Minnesota Cities Magazine
More from Jul-Aug 2017 issue

Letter of the Law: What’s in a Name? Defining ‘Employee’ Under State and Federal Laws

By Laura Kushner

Who is an employee and who isn’t? Who receives benefits and who doesn’t? Who can join the union and who can’t? The answers to these questions are often tied to the definition of “employee” found in various laws. Let’s try to untangle this web.

Definition under FLSA
A woman smiling and gesturing as if she is unsure of something One key definition is found under the federal Fair Labor Standards Act (FLSA). Generally, under the FLSA, an employee is considered someone who is economically dependent on the business of the employer. A contractor, on the other hand, is in business for him- or herself. The FLSA also differentiates employees from volunteers by the level of compensation, or lack thereof. This gets tricky with volunteer firefighters, who are often paid more than the “nominal” amount required to be considered true volunteers.

Several other federal laws are tied to the FLSA definition of employee. The Affordable Care Act (ACA) is one example. Those considered employees under FLSA are often also considered employees for purposes of coverage by the ACA’s large employer definition.

The Family and Medical Leave Act (FMLA) is another federal law that ties its definition of employee back to the FLSA. The FMLA requires covered employers to provide up to 12 weeks of job- and benefit-protected leave per year to allow employees to care for their own illness or injury or those of close family members.

All cities are considered covered employers for purposes of the FMLA. To be eligible to use FMLA, however, an employee of a covered employer must meet eligibility criteria, including working at a site with at least 50 employees, or where the employer has at least 50 employees within 75 miles.

Labor relations and unemployment laws
For cities, another key law defining “employee” is the Public Employment Labor Relations Act, or PELRA. It includes a long, complicated definition of “public employee,” but one key factor is whether the employee works 14 hours per week for at least 67 working days per calendar year.

This definition is also used in the pay equity law. Thus, if an employee occupies a job class meeting these criteria, that job class must be included in the city’s pay equity report.

Minnesota unemployment law defines “employee” very broadly to cover most workers, but does differentiate between employees and independent contractors, relying on factors such as worker versus employer control over how the work is performed; the ability to terminate employment versus end a contract; how the worker is paid; who provides the equipment; and where the work is performed.

Eligibility for certain benefits
Another area to consider is how an employee is defined when it comes to eligibility for such benefits as workers’ compensation, health insurance, and pensions. There are laws that dictate in these areas as well.

Certain volunteers are defined by Minnesota statute as “employees” for workers’ compensation eligibility—volunteer firefighters, ambulance attendants, and first responders, to name a few. The League of Minnesota Cities Insurance Trust also makes workers’ compensation coverage for elected and appointed officials the default coverage option. That is, elected and appointed officials of covered entities are covered parties for workers’ compensation unless the member specifically elects otherwise.

Eligibility for group insurance and paid leave benefits are two areas where the city is primarily in the driver’s seat regarding the determination of who is considered a covered employee. For the most part, the city’s personnel policy and collective bargaining agreements will dictate who is eligible for group insurance, vacation, sick leave, and other paid time off. Keep in mind, though, that the Affordable Care Act (if not totally repealed) has penalties for large employers that do not offer group health insurance to employees who routinely work 30 hours per week.

Finally, the Public Employees Retirement Association law broadly defines “employee” as “a governmental employee or a public officer performing personal services for a governmental subdivision,” but then goes on to state which types of employees are included and excluded from membership. Both definitions are complex, but as a very general rule, someone who earns more than $5,100 per year and works in a position that lasts more than six months is likely to be covered.

While we can wish that state and federal laws would come up with one universal definition of employee, it’s not likely to happen any time soon. The important thing to remember is this: You should always check with your city attorney and the League as to whether someone is considered an employee under the law in any employment situation.

Laura Kushner is human resources director with the League of Minnesota Cities. Contact: lkushner@lmc.org or (651) 281-1203.

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