State-by-State Employment Law Developments

Iowa: Undocumented workers are entitled to healing period benefits under the Iowa Workers’ Compensation Act per a recent holding by the Iowa Supreme Court. The court determined that undocumented workers are “employees” under the Iowa Workers’ Compensation Act. The court was not persuaded by the employer’s contention that an employment contract between an undocumented worker and an employer is contrary to the provisions of the Immigration Reform and Control Act of 1986 (IRCA). It determined that construing such an employment agreement as not covered by the Iowa Worker’s Compensation Act would undermine the IRCA. Employers would hire undocumented workers because they would not be liable under the Iowa Workers’ Compensation Act for any injuries those workers sustained. Moreover, the court held that an employment contract with an undocumented worker does not inherently have an illegal purpose, and it is not void as illegal merely because the contract is with an undocumented worker.

Kansas: In late November, Kansas Attorney General Derek Schmidt joined 16 other state attorneys general in asking the U.S. Supreme Court to invalidate three of President Obama’s appointments to the National Labor Relations Board. President Obama made the appointments at issue by recess appointment, despite the fact that the Senate could have held confirmation hearings, so Attorney General Schmidt contends that the appointments are invalid. “The Constitution gives the states the right to have our voices heard in the selection of presidential nominees through the advice and consent of our elected representatives in the U.S. Senate,” Schmidt said. “By unilaterally declaring the Senate to be in recess, the president silenced the states’ voices in selecting members to a board whose regulations significantly affect the economy of every state, including Kansas.” The U.S. Supreme Court set oral argument for January 13, 2014.

Minnesota: In Dukowitz v. Hannon Security Services, a divided Minnesota Supreme Court recently reaffirmed precedent holding that an employee-employer relationship is presumed to be “at-will” in Minnesota. The court also reiterated that only very narrow exceptions to the at-will rule will be recognized.

Missouri: In Oros & Busch Application Techs., Inc. v. Terra Renewal Servs., Inc. (E.D. Missouri), the court held that a ten-year, nationwide covenant not to compete clause in a business purchase agreement was not per se unenforceable. The court noted that the agreement in this case was not an agreement between an employee and employer, but rather, a purchase agreement between a buyer and a seller for the sale of a business. Unlike an employee in an employment agreement, the seller of a business “has a superior bargaining position from which he may negotiate the best price for his covenant not to compete.” The court also noted that the geographic and time limitations required in covenants not to compete accompanying the sale of a business “are designed in part to protect the buyer from the seller’s encroachment on the good will transferred in the sale.” For those reasons, a covenant not to compete in a business purchase agreement may include broader restrictions than those included an employment agreement.

Montana: The Montana district court located in Billings, Montana, recently ordered the City of Billings to produce un-redacted copies of documents regarding discipline of five City employees and the corrective action forms issued for misuse of work computers. The City has produced redacted documents, removing all information that could identify the employees, and further refused to produce the corrective action documents. The City appealed and the Court stayed the order pending the outcome of the appeal.

North Dakota: In Davenport v. Workforce Safety & Insurance Fund, 833 N.W.2d 500 (N.D. 2013), North Dakota’s Supreme Court upheld an administrative law judge’s (“ALJ”) denial of Workers’ Compensation benefits for an employee’s anxiety and depression. Citing state law, the court emphasized that the employee bore the burden of proving, by a preponderance of the evidence, that a work-related physical injury “is determined with reasonable medical certainty” to be “at least fifty percent of the cause” of the resulting mental or psychological condition in order to be compensable. Because other, non-work-related factors significantly contributed to the employee’s condition, the ALJ’s denial of benefits was proper.

South Dakota: Officials from the South Dakota Democratic Party gathered more than 25,000 signatures in support of an initiative to place a minimum wage increase on the November 2014 ballot. If the measure passes, effective January 1, 2015, the South Dakota minimum wage would increase from $7.25 per hour to $8.50 per hour. In addition, the state minimum wage would index to inflation in future years. Currently, South Dakota’s minimum wage is in line with the federal level, along with 31 other states.