days on the Hill. Constituents from dozens of different professional, cultural, and issues groups have descended on the Capitol complex in recent weeks to rally, lobby, and share their views with their home district legislators.

Free School Lunch

Thursday night, the House passed a bill (HF5) to provide free breakfast and lunch in schools to all K-12 students. The bill, which has a price tag of about $200 million, now heads to the Senate for a vote, where it is likely to pass. The Governor included this proposal in his budget and is expected to sign it into law.

Voting Rights for Individuals Convicted of a Felony

Thursday was a busy evening for the House, as the chamber also passed an initiative to restore voting rights to Minnesotans convicted of a felony upon the completion of their incarceration (HF28). Current law requires this group to complete their entire parole or probationary period before their voting rights are reinstated. The bill will next be heard on the Senate floor.

Increased Funding for the Attorney General’s Office

In recent years, the Attorney General’s office has increasingly been asked to aid Greater Minnesota counties with criminal prosecutions. A bill to provide the office with additional funding to help support this function—as well as partially close a general budget gap—passed the Senate in late January. The House went on to pass the bill this past week, and the Governor signed it into law on Tuesday.

Huber Cancels Plan for Cohasset Engineered Wood Plant

A planned development for a new oriented strand board mill in the northwest Minnesota town of Cohasset was canceled by the company this week after a state appeals court ruled that a lengthy environmental impact statement could be required. The $400 million project would have created 150 Minnesota jobs.

Smaller Bills Moving Through

After the breakneck pace of the last several weeks, many of legislative leadership’s cornerstone bills have been passed. While major priority bills like paid family leave and cannabis are still moving through committee, this clears the way for smaller pieces of legislation to start moving in earnest. Expect something of a return to standard session form through the first deadline in early March.

Clean Energy

Last week, the House passed the bill requiring Minnesota utilities to transition to 100% carbon-free energy production by the year 2040, and sent it to the Senate. The Senate debated the legislation Thursday and passed it off of the floor without amendments, and will send it to the Governor for signature within the week. The bill includes “off-ramps” for utilities that are unable to meet the specified benchmarks on their own.

Abortion

Senators debated the bill to codify the right to an abortion for hours last Friday, eventually passing the bill close to 3:00 AM on Saturday morning. Governor Tim Walz signed the bill into law on Tuesday. While the provisions go into effect immediately, Minnesotans will see no functional changes, as a state Supreme Court case has already protected the right to an abortion for about 25 years. House Democrats continue to work to pass a suite of other bills that would repeal an assortment of restrictions placed on abortion services.

Driver’s Licenses for All

This past Monday, the bill to allow Minnesotans who lack proof of legal residency to get a driver’s license passed off the House floor. A lengthy debate included several amendments aimed at preventing undocumented immigrants from improperly registering to vote using driver’s licenses, but no such amendments were adopted.

Paid Family & Medical Leave

The Paid Family & Medical Leave bill, which would require employers of a certain size to offer at least 12 weeks of paid leave to employees, continues to rapidly progress through its House and Senate committee stops. As one of legislative leadership’s top priorities, this bill is scheduled to be heard in several more committees in each chamber next week. As the bill progresses, employer voices have begun to break through into the legislature’s consciousness—it appears likely that the bill will be amended significantly before it makes its way to a vote.

2022 Election Fundraising

This week, 2022 campaign fundraising totals were released, showing the DFL vastly outspent Republicans across the board. Governor Tim Walz’s reelection campaign spent $9.8 million to opponent Dr. Scott Jensen’s $5.5 million, while outside groups funneled nearly $62 million into state elections on both sides. The Minnesota DFL out-raised the Minnesota GOP more than 18 to 1.

The Minnesota legislature recently passed a bill that will prohibit discrimination against a person based on hair texture and hair styles that are associated with race. Approximately 20 states have passed similar measures, commonly referred to as “CROWN Acts,” which stands for “Creating a Respectful and Open World for Natural Hair.” Supporters of CROWN Acts say such laws protect people of color from discrimination based on natural hairstyles at work and school.

The Minnesota CROWN Act is a short amendment to the Minnesota Human Rights Act (“MHRA”). The bill adds a subdivision to the MHRA (Minn. Stat. § 363A.03, subd. 36a), stating, “’Race’ is inclusive of traits associated with race, including but not limited to hair texture and hair styles such as braids, locs, and twists.” While the MHRA already prohibits race discrimination in employment, housing, public accommodations, and other areas, the CROWN Act makes it explicit that hair texture and certain hair styles associated with race are protected. The Act also adds protection for “traits associated with race” but does not provide examples of such traits aside from hair texture and certain hair styles. The Minnesota Department of Human Rights may later issue guidance providing further interpretation of the statute. Minnesota Governor Tim Walz is expected to sign the CROWN Act into law.

Winthrop & Weinstine continues to monitor the situation and will provide updates if further guidance is published.  For now, Minnesota employers should review their employment policies, such as dress codes, to ensure that their policies do not prohibit hairstyles that are protected by the new CROWN Act, as well as communicate the new protections in Minnesota law to supervisors or managers that enforce such policies. For more information, please feel free to reach out to any member of our Employment team.