If Pain, Yes Gain—Part 106: Minnesota Legislature Passes Statewide Paid Sick and Safe Time Bill

What You Need To Know:

• On Tuesday, May 16, 2023, the Minnesota legislature passed a statewide paid sick and safe time mandate, known as Earned Sick and Safe Time (ESST), as part of a larger jobs and labor package. The bill will become law once signed by Gov. Tim Walz, which is expected.
• Once signed into law, the Minnesota ESST mandate will take effect on January 1, 2024.
• Minnesota statewide ESST will not preempt existing local paid sick and safe leave mandates currently in effect in Duluth, Minneapolis, and St. Paul, nor the Bloomington mandate scheduled to go into effect on July 1, 2023.
• Employers in Minnesota will be required to provide eligible Minnesota employees with 1 hour of paid ESST for every 30 hours worked, up to a maximum of 48 hours per year and an overall balance of 80 hours. The mandate does not appear to impose a specific cap on the amount of available ESST employees can use in a benefit year.

With the state legislature’s passage of the ESST mandate, Minnesota is poised to join 18 other states, plus Washington, D.C., as jurisdictions that have enacted a statewide paid sick leave or general paid time off mandate.[1] Like the new Illinois Paid Leave for All Workers Act that was enacted earlier in 2023, Minnesota ESST will go into effect on January 1, 2024 once signed into law.  As noted above, local paid sick and safe leave mandates already exist in four Minnesota municipalities: Bloomington, Duluth, Minneapolis, and St. Paul. The Minnesota legislature is also seeking to pass a separate paid family and medical leave mandate during the current legislative session, so the Land of 10,000 Lakes may not be done making paid leave waves this month.

As we await Gov. Walz’ anticipated signature of ESST, here are highlights of the mandate.

Key ESST Highlights

• Employer Coverage: Employer coverage under the ESST mandate is broad, defining “employer” to include an individual, corporation, partnership, association, business trust, nonprofit organization, group of persons, the state of Minnesota, a county, town, city, school district, or other governmental subdivision that has one or more employees.[2]
• Employee Eligiblity: “Employee” is defined to include an individual employed by an employer who works for the employer for at least 80 hours in a year in Minnesota.  The definition includes temporary and part-time workers, but does not include independent contractors and individuals employed by an air carrier as a flight deck or cabin crew member if certain conditions are satisfied.
• Accrual Rate: Eligible employees will be able to begin accruing ESST on January 1, 2024 (i.e., the mandate’s effective date) or upon commencement of employment, whichever is later. Specifically, ESST must accrue at a rate of at least 1 hour of ESST for every 30 hours worked.
• Accrual Cap: The ESST mandate has both an annual accrual cap and a “point-in-time” (i.e., “rolling”) accrual cap. Specifically, employees must be permitted to accrue up to (a) 48 hours of ESST in a year,[3] and (b) a total of 80 hours of ESST at any point in time.
• Usage Waiting Period: A newly hired employee can begin using ESST as it is accrued; there is no usage waiting period. This would be in contrast with the Bloomington, Duluth, Minneapolis, and St. Paul paid sick and safe leave mandates, which each allow for a 90 calendar day usage waiting period.
• Usage Cap: The mandate does not appear to set a cap on the amount of available ESST an employee can use per year.
• Year-End Carryover: The mandate does not appear to set a cap on the amount of earned, unused ESST that would carry over at year-end. However, the mandate provides that an employee’s balance of accrued and unused ESST can be capped at a maximum of 80 hours as noted in the “Accrual Cap” section above.
• Frontloading: To avoid year-end carryover of ESST, an employer can elect to either (a) provide employees with a frontloaded grant of 48 hours of ESST for their immediate use at the beginning of the subsequent year and payout an employee’s balance of earned, unused ESST at year-end, or (b) provide employees with a frontloaded grant of 80 hours of ESST for their immediate use at the beginning of the subsequent year. While not completely clear, it appears that if the employer goes with the 80-hour frontloading option, no year-end payout or carryover of earned, unused ESST is required.
• Reasons for Use: An employee can use available ESST for the following covered reasons:

