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on Monday, 28 April 2014 in Labor & Employment Law Update: Sarah M. Huyck, Editor

Iowa:  A final rule by the Iowa Workforce Development Department amends regulations under Iowa Admin. Code Sec. 871-24.13 and 871-24.16.  The final rule specifies  that paid time off, annual leave and excused personal leave should be included in the term “vacation pay” and thus are deductible from unemployment.  This rule took effect on April 9, 2014.   Kansas:  A Johnson County community may become the second municipality in Kansas to enact legislation protecting members of the LBGT community from discrimination.  Roeland Park’s proposed anti-discrimination measure, introduced at the city council’s March 3, 2014, meeting by councilwomen Megan England and Jennifer Gunby, would create a process for residents to file complaints if they were subjected to discrimination made unlawful by the measure.  Gay-rights advocacy group Equality Kansas helped craft the language for the proposal.  “The message isn’t just for gays and lesbians,” England said.  “It’s for the entire community to realize that we in Roeland Park welcome everyone and want to include everyone and that everyone is open and should have equal rights and shouldn’t be discriminated against.”


Minnesota:  At least 500 hourly employees at a processing plant in Minnesota may proceed as a class with claims that Armour-Eckrich Meats LLC violated the Fair Labor Standards Act by failing to pay for time spent donning and doffing required protective gear before and after their shifts and during 30-minute lunch breaks, a federal district court decided on January 8, 2014.  Despite the employer’s objections, the judge found that both production-line and other types of employees were similarly situated for purposes of the notice stage in a two-step certification process based on declarations of nine current and former workers.


Missouri:  A Missouri state court has held that a company could not be liable for the misappropriation of trade secrets under the Missouri Uniform Trade Secrets Act (“MUTSA”) for merely affiliating with the ex-director of the plaintiff-employer.  In Central Trust and Investment Co. v. Signal-Point Asset Management, LLC, Central Trust purchased Springfield Trust & Investment Company (“STC”), a provider financial management services.  The director of STC left his employment on the day of the purchase was finalized.  The director subsequently entered into an affiliation agreement with Signal-Point under which the director solicited and received orders to buy and sell securities or to facilitate other types of securities transactions on behalf of Signal-Point.  Under the agreement, Signal-Point received a set fee per trade and 10 percent of the fees the director received from his clients.  The agreement expressly stated that the director was an “independent contractor” and not an employee of Signal-Point.  The director retained a list of contacts and confidential financial information on all clients with whom he worked while at the STC, and 85 of his 90 current clients were former clients of STC.  Central Trust claimed that Signal-Point violated the MUTSA by having a “business relationship” with the former director, but did not allege the director acted as an agent of Signal-Point.  The Missouri Supreme Court stated that the MUTSA requires acquisition of a trade secret or “knowledge of the trade secret” in order to establish a claim of misappropriation.  While Central Trust had established that the former director acquired the client list, it failed to present evidence that Signal-Point ever obtained a copy of the list.  Therefore, Signal-Point “could not have acquired, disclosed, or used it” to establish a claim for misappropriation.  The court also held that Central Trust could not establish a claim under an agency theory because it failed to plead the existence of a principal-agent or employer-employee relationship between the former director and Signal-Point.  Moreover, under the affiliation agreement, the director was an independent contractor, disclaimed the existence of an employer-employee relationship, and stated that the director had no right to bind Signal-Point by his actions.    Montana:   The Montana Supreme Court recently ruled that an employee handbook did not constitute a contract between an employer and its employee such that the employer is obligated to pay employees for unused, accrued sick leave when the employee terminates employment.  The Court noted that Montana law generally does not consider handbooks to be contracts unless the employee can show the terms of the handbook were bargained for and there was mutual consent and consideration.  The Court held that was not the case, particularly where the handbook specifically advised that it was not intended to be a contract.  The policy also advised employees that benefits could be changed or eliminated at any time, which the employees acknowledge annually.  Two dissenting justices concluded that there was a fact issue for trial.


North Dakota:  In Brockel v. North Dakota Workforce Safety & Insurance, 2014 ND 26 (Feb. 13, 2014), North Dakota’s Supreme Court reversed and remanded part of an administrative law judge’s decision denying disability benefits because the hearing on the merits failed to satisfy the state’s due-process requirements.  Specifically, the insurer sought to terminate disability payments because the former employee had failed to submit updated medical records verifying his ongoing disability, among other reasons.  But this basis for ceasing benefits was not spelled out in the hearing notice.  The Supreme Court emphasized that the ALJ’s determination could not rest on grounds not set forth in the notice and remanded the matter for rehearing. 


South Dakota: The South Dakota House State Affairs Committee passed a bill requiring background checks by the FBI of officers and employees of the Governor’s Office of Economic Development.  The agency has been under federal and state investigation recently based on allegations of misconduct.  Under the bill, employees of the agency who authorize financial assistance or have access to account numbers would be subject to the background checks.  The bill passed based on a unanimous vote.


Wyoming:  The Wyoming legislature recently enacted legislation to make Wyoming an “Employment First” state.  Employment First requires developmentally disabled individuals in the Medicaid waiver program to work with state employment services to find jobs before they can start applying for other state services.  Under the employment first approach, community based, integrated employment is the first option for employment services for children and adults with disabilities. Employment First requires that employees be paid minimum wage and work in settings in which they are integrated with people who are not disabled.  The law takes effect July 1, 2014.

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