Do I need an Attorney to Review my Severance Agreement?

Being laid-off or discharged from employment is a stressful situation. In some instances, your employer may provide you with a separation agreement in which they offer you some money in exchange for your signing of the document. This may seem like a nice gesture (and, on occasion, it is), but if you receive a separation or severance agreement, there are several reasons why you may want to discuss it with an attorney:

1. The Severance Payment

   Sometimes employees may already be entitled to severance, whether it is in an employment contract or company policy. If this is the case, an employee does not need to sign the agreement in order to be eligible for the compensation being offered. In other cases, the employer may disguise money already owed (for instance, a PTO payout) as money being offered. If your employer is obligated under law to pay this, and they don’t, you may be eligible for the full payment and other penalties would could more than double the amount of pay you are eligible to receive.

2. Release of Claims

   Another critical reason to discuss your severance agreement with an attorney is to understand the release of claims. Most people realize that they are releasing claims (i.e., giving up the right to sue for legal wrongdoing) by signing the agreement. What most people don’t realize is whether and, if so, what claims they are in fact giving up. If your employer has violated the law, they are liable to you for damages. If you sign the agreement, you may be giving up the right to pursue what you are owed (for example: wrongful termination claims). We’ve represented dozens of clients who have been offered severance agreements and been able to obtain settlements in excess of $100,000 on several occasions.

3. Non-Disparagement Clauses

   If you look through your separation agreement, you’ll likely come across a ‘non-disparagement’ section that prohibits you from saying anything negative about your former employer. But this clause should operate both ways. In other words, you should ensure that your employer agrees not to say anything negative about you that could interfere with your ability to find other employment or obtain the highest salary offer possible.

4. Non-Competes and Non-Solicitation Clauses

   Sometimes your employer will try to prevent you from competing or drawing other employees away from the company. If you haven’t already signed a non-compete or non-solicitation clause, this is not the time to do so. If you’ve just lost your job, the last thing you want to do is limit your options for other employment. If your employer wants this limit, they should be willing to pay you a premium for agreeing to it.

These are just a few of the key reasons to have an attorney review your severance or separation agreement. Each case is unique, and therefore your particular needs are best protected by consulting with an attorney to discuss your agreement.

What is a Whistleblower?

We’ve all heard the term. We’ve seen them featured in films, novels, and more recently through social media. But what exactly does it mean to be a “whistleblower?”

At a high level, a whistleblower is someone who “reports” wrongful conduct (including, but not limited to, fraud, submitting false financial documents, abuse, corruption, dumping chemicals in local water supplies, covering up illegal conduct, endangering the public health, etc.). For example, the Minnesota Whistleblower Act, Minn. Stat. § 181.932 lists a number of different types of conduct that qualify an individual as a whistleblower. In summary, though, a whistleblower is typically an employee of a company who learns or observes of wrongdoing taking place and then reports that wrongdoing to someone higher up within the company (such as a supervisor, an executive of the company, or Human Resources).

In recent years, numerous state and federal whistleblower laws have been enacted to both ensure protection for employees who make such reports and incentivize employees to come forward with such information. In a perfect world, an employer would receive these reports from an employee and take steps to ensure that the wrongful conduct is discontinued. Unfortunately, the world isn’t always perfect, and sometimes employers decide to take action against the employee who reported such conduct.

Fortunately, the law recognizes that this latter situation may occur and therefore authorizes employees who make reports (whistleblowers) and are retaliated against to sue and recover damages including past wage loss, future wage loss, emotional distress, and even punitive damages.

If you have reported unlawful conduct and been retaliated against, or if you are considering reporting unlawful conduct but want to talk with an attorney beforehand, please don’t hesitate to contact me at 612 (351)-0084. In order to be afforded the greatest protections under the law, it is critical that you follow the proper procedure.

Terminated Employee's Right to Commissions

Does my employer have to pay my commissions if I get fired?

A couple of months ago, I received a phone call from an individual who had just been fired from his job. To maintain anonymity, let’s call this individual “Frank.” Frank was a salesperson for an employer (“Company”) and Frank sold a certain type of product (“Widgets”). Here is what Frank told me:

Frank worked for Company for the last fews years. He was paid a set base salary bi-monthly. In addition, he was paid a certain amount ($0.25) for each Widget that he sold to a customer. Typically, customers would order several hundred Widgets at a time. For example, if a customer ordered 300 Widgets from Frank, he would earn a $75.00 commission for that sale. During the final month in which he was employed, he sold a total of 8,550 Widgets (which would equal an earned commissions totaling $2,137.50). Unfortunately, Frank was fired on the 29th day of the month. When his final paycheck came, Company did not pay him anything for commissions. When Frank e-mailed Company asking for payment, Company said it did not have to pay him because he was not there through the end of the month. Frank then reached out to me to ask whether his employer had to pay him his commissions. Here is what I told him:

The Minnesota Payment of Wages Act (“PWA”), Minn. Stat. § 181.13 governs the payment of wages and commissions earned by employees. It also dictates that when an employer terminates an employees, all wages “earned” became immediately due and payable “upon written demand” by the employee. When an employer fails to pay these commissions, they become liable for not only the commissions earned, but for additional things such as penalties, costs, and fees (the employee’s “damages”). In order to determine whether Frank’s employer was in default, we had to look closely at a number of documents.

We reviewed Frank’s offer letters, payment history, employee handbook, sales spreadsheets, and other materials and determined that Frank had, in fact, “earned” those commissions as defined by statute and his employment documents. As a result, it was clear that Frank’s employer violated the law. Further, because his employer violated the law, they were now on the hook for those other penalties, including my fees. After a few weeks dealing with Frank’s former employer, I was able to get them to pay Frank not only his commissions earned and owed ($2,137.50), but a premium because their violations of law implicated the these other penalties. In the end, Frank walked away with approximately $4,000.00 in his pocket (the employer had to pay my fees in addition to what it paid Frank).