1. 1. The employee’s or employee’s covered family member’s (see below) (a) mental or physical illness, injury, or other health condition, (b) need for medical diagnosis, care, or treatment of a mental or physical illness, injury, or health condition, or (c) need for preventive medical or health care;
   2. Absence due to domestic abuse, sexual assault, or stalking of the employee or employee’s covered family member (see below), if the time is for the employee to (a) seek medical attention related to physical or psychological injury or disability caused by domestic abuse, sexual assault, or stalking, (b) obtain services from a victim services organization, (c) obtain psychological or other counseling, (d) seek relocation or take steps to secure an existing home due to domestic abuse, sexual assault, or stalking, or (e) seek legal advice or take legal action, including preparing for or participating in any civil or criminal legal proceeding related to or resulting from domestic abuse, sexual assault, or stalking;
   3. Closure of the employee's place of business due to weather or other public emergency or an employee's need to care for a family member whose school or place of care has been closed due to weather or other public emergency;
   4. The employee's inability to work or telework because the employee is (a) prohibited from working by the employer due to health concerns related to the potential transmission of a communicable illness related to a public emergency, or (b) seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, a communicable disease related to a public emergency and such employee has been exposed to a communicable disease or the employee's employer has requested a test or diagnosis; or
   5. When it has been determined by the health authorities having jurisdiction or by a health care professional that the presence of the employee or family member of the employee in the community would jeopardize the health of others because of the exposure of the employee or family member of the employee to a communicable disease, whether or not the employee or family member has actually contracted the communicable disease.

• Covered Family Members: The ESST mandate contains a notably broad definition of “family member” as compared to other existing state and local paid sick leave mandates. Specifically, the ESST “family member” definition includes (a) an employee’s (i) child, foster child, adult child, legal ward, child for whom the employee is legal guardian, or child to whom the employee stands or stood in loco parentis, (ii) spouse or registered domestic partner, (iii) sibling, stepsibling, or foster sibling, (iv) biological, adoptive, or foster parent, stepparent, or a person who stood in loco parentis when the employee was a minor child, (v) grandchild, foster grandchild, or stepgrandchild, (vi) grandparent or stepgrandparent, (vii) a child of a sibling of the employee, (viii) a sibling of the parents of the employee, or (ix) a child-in-law or sibling-in-law; (b) any of the family members listed in “(a)” of a spouse or registered domestic partner; (c) any other individual related by blood or whose close association with the employee is the equivalent of a family relationship; and (d) up to one individual annually designated by the employee.
• Increments of Use: Employees can use ESST in four-hour increments or the smallest increment of time tracked by an employer’s payroll system, whichever is smaller.
• Rate of Pay: ESST must be paid at the same hourly rate as an employee earns from employment, but not less than the state minimum wage or any applicable local minimum wage.
• Employee Notice to Employer: An employer can require notice of an employee’s intention to use ESST (a) up to seven days in advance, if the need for use is foreseeable, or (b) as soon as practicable, if the need for use is unforeseeable. If an employer requires employees to provide such notice of an ESST absence, then the employer’s written policy must contain reasonable procedures for employees to provide the notice. Further, the mandate states that the employer must provide employees with a written copy of the policy.
• Documentation: An employer can require reasonable documentation that ESST was used for a covered reason when an employee uses more than three consecutive days of ESST. The ESST mandate contains additional documentation standards, including examples of what is considered reasonable documentation for certain covered absences.
• Payout on Termination / Reinstatement Upon Rehire: Employers are not required to pay out earned, unused ESST upon an employee’s termination, resignation, retirement, or other separation from employment. However, if an employee is separated from employment and rehired within 180 days of separation by the same employer, the employer must reinstate previously accrued, unused ESST.
• Compliance Using Existing Policy: Employers with paid time off or other paid leave policies that allow an employee to use leave for the same reasons and under the same conditions as ESST and that meet or exceed the mandate’s minimum standards and requirements can use those policies to comply with the Minnesota ESST mandate. In these instances, the employer would not be required to provide additional ESST to its employees.
• Collective Bargaining Agreements (CBA): With the exception of a CBA with a bona fide building and construction trades labor organization,[4] it appears that the ESST mandate will apply to employees covered by a CBA unless the CBA meets or exceeds, and does not otherwise conflict with, the minimum standards and requirements under the mandate.
• Notice to Employees: Under the ESST mandate, employers must provide notice (a) that employees are entitled to ESST, including the amount of earned ESST, the employee’s accrual year, the terms of ESST use, and a copy of any written policy for providing notice to the employer, (b) that retaliation against employees who request or take ESST is prohibited, and (c) that each employee has the right to file a complaint or bring a civil action if their employer denies earned ESST or if they are retaliated against for requesting or using earned ESST. Such notice needs to be provided to each employee in English and the primary language spoken by the employee, as identified by the employee. Notice must be provided at the later of commencement of employment or January 1, 2024 (i.e., the ESST mandate’s effective date).

