Contributed By Foulston Siefkin LLP
Similar to its impact throughout the country, the “gig” economy has made significant inroads in Missouri. Many people struggle to meet their financial needs working only one job, while others enjoy the flexibility commonly associated with these short-term or freelance-type employment arrangements. Entities that utilize workers on short-term or freelance contracts must be aware of the legal risks of doing so (see 2.1 Defining and Understanding the Relationship).
As the number of individuals taking on this type work continues to grow, so will the number of legal challenges associated with determining these workers’ rights and benefits. This trend is already playing out in federal and state courts across the country through a host of lawsuits challenging the classification of “gig-economy” workers for various prominent entities, such as Uber, Lyft, Postmates, and Grubhub. Going forward, there are still unresolved questions as to whether these workers are protected by federal and state anti-discrimination statutes, covered under state workers’ compensation laws, or eligible for healthcare benefits, among other employment-related benefits.
As the “gig” economy becomes more defined, Missouri or the federal government (or both) may take steps to more clearly establish what rights and benefits “gig-economy” workers hold. In October 2017, the New Economy Works to Guarantee Independence and Growth (NEW GIG) Act was introduced in both the US House and US Senate, providing objective criteria that, if met, would provide a safe harbor ensuring “gig” workers would be treated as independent contractors. While the companion bills ultimately stalled in committee, this is not likely to be the last effort to try to better define these types of alternative employment arrangements.
With the ever-changing global economy, employers in Missouri must be willing to adapt. Technological improvements, artificial intelligence, cyberspace, and social media can all potentially redefine the traditional employer-employee relationship. Though not limited to Missouri, many entities have already used technological improvements and artificial intelligence to eliminate positions or restructure the duties of their workforce. As technology continues to improve, this trend is likely to continue.
In 2018, the #MeToo movement took the country by storm, and Missouri was no exception. The #MeToo movement seeks to raise awareness about the prevalence of sexual harassment and assault, especially in the workplace, and has resulted in numerous high-profile individuals being outed for predatory behavior, including former Missouri Governor Eric Greitens. Sexual harassment and sexual assault are not issues limited to actors, politicians, and news anchors: such issues play out every day in workplaces across Missouri (and the rest of the country), with many victims afraid of the consequences of reporting workplace abuse, despite protections afforded under federal and state anti-discrimination laws.
In the wake of the #MeToo movement, it is worth tracking whether there is a significant jump in the number of sexual harassment charges filed with the Equal Employment Opportunity Commission (“EEOC”) and Missouri Commission on Human Rights (“MCHR”). In the past five years, the number of sex discrimination charges filed with the EEOC in Missouri has steadily risen, from 577 in 2013 to 720 in 2017. Post-#MeToo data is not presently available, but many speculate that a significant increase in the number of sexual harassment complaints is coming, in part because of the public outpouring of support for harassment victims. Entities doing business in Missouri should anticipate this trend by reviewing (and updating, if necessary) their anti-harassment policies, reminding their employees of the importance of reporting workplace harassment and how to do it, refreshing workplace harassment training or implementing it, and making sure they have buy-in from top-level leadership.
In response to the #MeToo movement, the US House introduced a bipartisan bill titled the EMPOWER Act, which proposes ramping up efforts to curb workplace harassment by outlawing confidentiality and non-disclosure provisions in settlement agreements, requiring publicly owned companies to disclose settlements, establishing a confidential tip-line for reporting harassment, and reforming the tax code to ensure that victims of sexual harassment are not penalized. The Senate previously released a companion bill. Despite receiving bipartisan support, however, House and Senate leadership have displayed a lack of enthusiasm for addressing either bill.
Congress did address one issue on this topic in 2017, though, with the inclusion of Section 162(q) in the Tax Cuts and Jobs Act of 2017. This Section prevents employers from deducting the settlement payment and/or the attorney’s fees of a sexual harassment or sexual abuse settlement as a business expense if a non-disclosure provision is included in the settlement. However, ambiguous language in the Section leaves many unanswered questions regarding the practical effects of this provision – questions that will need to be resolved by the IRS, the legislature or the courts in the near future.
