September 27, 2023 - Mercer
Minnesota joins 17 other states and Washington, DC, in requiring accrued paid leave for employees. Starting Jan. 1, 2024, 2023 Ch. 53 (SF 3035, see Article 12) will require all employers in the state to provide up to 48 hours of earned sick and safe time (ESST) ・accrued at one hour for every 30 hours worked ・to eligible employees working in Minnesota. The law replaces the current statute that applies to an employer’s voluntary sick leave program. The state’s Department of Labor and Industry (DLI) is responsible for adopting rules, enforcing the law and providing a uniform employee notice.
Employers. The law applies to Minnesota employers of any size, including state and local government employers and nonprofit organizations. For situations involving a leasing company or professional employer organization, the responsible entity is the one paying employment-related taxes. For situations involving a temporary employee placed by a staffing agency, the staffing agency is the responsible entity, unless the underlying contract states otherwise.
Employees. Most Minnesota part-time, temporary and full-time employees are eligible, as long as they work at least 80 hours in a year for the same employer. An employee’s state of residence and an employer’s headquarters site are irrelevant. Covered employees do not include:
Collective bargaining agreements (CBAs). The law does not apply to building and construction industry employees covered by a labor organization’s CBA with a valid ESST waiver. The law does not diminish the rights of union employees subject to a CBA meeting or exceeding ESST standards.
Employees will be able to earn up to 48 hours of paid leave in a year at the start of 2024 or on hire. A “year” is defined as any regular, consecutive 12-month period, as determined and communicated by an employer. Paid leave will accrue at a rate of one hour for every 30 hours worked. Unused ESST will carry over at year-end to the next year, subject to an overall 80-hour cap on accrued and unused ESST.<
Frontloading. Instead of using the accrual method, employers may make a minimum of 48 hours of ESST available on the first day of the year, if they pay out accrued, unused ESST at the end of each year. Payout is not required if employers frontload at least 80 hours of ESST on the first day of the year.
Covered reasons. Employees may use leave for these reasons:
Family member. The law broadly defines family members to include:
Children include adult, biological, foster or legal ward relationships; legal guardianships; and in loco parentis relationships. Parents include biological, step-, adoptive, and foster parents and anyone who stood in loco parentis during childhood. Grandchildren include foster and step-grandchildren, and grandparents include step-grandparents.
While Minnesota does not have statewide domestic partnership registration, many cities do, including four of the largest: Duluth, Minneapolis, Rochester and St. Paul.
Timing. Paid leave accruals will start on Jan. 1, 2024, or an employee’s hire date, whichever is later. Employees may use leave as it is earned and in the smallest increments tracked by an employer’s payroll system, but the increment may not exceed four hours. If a former employee is rehired within 180 days of separation, all previously accrued, unused ESST must be reinstated and made available for immediate use. Employees transferring to a separate division, entity or location of the same employer will be entitled to all accrued, unused leave at the time of transfer. Successor employers will have to honor leave accruals of all covered employees, including terminated employees hired by the successor employer within 30 days of the acquisition.
Notice. Employers will be able to require up to seven days’ advance notice for foreseeable leaves. For unforeseeable leaves, employees can be required to provide notice as soon as practicable. Employees must receive a written policy containing reasonable notice procedures.
Documentation. Employers will be able to require reasonable documentation when leave continues for more than three consecutive days. This documentation may consist of a health professional’s signed statement or an employee’s written statement, which can be in the employee’s primary language and need not be notarized. In domestic violence or related situations, reasonable documentation may consist of a signed statement by a representative of a victims services organization, an attorney, a police officer or an antiviolence counselor. An employer may not request details about domestic violence or related situations.
Pay. Employees will receive their hourly pay rate while on leave but no less than the applicable minimum wage (2024 minimum wage rates range from $8.85 to $10.85 per hour). The law does not address how to calculate the hourly rate for salaried employees or whether to include bonuses or overtime in the pay rate. Employers will not have to pay out unused ESST on employment separation.
The law prohibits employers from requiring employees to find a replacement worker while on paid leave. An employee’s use of ESST cannot result in retaliation or any adverse action under an employer’s absence control policy or attendance point system. Other forms of retaliation are prohibited:
On return from leave, an employee will be entitled to return to the former position at the same preleave rate of pay, plus any automatic pay adjustments occurring during the leave. In addition, returning employees will retain all accrued preleave benefits and seniority. An agreement to work part-time during leave will not affect an employee’s return-to-work rights.