Employers have multiple ways they can comply with the above notice requirement. Specifically, an employer can either (a) post a copy of the notice at each location where employees perform work and where the notice must be readily observed and easily reviewed by all employees performing work, (b) provide a paper or electronic copy of the notice to employees, or (c) make a conspicuous posting in a web-based or app-based platform through which an employee performs work. 

Additionally, an employer that provides its employees with an employee handbook must include within the handbook a notice of employee rights and remedies under the ESST mandate. 

The Minnesota Department of Labor and Industry is tasked with preparing a model notice for employers to use to meet the above standards.

• Balance Notice: At the end of each pay period, employers must provide each employee an earning statement, either in writing or by electronic means, that includes, among other required content under Minnesota law, (a) the total number of ESST hours accrued and available for use, and (b) the total number of ESST hours used during the pay period.
• Recordkeeping: Under the mandate, employers must retain records documenting, among other information, hours worked by employees and hours of ESST taken by employees. It appears that such records will need to be retained for at least three years in addition to the current calendar year.
• Retaliation Prohibited: Employers cannot take any adverse employment action or otherwise retaliate or discriminate against employees for exercising their rights under the ESST mandate. Additionally, employers cannot maintain an absence control policy or attendance point system that counts ESST taken as an absence that may lead to or result in retaliation or any other adverse action.

We will continue to monitor and provide updates on Minnesota ESST developments as they occur in the coming months as the mandate’s January 1, 2024 effective date approaches.

As the paid leave landscape continues to expand, companies should reach out to their Seyfarth contact for solutions and recommendations on addressing compliance with the Minnesota ESST mandate and sick leave requirements generally.  To stay up to date on paid leave developments, click here to sign up for Seyfarth’s Paid Sick Leave mailing list.

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[1] Including Minnesota, the states that have enacted a statewide general non-COVID-19 paid sick leave or paid time off mandate include: (1) Arizona; (2) California; (3) Colorado; (4) Connecticut; (5) Illinois (PTO law) (effective 1/1/2024); (6) Maine (PTO law); (7) Maryland; (8) Massachusetts; (9) Michigan; (10) Minnesota; (11) Nevada (PTO law); (12) New Jersey; (13) New Mexico; (14) New York; (15) Oregon; (16) Rhode Island; (17) Vermont; and (18) Washington. In addition, (19) Virginia has a statewide paid sick leave law that applies only to certain home health workers. There also are non-COVID-19 paid sick leave or paid time off mandates in (20) Washington, D.C. and more than two dozen municipalities.

[2] The ESST mandate notes that in the event a temporary employee is supplied by a staffing agency, and assuming there is no contractual agreement stating otherwise, the individual will be considered an employee of the staffing agency for purposes of ESST.

[3] The ESST mandate defines “year” to mean a regular and consecutive 12-month period, as determined by an employer and clearly communicated to each employee of that employer.

[4] Certain criteria must be satisfied for such a CBA to waive the ESST requirements.