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Employment Law in a Nutshell for Small Business Owners

Small business owners are often confronted with employment law issues with little or no notice.  The following are examples.

Should I oppose the former employee’s application for unemployment benefits?

For instance, an employee may quit his employment but then apply for Minnesota unemployment benefits with no warning to the employer.  The employer must then present proof to the Minnesota Department of Economic Security that the former employee left his employment voluntarily and was not terminated or laid-off.  To avoid this problem, the employer should ask every resigning employee to sign a document stating that he or she has resigned voluntarily.  If the employee refuses to sign such a document, the employer should compile evidence regarding the employee’s resignation.

Of course, if the small business owner lays off an employee, the employee is entitled to unemployment benefits.  However, if the small business owner terminates the employee for “employment misconduct”, the former employee is not entitled to unemployment benefits.

Examples of “employment misconduct” include being habitually late to work, failing to show up at all, or committing intentional acts of theft or vandalism.

A clear example of a firing that is NOT for “employment misconduct” is a terminated employee who was unable, due to no fault of his own, to complete his job to the satisfaction of his employer.

Many times it is difficult to determine whether the employee was terminated for “employment misconduct”, in which case the dispute will often come before an administrative law judge (ALJ).  At this time, an attorney should be consulted to examine the legal precedent in order to advise the employer of the likely outcome and to persuade the ALJ.  If the employee or employer disputes the ALJ’s determination, he or she may appeal.

What if I fire one of my employees because he came to work intoxicated or with alcohol on his breath?

Minnesota case law is conflicting with regard to this issue.  In one case, an employee who appeared to be intoxicated and who apparently had alcohol on his breath was found to be entitled to unemployment benefits because the Court believed that there was not enough proof of intoxication.  In other cases, evidence of even a minimal consumption of alcohol was enough to bar entitlement to unemployment benefits where the job involved dangerous activities.  An attorney should be consulted to determine whether your fact pattern more closely matches the case law in favor of the employee or the employer.

Furthermore, if alcohol and/or drugs are found in the employee’s system as a result of a blood or urine test, Minnesota law requires that the employee be given an opportunity to seek alcohol and/or drug counseling.  The employer may then only fire the employee after a second positive test occurs after the counseling is completed.  Furthermore, the employee is entitled to unemployment benefits unless he “failed to make consistent efforts to control the chemical dependency.”

Must I pay a terminated or resigning employee for unused but accrued vacation time/paid time off?

It depends.  The Minnesota Supreme Court recently held in Lee v. Fresenius Medical Care, Inc., 741 N.W.2d 117 (Minn.2007) that an employee handbook may validly prohibit payment for accrued PTO time where the employee had been terminated for misconduct or where the employee failed to give his two-week notice.  However, there was a vigorous dissent from Justice Alan Page.  Absent such a provision, the employer should pay the employee for accrued but unused vacation time/PTO in accordance with Minnesota Statute Section 181.13.  If the employer fails to pay, a court may award the employee up to 15 days of full payment as a penalty to the employer, per Section 181.13.