Benefit continuation. Employers will have to maintain all group insurance, group subscriber contracts and health plan coverage for the employee and dependents, as long as the employee continues paying active employee rates.
Four major cities in Minnesota (Bloomington, Duluth, Minneapolis and St. Paul) already have similar mandates in effect; the state ESST law does not preempt them. Starting Jan. 1, 2024, employers will have to follow the most protective legal requirements applicable to their employees. For example, Bloomington, Minneapolis, and St. Paul all match the state’s ESST law’s accrual and annual cap requirements. Duluth’s ordinance, however, has an accrual of one hour per 50 hours worked, with a cap of 64 hours per year. As a result, absent any changes to the local ordinance, Duluth employees will be entitled to accrue leave at the state rate of one hour per 30 hours worked, up to 64 hours per year.
In addition to providing paid leave and defining the year, employers will have to comply with earnings statement, posting and recordkeeping obligations.
Earnings statement. Minnesota employers already must include considerable information in employees’ earnings statements each pay period. Starting in 2024, earnings statements must include ESST hours accrued and available, as well as ESST hours used during the pay period.
Notice. By Jan. 1, 2024, or an employee’s hire date ・whichever is later ・employers will have to provide all employees a DLI-created uniform ESST notice, along with a copy of the employer’s written policy for providing notice of leave. The ESST notice will include leave amounts, the accrual year, terms of use, the ban on retaliation and complaint/civil action rights. Employers can meet the notice requirement by any of the following methods:
Employers must also include the notice in an employee handbook, if applicable. Employers must provide the notice to employees in English and an employee’s self-identified primary language. DLI will provide the notice in the five most common languages spoken in Minnesota and perhaps other languages, if requested in writing by an employer. If DLI does not provide the notice in a requested language, the employer will not be subject to a notice penalty (see Enforcement and penalties below).
Recordkeeping. Employers will have to keep records of an employee’s hours worked and ESST taken for at least three years and comply with all of the recordkeeping requirements under the state’s Fair Labor Standards Act. Employers will have to make records available to DLI within 72 hours of a request and allow employees to inspect their records at a reasonable time and place. Any records or documents that contain health or medical information, pertain to domestic or sexual assault, or relate to ESST leave requested or taken must be kept confidential. Employers must destroy records more than three years old on an employee’s request.
Labor or service contracts. Employers will have a duty to ensure labor or service contractors comply with ESST requirements. An employer is held responsible for violations within the past two years if it has knowledge ＝ based on normal facts and circumstances ・of a contractor’s noncompliance. This duty extends to what would make a reasonably prudent person inquire about a contractor’s compliance.
DLI may issue a cease-and-desist order, require back pay, gratuities, compensatory damages, an equal amount as liquidated damages, and litigation and hearing costs. Repeated and willful violations will be subject to a civil penalty of up to $10,000 per violation. Recordkeeping violations will be subject to a penalty of up to $10,000 per failure. In addition, affected employees will have three years to bring a civil lawsuit to address alleged ESST violations and recover damages, costs, reasonable attorney’s fees, and injunctive and other equitable relief.
Employers already providing at least 48 hours of discretionary paid leave, vacation or paid time off (PTO) will not have to provide additional paid leave to comply with the law, as long as their policies adhere to ESST requirements. Employers should evaluate existing leave policies to determine any necessary changes, including employment termination, carryover and frontloading provisions.
Employers should look for upcoming DLI guidance, particularly on these issues:
Benefits under the PFML law enacted earlier this year are scheduled to begin in 2026. Some absences may be covered under both laws, yet neither addresses benefit coordination. More information may come with implementing regulations. For more information on the state’s PFML law, see Minnesota passes paid family and medical leave law (July 10, 2023).
Multistate employers must also contend with implementing Illinois accrued paid leave requirements by Jan. 1, 2024. The Illinois law makes leave available for any reason. For details, see Illinois requires paid leave for any reason starting in 2024 (April 11, 2023). As mentioned above, some form of accrued paid leave is now required in about one-third of US states; see Roundup: State accrued paid leave mandates (April 29, 2022). Employers concerned about creating uniformity in benefits and administration nationwide may want to conduct a full review of accrued paid leave benefits across the workforce.
Finally, watch for paid sick leave developments in 2024. Other states are likely to revisit similar measures considered in the 2023 legislative sessions.