On August 28, 2017, significant amendments to the Missouri Human Rights Act (“MHRA” or “Act”) (the state counterpart to federal civil rights laws such as Title VII, the ADEA, and the ADA) went into effect. These largely brought Missouri’s anti-discrimination statute in line with federal law. Before the recent amendments, the MHRA was arguably one of the nation’s most pro-employee anti-discrimination statutes, but the amendments have raised the standard for proving discrimination from the alleged discrimination being a “contributing factor” to being a “motivating factor,” eliminated individual liability under the Act, lowered the caps on punitive damages, and changed the standard for challenging the timeliness of a charge of discrimination. The amendments also introduced the Whistleblower Protection Act, which took the place of Missouri common-law wrongful discharge causes of action. While not specific to sexual harassment, the amendments made it more difficult for employees to establish violations of the Act. Before the amendments, plaintiffs often sued under the MHRA instead of federal anti-discrimination laws because the Missouri law had both a lower evidentiary burden and the possibility for larger monetary recovery. Missouri courts are currently still grappling with whether these amendments apply retroactively, often reaching differing conclusions.
The amendments to the MHRA do not tell the whole story in Missouri. Recent legislative activities in the state show that pro-employee sentiments are still strong among some voters and local governments. For example, as discussed in 1.3 Decline in Union Membership, in 2018, Missouri voters rejected becoming a “right to work” state, and Kansas City, Missouri joined a growing trend of cities and states by deciding to remove questions about salary history for applicants for city jobs in an effort to prevent gender-based wage disparities. The city plans to ask contractors of the city to do the same. Moreover, in February 2018, Kansas City, Missouri, “banned the box”, which prevents both public and private city employers from asking applicants about their criminal history on job applications. This ordinance went into effect in June 2018.
On August 7, 2018, Missouri residents voted on whether to become a “right to work” state – a proposal rejected by an overwhelming 67.5% to 32.5% margin. This represented a big win for unions, as the measure was previously signed into law in 2017, but pro-labor interests blocked its enactment, forcing a statewide vote.
As in the rest of the country, however, there has been a steady decline in union membership in Missouri during the last few decades. Today, only about 9% of Missouri workers are union-represented, down from almost 26% in 1968. Going forward, it is unlikely there will be meaningful increases in union membership in Missouri without significant changes in the law, the composition of the Supreme Court and National Labor Relations Board, or public attitudes toward unions. This issue is not unique to Missouri. While voting down the “right to work” law represents a big victory for pro-labor groups, the efforts by politicians and interest groups to diminish the role of unions in this country are likely to continue.
President Trump’s election set the stage for yet another shift in the ideology of the National Labor Relations Board. With a Republican majority now in place, the NLRB has moved quickly to undo many Obama-era labor regulations and precedents. Though not necessarily specific to Missouri, going forward the NLRB as currently constituted will likely routinely reach pro-business decisions on contested issues. This marks a stark contrast from the Obama administration’s NLRB, which delivered numerous victories for unions and employees. This seems to be business as usual, as Democratic-majority Boards tend to skew pro-labor, while Republican-majority Boards typically favor employers. This does not mean employers will always be victorious, but it signals that employers are likely to have additional leverage in collective bargaining negotiations and in day-to-day dealings with unions.
President Trump’s NLRB, however, may be more aggressive than previous Republican-majority Boards. In addition to swiftly undoing many Obama-era regulations and rulings, the NLRB’s general counsel, Peter Robb, has devoted significant attention to taking power away from the regional offices, and instead centralizing it in Washington DC. Some commentators view Mr. Robb’s plans as a power grab catered toward pro-business interests. Though not specific to Missouri, the more the Trump NLRB changes the way the agency operates, the more favorable to employers the agency is likely to become.
In Missouri, it is critical for entities to properly classify their workers. Employee misclassification can have serious consequences under a variety of federal and state statutes, including laws governing payroll taxes and tax withholding, payment of wages, employee benefits, workers’ compensation, and unemployment benefits. Entities seeking to utilize independent contractors must be aware of, and comply with, federal and Missouri laws regarding worker classification.
