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The Minnesota legislature continues to be busy, amending and
clarifying the sweeping paid sick and family leave laws it passed
last year. While some of these amendments provide much needed
clarification, others add further ambiguities for employers
grappling with compliance questions.
Changes to Earned Sick and Safe Time Act
On May 24, 2024, Governor Walz signed a bill amending the Minnesota Earned Sick and Safe Time Act (the Act), which went into effect on January 1, 2024. The amendments increase potential penalties under the Act and clarify some issues, but also create new ones for employers. Most amendments became effective the day after enactment.
New Penalties. The Act requires Minnesota employers to provide earned sick and safe time (ESST) to all employees for various covered reasons. The amendments stipulate that if an employer fails to provide employees with ESST as the statute requires or fails to allow employees to use ESST, the employer is liable for an amount equal to all ESST that should have been provided or could have been used, plus an equal amount of liquidated damages.
The amendments also increase the stakes for employer recordkeeping. Under the amendments, if an employer does not possess records that show the ESST an employee should have received, the employer is liable to the employee for 48 hours of ESST for each year ESST was not provided, plus an additional equal amount as liquidated damages.
Clarifying Rate of Pay for ESST. The amendments clarify the rate of pay to be used when paying ESST. The Act previously required employers to pay ESST at the same hourly rate the employee earned from employment. The amendments substitute "base rate" for "hourly rate." For employees paid on an hourly basis who receive multiple hourly rates, the "base rate" is the amount the employe would have been paid for the period of time when leave was taken. Salaried employees receive the same rate as if the employee had not taken the leave. The most important change is with respect to how employees who are paid on a basis other than hourly or salary, such as commission or piecework, are paid for ESST. The Act was previously silent on this issue. The amendments clarify that such employees receive ESST at a rate no less than the applicable minimum wage. The amendments also clarify that the "base rate" does not include commissions, shift differentials in addition to an hourly rate, overtime pay, premium payments for holidays or certain days of the week, bonuses, or gratuities.
Amended Definition of "Employee." The amendments redefine the term "employee" by creating additional limited exemptions for certain firefighters, state elected officials, and temporary farm workers. However, the amendments remove the exemption for certain air carrier flight deck or cabin crew members. Additionally, the Act previously read that "employee" included any person who performs at least 80 hours of work in a year for the employer in Minnesota. The amendments clarify that "employee" includes any person anticipated by the employer to perform at least 80 hours of work in a year for the employer in Minnesota. In other words, under the amended Act, employees anticipated to work more than 80 hours in a year may begin to use ESST immediately upon accrual without satisfying an 80-hour waiting period.
Amended Reasons for Use. The amendments add to the list of reasons employees may use ESST. In addition to the reason previously covered by the ESST law, employees may now use ESST to make arrangements for or to attend funeral services or a memorial or to address financial or legal matters arising from a family member's death. Under the Act, "family member" remains broadly defined and includes up to one individual annually designated by the employee.
The amendments provide employees may not use ESST for weather-related events if an employee's work duties require them to respond to a weather event and the employee is a firefighter, peace officer, 911 telecommunicator, correctional facility guard, or public employee with a commercial driver's license under certain circumstances.
Clarifying Increments of Use. The amendments clarify the increment of time in which ESST may be taken. The Act originally required employers to provide ESST in the smallest increment of time tracked by the employer's payroll system (of less than four hours). This was an onerous requirement, as many employers track hourly workers' time in increments of less than a minute. The amendments clarify that employers need not allow ESST to be taken in increments of less than 15 minutes but that they cannot require use of ESST in increments of more than four hours.
Earnings Statements. The amendments address the difficulty many employers have had in providing information about sick and safe time on employees' earning statements. The Act originally required employers to provide information about available and used ESST on employees' earnings statements. Under the amendments, an employer must provide information about a) the total number of ESST hours available for use, and b) the total number of ESST hours used during the pay period. Rather than requiring that the information be stated on the earnings statement, the amendments allow employers to choose a "reasonable system" for providing this information. That system could be the earnings statement or an electronic system where employees can access the information. If an employer chooses to provide the information by electronic means, it must provide employees with access to an employer-owned computer during regular work hours to review and print the information. These records must be maintained for three years and must be made available to the Department of Labor & Industry upon demand within 72 hours.
