Minnesota Supreme Court bolsters contract claims for employees

Following several important decisions reinforcing and even expanding employee rights, the Minnesota Supreme Court recently ruled for employees in another nationally significant case. The decision in Hall v. City of Plainview has extended the legal doctrine recognizing that an employee handbook can create obligations for employers regarding their employees. In particular, such handbooks can be a contract between employers and employees about, for example, employee benefits or other compensation. Hall represents an important advance in the law because the Minnesota Supreme Court ruled that employee handbooks can establish an employee’s contractual right to compensation even when those handbooks have a general disclaimer. Such disclaimers, which appear in virtually every employee handbook, typically declare that the handbooks do not create contractual rights in any respect. In Hall, however, the Minnesota Supreme Court made clear that a claim for unpaid compensation based on a specific promise in an employee handbook should now at least survive summary judgment even if the handbook has a general disclaimer about not creating any contract rights. In short, these types of claims should be decided by a jury at trial going forward rather than by a judge at the summary judgment stage.

Hall takes on greater importance given the amendments to the Minnesota Payment of Wages Act, Minn. Stat. §§ 181.13-.14, 181.171. Although that law does not create a substantive right to compensation, as the Hall ruling reiterated, the relevant statutory provisions provide a robust basis for pursuing compensation claims nonetheless. The Minnesota Payment of Wages Act offers a powerful vehicle to enforce the contract rights expanded under Hall and the compensation claims based on any other legal authority, including local wage ordinances and government policy. In other words, this law provides a vital complement to enforcement under the Federal Fair Labor Standards Act, 29 U.S.C. §§ 201, et seq., and the Minnesota Fair Labor Standards Act, Minn. Stat. §§ 177.21, et seq. The resulting ability to prosecute wage theft claims more broadly, whether through private counsel, the United States Department of Labor, or the Minnesota Department of Labor and Industry, bodes well for the rule of law – particularly given the double damages and other substantial remedies available to employees in this context.