Opinion ID: 2140651
Heading Depth: 3
Heading Rank: 1

Heading: Misclassification

Text: We first consider whether an employer's misclassification of employees as exempt from the protections of the MFLSA, standing alone, constitutes a violation of the Act. Even though the plaintiffs did not establish that Farmers failed to pay them overtime pay, the district court treated the misclassification of the plaintiffs as a violation of the MFLSA. The district court concluded that Farmers violated Minn. Stat. § 177.23, subd. 7(6), by refusing to classify the Class as employees within the meaning of the Act. Section 177.23, subd. 7(6), defines an employee, as relevant here, as any individual employed by an employer, but not including any individual employed in a bona fide executive, administrative, or professional capacity. The court of appeals did not directly address this issue. Farmers argues that the district court erred in concluding that Farmers violated Minn.Stat. § 177.23, subd. 7(6), because this is simply a definition of the term `employee,' not a substantive provision that can be violated. According to Farmers, an employer cannot violate the definition of `employee.' Farmers advocates that we conclude the MFLSA, like the Federal Fair Labors Standards Act (FLSA) does not make mere classification a violation. See 29 U.S.C. §§ 201-19 (2006). Although mere misclassification is not considered a violation under the FLSA, [7] the FLSA is not dispositive here because it is structured differently than the MFLSA. We begin our analysis by looking at the language of the statute. The legislature was not precise in delineating the scope of actionable violations under the MFLSA. Essentially, the legislature identified the entire Act. In the context of suits by private parties, the statute provides that [a]n employee may bring a civil action seeking redress for a violation or violations of sections 177.21 to 177.35 directly to district court. Minn.Stat. § 177.27, subd. 8. Sections 177.21 to 177.35 encompass every section of the MFLSA, even those sections setting forth the proper citation of the Act, the statement of purpose of the Act, the powers and duties of the Division of Labor Standards, the powers and duties of the Commissioner, and the manner of appealing an administrative rule. See Minn.Stat. § 177.21 (stating that sections 177.21 to 177.35 may be cited as the `Minnesota Fair Labor Standards Act'); Minn.Stat. § 177.22 (setting forth the purpose of the MFLSA); Minn.Stat. § 177.26 (setting forth the powers and duties of the Division of Labor Standards and Apprenticeship in the Department of Labor and Industry); Minn.Stat. §§ 177.27-.28 (setting forth the powers and duties of the Commissioner, including the adoption of administrative rules); Minn.Stat. § 177.29 (specifying the manner of appeal for persons aggrieved by an administrative rule issued under section 177.28). Although every section of the MFLSA, including section 177.23, falls within the literal scope of actionable violations under section 177.27, the legislature clearly did not contemplate that an employer could be civilly liable for misciting the Act, violating the purpose of the Act, or improperly seeking an appeal of an administrative rule. See also Minn.Stat. § 177.32, subd. 1(9) (providing a criminal penalty for employers that violat[e] any provision of sections 177.21 to 177.35). Therefore, in determining the scope of actionable violations, we focus on whether a section of the MFLSA is capable of being violated by an employer. The term violate includes a failure to comply with a statutory requirement. See Minn. Stat. § 645.44, subd. 17 (2006). Key to our analysis is determining whether there is an affirmative requirement imposed upon the employer to take or not take certain action under the Act. Several sections of the MFLSA do impose an affirmative requirement on the employer with respect to employees covered by the Actfor example, the obligation to pay minimum wages under section 177.24; the obligation to pay overtime compensation under section 177.25; the obligation to provide rest and meal breaks under sections 177.253 and 177.254; and the obligation to make and keep records under section 177.30. There is no similar obligation with respect to the classification of employees under section 177.23. Section 177.23 is merely a list of definitions and does not impose any affirmative requirement upon which a violation may be based. The preface to the definitions in section 177.23 provides generally that the following terms, for the purposes of sections 177.21 to 177.35, have the meanings given to them in this section. Minn.Stat. § 177.23, subd. 1. The definition of employee at issue here simply provides that an employee does not include any individual employed in a bona fide administrative capacity. Minn.Stat. § 177.23 subd. 7(6). Neither this section nor any other section of the MFLSA mentions the terms classification or misclassification in the context of the definition of employee, and the Act does not specify the actions an employer must take to classify employees properly. It is true that employers are required to make and keep records of each employee's name, address, occupation, pay, and hours under section 177.30, but an employer's failure to make and keep these records constitutes a violation of section 177.30, not section 177.23. We thus conclude that civil liability does not arise under the definition of employee in section 177.23. An employer's act of misclassifying an employee, without more, does not constitute a violation of the MFLSA.