Under Missouri’s Workers’ Compensation statutes, Missouri courts look to several factors to determine whether a worker was properly classified as an employee. Ultimately, however, the issue typically comes down to whether the employer retained the right to control the manner and means of the worker’s performance, not just the end results. The state’s workers’ compensation laws are not limited to employee coverage, however. Missouri’s law extends to individuals performing work under a contract on the employer’s premises, and to those individuals’ subcontractors and employees who are injured on the company’s premises and in the ordinary course of the employer’s business.
For unemployment benefits purposes, services performed by a worker for wages are presumed to be part of employment, unless the company can demonstrate that an independent contractor performed the services. Missouri applies the common-law right-to-control test to determine whether a worker is an independent contractor for these purposes. Where the employer retains the right to control the manner and means of performance, they are typically considered an employee.
Misclassification of workers presents serious risks for entities doing business in Missouri. The state’s laws governing unemployment compensation permit the state to penalize employers that improperly classify their workers up to $1,000 dollars per day per worker, with additional criminal consequences. The state may also assess liability for all unpaid unemployment contributions, and impose an additional penalty of up to 25% of the total amount for which the state was defrauded. Failing to provide workers’ compensation insurance for employees is illegal and can result in significant civil and criminal penalties, depending on the severity of the offense.
As discussed in 1.1 "Gig" Economy and Other Technological Advances, with the growing number of workers entering into alternative employment agreements, entities doing business in Missouri need to ensure they are properly classifying such “gig” workers. Employers should also stay apprised of the trends in federal and state litigation across the country regarding the classification of “gig” workers. Preemptively seeking advice from knowledgeable legal counsel may alleviate some of the risks.
Missouri is an at-will employment state, subject to a number of exceptions, including the following:
Employers in Missouri can always modify the presumption of an at-will relationship by entering into an employment contract with an employee. However, unlike many states, Missouri does not recognize an implied employment contract outside of a written employment contract. Where employees are subject to a collective bargaining agreement, the terms and conditions of the agreement define the terms and conditions of the employment relationship.
In addition to the restrictions imposed on entities under federal law, Missouri makes it illegal for a “business entity or employer [to] knowingly employ, hire for employment, or continue to employ an unauthorized alien to perform work within the state of Missouri” (seeMo. Rev. Stat. § 285.530(1)). In 2009, Missouri enacted the Omnibus Immigration Act, which requires that all public employers and contractors doing a certain amount of business with the state use E-Verify to determine whether an employee is eligible to work in the United States. The use of E-Verify provides an affirmative defense to any action brought against the employer for employing an illegal alien. The law calls for progressive discipline for employers who violate its provision, up to and including refusing to permit the entity to do business in the state.
In addition to any requirements imposed by the National Labor Relations Act (NLRA) and other federal labor statutes, the Missouri Constitution guarantees private employees the right to organize and bargain collectively. Additionally, as discussed in 1.3 Decline in Union Membership, on August 7, 2018, Missouri residents voted against becoming a “right to work” state, representing a big victory for unions and pro-labor supporters. Entities doing business in Missouri need to be aware of the rights of their employees to collectively bargain and organize.
In addition to the rules imposed by federal law, Missouri places further rules and restrictions on employers during the interview process regarding the types of tests and questions to avoid. Employers in Missouri should only make inquiries that are necessary to determine an applicant’s eligibility and qualifications for the specified position. Questions about an applicant’s race, color, national origin, sex, religion, ancestry, disability, or age violate the Missouri Human Rights Act, except in extremely limited instances where they are a bona fide occupational qualification. The Missouri Commission on Human Rights (MCHR) has published regulations that generally prohibit the same types of inquiries prohibited under federal law. It has also published guidelines on the types of interview questions employers may ask and those they should stay away from; however, these guidelines are not legally binding (seehttps://labor.mo.gov/mohumanrights/Discrimination/pre_employ_inquiries).
Similar to the limitations under the federal Genetic Information Nondiscrimination Act of 2008, Missouri law precludes the use of genetic information to make employment decisions. Employers also cannot require applicants to submit to physical examinations. Instead, they may only ask about the applicant’s ability to perform the essential functions of the position with or without a reasonable accommodation. After an offer is made, however, the employer may require the applicant to submit to a physical examination if it is required of all applicants for the position regardless of physical or mental impairment, if the examination is related to the essential functions of the position, and if each applicant’s results are given the same consideration regardless of any impairment.