More Generous Policies. The Act originally provided that it was not to be construed to discourage employers from adopting or retaining ESST policies that met or exceeded, but did not conflict with, the Act's requirements. The amendments add to this provision, stating, "All paid time off and other paid leave made available to an employee by an employer in excess of the minimum amount required . . . [by the Act] for absences from work due to personal illness or injury, but not including short-term or long-term disability or other salary continuation benefits, must meet or exceed the minimum standards and requirements" for the use of sick and safe time. This amendment calls into question whether an employee with a "paid time off" (PTO) policy that provides a greater amount of PTO than is required under the Act must allow employees to use all of the PTO under such a policy as protected ESST for personal illness or injury.
Additionally, for paid leave accrued before January 1, 2024, for absences from work due to personal illness or injury, an employer may require an employee to follow the written notice and documentation requirements in an employer's policy or collective bargaining agreement as of December 31, 2023, in lieu of the requirements of the Act, so long as the employer does not require the employee to use post-Act accrued leave before using leave accrued prior to the Act's effective date.
Rule-Making Authority. Finally, under the amendments, the Department of Labor & Industry was granted rule-making authority to issue administrative rules further defining an employer's obligations under the Act. When such rules will be forthcoming, however, is unknown at this time.
Next Steps: In light of these recent amendments, employers should review their existing ESST/PTO policies and practices to ensure compliance with the amendments to the Act.
Amendments to Minnesota Paid Family Leave
The legislature also amended the Minnesota Paid Family Leave law, which was passed in 2023 but will go into effect on January 1, 2026. Like the amendments to the Earned Sick and Safe Time Act, most amendments discussed below took effect on May 25, 2024, unless otherwise noted. These amendments include, but are not limited to:
Amended Definitions: The legislature updated and clarified the definitions of various key terms, including "benefit year," "covered employment," "covered individual," "effective date of application," "effective date of leave," "financially eligible," "typical workweek," and "initial paid week."
Minimum Increment of Leave: The amendments clarify that the minimum leave increment must be at least one calendar day. While intermittent leave is available under the law, it must be taken "in increments consistent with the established policy of the employer to account for use of other forms of leave, so long as such employer's policy permits a minimum increment of at most one calendar day of intermittent leave." Applicants may not apply for intermittent paid leave benefits until the applicant has at least eight hours of accumulated leave, unless more than 30 calendar days have passed since the initial taking of leave.
Authorized Representative: Originally, the law stated that an "individual" could apply for leave. Now, an individual or their authorized representative may apply for leave. An authorized representative is "an individual over 18 years of age designated by the person or the individual's legal representative to act on their behalf" and can be a family member, guardian, or other individual designated by the person or the individual's legal representative.
Appeals: The initial law stated the benefit determinations were appealable but did not provide specifics for the process. The amendments provide a lengthy, detailed appeal mechanism, which includes a hearing and the ability to appeal to the court of appeals. This section is effective November 1, 2025.
Small Employers: Employers with 30 or fewer employees (now, regardless of the employer's gross annual revenue) and who have an average wage rate less than or equal to 150% of the state's average wage in covered employment for the prior year may apply for assistance grants. The amendments create a "small employer premium rate" for such employers, which is 75% of the annual premium rate. Employers must pay a minimum of 25% of the rate and may not deduct from employee pay to fund the employer portion of the premium. Employees must pay the remaining portion due, if any, not paid by the employer, and the employer must make wage deductions as necessary to fund the employee portion. This section is effective January 1, 2026.
The amendments also allow entities to opt into coverage, provide further detail regarding the calculation of the weekly benefit amount, establish a disability insurance offset, and allow for an employer to provide an employee with wage replacement during an absence. However, if the total amount of paid benefits under the law and supplemental benefits exceeds the employee's usual salary, the employee is required to refund the excess amount to the employer or paid leave subdivision.
Next Steps: While further amendments and refinements to the Minnesota Paid Family Leave law are likely in the future, employers should review current policies now in light of these updates from the legislature.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.