To answer the question of whether your employer must pay your commissions if they fire you, the short answer is “yes, but only if those commissions are “earned.”” Whether they’ve been “earned” depends on a number of considerations. If you believe your employer failed to pay you for all commissions earned, the best thing to do is call an employment attorney or schedule a free consultation. I can be reached at (612) 351-0084.

Can I be Fired for any reason?

One of the most common questions that I receive from callers is “can I be fired for any reason?” The answer, as I often have to admit, isn’t so simple. Minnesota, like many other states, recognizes the concept of “at-will” employment and therefore most employees who are hired in this state are hired “at-will.” When people ask me to describe for them what means to be an “at-will” employee, here’s what I tell them:

An “at-will” employee is an employee who does not have an employment contract and therefore may leave their job at any time. The flip side of this is that the employer may terminate that employee at any time and for almost any reason (I’ll explain below) or even for no reason at all. Yes, you read that correctly: your employer can technically fire you without any reason whatsoever. But hold on…

Even though an employer can legally terminate an employee under most circumstances, there are some exceptions. And an employer who fires an employee for one of these exceptions runs the risk of being sued for wrongful termination. These exceptions include things like workplace discrimination, taking medical leave for yourself or a family member, retaliating against you for reporting your employer’s illegal activity or complaining about wage and hour violations, and sometimes things like employee handbooks and personnel manuals will limit your employer’s ability to fire you.

So how do you know whether you fit within one of these exceptions? The best way is to pick up the phone for a free consultation with an employment attorney and describe your specific situation. The Twin Cities has some great employment attorneys, and most of us are willing to spend some time on the phone for no charge. If you’d like to schedule a free consultation with me, just pick up the phone and dial (612) 351-0084. If I can’t help you, I’ll happily provide you with the names and numbers of other attorneys until you find someone who can.

Overtime Pay for Salaried Employees

One of the most misunderstood areas of employment law involves overtime pay and salaried employees.  Under the Fair Labor Standards Act—one of the most significant acts of employment legislation in our nation’s history—employees who work more than forty (40) hours per week are entitled to overtime at a rate “not less than one and one-half times the regular rate at which he is employed.” 29 U.S.C. § 207(a)(1). The Fair Labor Standards Act was enacted in 1938 in response to “conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers…” 29 U.S.C. § 202(a). Its purpose was to “eliminate the conditions above referred…without substantially curtailing employment or earning power.” 29 U.S.C. § 202(b). 

It has been 80 years since the Fair Labor Standards Act (“FLSA”) was passed by Congress. It has undergone numerous revisions, been the subject of thousands of lawsuits, and is one of the most identifiable pieces of legislation in our country. That notwithstanding, the FLSA continues to be widely misunderstood by employers and employees alike; in particular as it relates to salaried employees. By some estimates, more than 50% of employers get it wrong.

Employees often assume that if they are paid a salary then they are not entitled to the overtime pay required under the FLSA. However, being a salaried employee in-and-of itself is NOT sufficient to disqualify an employee from overtime pay. A salaried employee must satisfy two tests in order to be unentitled to overtime pay.  The first of these is the ‘salary test[.]’ The second is the ‘duties test[.]’ An employee who satisfies both of these tests is referred to as “exempt[.]” An exempt employee is not entitled to overtime pay, while a non-exempt employee is.

The salary test is the simpler of the two tests and is less often the subject of a lawsuit. It includes an annual salary threshold and weekly salary basis. Under the salary test, a salaried employee must be paid a minimum annual salary of $23,660 (multiple federal lawsuits are currently pending which could increase this to $47,476). In addition to the annual threshold, an employee must be paid a weekly salary of at least $455 per week (referred as the “salary basis test”). 

The duties test, on the other hand, is the source of constant confusion, mistake, and opportunism.  The duties test, which must also be satisfied in order for an employee to be exempt (not entitled) to overtime pay, requires that an employee engage in certain duties, possess certain responsibilities, or work in certain fields in order to be exempt from overtime pay. These include, but are not limited to: (1) executive employees, (2) administrative employees, (3) learned professionals, (4) creative professionals, (5) agricultural employees, (6) computer employees, (7) outside sales employees, and (8) highly compensated employees.

Of these, one of the most common mistakes occurs when it comes to employees who are classified as exempt under the executive exemption. For purposes of the FLSA, the executive exemption applies to employees who (1) meet the salary test and (2) have as his/her primary duty the management of the enterprise or managing a customarily recognized department or subdivision of the enterprise. This typically requires managing or directing the work of two or more employees, possessing the ability to hire and fire (or, at minimum, make recommendations as o hiring, firing, promoting, or participating in other changes to employment). Unless and until an employer is able to establish both prongs of this test, an employee who is classified as “exempt” is done so incorrectly and is entitled to overtime. 

An employee who brings a lawsuit for this kind of misclassification is entitled to overtime pay, a penalty referred to as “liquidated damages” which doubles that amount, and attorney’s fees and costs.  Many employment attorneys are able to take on these types of cases on what’s referred to as a contingency fee, which means that an employee who brings a lawsuit does not have to pay the attorney but instead that the attorney will collect his/her fees at the conclusion of the lawsuit or upon settlement. 

If you think you’ve been misclassified, it is important to contact an employment attorney right away.  There is a statute of limitations that limits your ability to bring FLSA unpaid overtime claims to two years (sometimes three if you can prove the misclassification was willful).