Missouri law also limits pre-employment testing. State law prohibits the use of any test that adversely affects the hiring, promotion, transfer, or any other employment or membership opportunities of classes protected by the Missouri Fair Employment Practices Act, unless: “(A) the test has been validated and evidences a high degree of utility as described; [or] (B) the person giving or acting upon the results of the particular test can demonstrate that alternative suitable hiring, transfer or promotion procedures are unavailable for his/her use” (seeMo. Code Regs. tit. 8, § 60-3.030(2)).
While Missouri law does not specifically prohibit asking about an applicant’s criminal history, including arrests and convictions, the MCHR strongly advises against pre-employment inquiries into arrest records. It also cautions employers against making employment decisions based on prior convictions, unless such conviction has a bearing on the applicant’s ability to perform the specific position for which they are applying. Additionally, Missouri statutes require employers to run background checks on certain highly sensitive positions, including teachers, mental health workers, school bus drivers, and certain healthcare workers who work directly with patients or children. Missouri employers are also cautioned against running credit checks on applicants, unless the checks are job-related.
As discussed in 1.2 "Me Too" and Other Movements, Kansas City, Missouri has “banned the box”, meaning that public and private employers in that city are prohibited from including criminal history questions on their applications. Recently, the city also voted to prevent public employers and those that do business with the city from asking questions about an applicant’s salary history, in an effort to prevent gender-based wage disparities.
The interview process in Missouri is sown with potential landmines for employers, so an entity’s interviewers should be trained on the various federal and state legal requirements and come to the interview fully prepared.
Missouri courts will generally enforce a reasonable non-compete agreement. Generally speaking, noncompetes in Missouri are enforceable if they are reasonably necessary to protect legitimate interests, if they are reasonable in time and geography, and if they are narrowly tailored to be no more restrictive than necessary to protect the employer’s legitimate interests. Such legitimate interests typically include trade secrets, customer contacts, and confidential customer information. A restrictive covenant is not enforceable to protect an employer from mere competition by a former employee. Generally, the attitude of Missouri courts is that, although the law favors the ability of parties to contract freely, contracts in restraint of trade are unlawful. Missouri courts will reform an agreement to make it reasonable if necessary. Missouri law provides a safe harbor for nonsolicitation agreements of one year or less when the business is seeking to protect confidential or trade secret business information or customer or supplier relationships, goodwill, or loyalty. Missouri courts recognize that continued employment and continued access to the employer’s protectable information and relationships constitute adequate consideration for a non-compete agreement to be enforceable.
Missouri courts consider a trade secret to be any formula, pattern, device or compilation of information that is used in a business and that gives the business an opportunity to obtain an advantage over competitors who do not know or use it. Missouri courts consider the following when determining whether certain information is a trade secret:
Matters of public knowledge or information generally known within an industry are not trade secrets.
Missouri does not regulate drug testing for private employers, and has no law limiting employer access to employees’ personal online accounts or personal electronic devices. Missouri law prohibits discrimination against an employee who uses lawful alcohol or tobacco off the employer’s premises during off-duty hours.
The Missouri Human Rights Act expands protections against discrimination based on race, color, religion, national origin, sex, ancestry, age, or disability to apply to all private employers with six or more employees. Under Missouri law, employees aged 40 to 69 are protected from age discrimination. Marital status and sexual orientation are not protected classes under Missouri state law.
Missouri has no law that differs from federal occupational health and safety reporting requirements. Missouri has laws that apply to the health and safety of all employees, covering topics such as equipment to be guarded, fire escapes, doors, explosives, scaffolding, ventilation, prevention of dust and smoke, overcrowding, restrooms, and ladders. These laws are administratively enforced.
Workers' compensation benefits are paid at the employer’s expense in Missouri. The law applies to all employers with five or more employees, and to certain construction industry employers regardless of the number of employees. A small number of employees are exempt, such as farm laborers. Employees who suffer job-related injury or illness are entitled to medical benefits and either temporary total disability benefits, permanent partial disability benefits, or permanent total disability benefits. If death results from a job-related injury or illness, benefits are paid to survivors. Generally, the benefit is two-thirds of average wages for up to 450 weeks or as specified in the workers compensation schedule. All employers subject to the law must insure their entire workers' compensation obligations with an authorized insurance carrier or meet the requirements to be self-insured. Exempt employers, such as those with fewer than five employees, may choose to come under the law by buying workers' compensation insurance, or remain exposed to civil lawsuits. In 2016, Missouri had the 20th highest premium rate among the states.
Under Missouri law, employee handbooks are generally not considered contracts because they normally lack the traditional prerequisites of a contract; Missouri courts have not recognized an obligation implied outside of a written employment contract.
Missouri law applies if there is no federal COBRA coverage, such as for employers with fewer than 20 employees. Missouri requires that an employee is entitled to continued health insurance coverage for 18 months after the termination of employment. Dependents are entitled to continued health insurance coverage for 36 months after the divorce or death of the employee. Divorced or surviving spouses who are 55 or older when federal COBRA expires are entitled to unlimited continuation. Continuation is required on hospital, surgical and major medical plans, but not dental, vision, or prescription plans. Employees may opt for a conversion policy when group coverage is terminated if they were covered for the previous three months.
Missouri is an employment at-will state, unless a written employment agreement exists. Missouri has no state law similar to the federal WARN Act governing reductions in force.
Missouri law favors the ability of parties to contract freely but does not recognize implied contracts. Missouri courts are skeptical of arbitration clauses, holding that continued at-will employment is not adequate consideration.
Before filing suit, an employee must first file a charge of employment discrimination, harassment or retaliation with the Missouri Commission on Human Rights or the Equal Employment Opportunity Commission, the federal agency. The damages available in the Missouri Human Rights Act do not differ significantly from federal law, although Missouri law allows punitive damages of no more than USD500,000, depending on the size of the employer.
Missouri does not have a separate wage payment act other than a statute that requires hourly wages to be paid semimonthly, though salaries and commissions may be paid monthly. An employer violating the statute may be fined between USD50 and USD500 for each offense, and may be deemed guilty of a misdemeanor.
Missouri courts recognize a very narrowly drawn public policy exception to the at-will doctrine, often called the wrongful-discharge doctrine, which protects an employee who reports legal violations or wrongdoing to superiors or third parties (“whistleblowing”) or refuses to perform an illegal act. In order to bring a valid whistleblowing claim, an employee must show that he or she reported serious misconduct that constituted a violation of the law and of well-established and clearly mandated public policy, that the employer discharged him or her, and that the report causally contributed to the discharge. The exception affords no protected status for making complaints about acts or omissions the employee merely believes to be violations of the law or public policy. To merely cite a statute or regulation without showing how the reported conduct violated it cannot form the basis of a wrongful-discharge action.
The Missouri Department of Labor’s Dispute Management Unit offers mediation in workers' compensation disputes. Mediation is a voluntary process and is not a prerequisite to filing a formal claim for compensation. Missouri Supreme Court rules authorize lower courts to establish an alternative dispute resolution program. Most circuit courts notify all parties in civil actions of alternative dispute resolution programs available through the court, and many require parties to mediate cases before trial. Federal courts in the Eastern District of Missouri have local rules authorizing courts to refer civil cases to alternative dispute resolution, including mediation and early neutral evaluation in the early pretrial period. Federal courts in the Western District of Missouri have a Mediation and Assessment Program. Parties in all non-excluded civil cases are required to mediate cases within 75 days of the case management conference. The cases are randomly assigned to a magistrate or bankruptcy judge, the program director, or an outside mediator.
Missouri law does not differ significantly from federal law.
Remedies available under the Missouri Human Rights Act are such that many plaintiffs file discrimination cases in Missouri court rather than federal court. The MHRA allows for injunctive relief, actual damages, and punitive damages. Punitive damages may be awarded if the employer’s conduct is considered wanton or willful, or if it recklessly disregards the right of the employee. Damages are capped according to the number of employees. For employers of more than 500 employees, damages (other than back pay) are capped at USD500,000. For employers with 201 to 500 employees, the cap is USD200,000. For employers with 101 to 200 employees, the cap is USD100,000. For an employer with six to 100 employees, the cap is USD50,000. Employees who prevail are entitled to attorney fees, which are not included in the damages cap.
There is no information relevant to this section.
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