EMPLOYMENT LAW NEWS
New Amendments to Minnesota’s Paid Leave Law and Earned Sick and Safe Time Act
By Jana Bjorklund, GovDocs Senior Counsel and Director
Employment Law and Compliance
Published June 20, 2024
The recent amendments to both the state’s Paid Leave Law (PLL) and its Earned Sick and Safe Time Act (ESST) took effect on May 24, 2024.
New Amendments to Minnesota’s Paid Leave Law and Earned Sick and Safe Time Act
Governor Walz signed into law amendments to both the state’s Paid Leave Law (PLL) and its Earned Sick and Safe Time Act (ESST) under H.F. 5247, which took effect on May 24, 2024.
In addition to the new amendments, Minnesota’s Department of Employment and Economic Development (DEED) released several frequently asked questions providing additional guidance to employers about PLL which takes effect in January 2026.
Minnesota’s Department of Labor and Industry also has on its website frequently asked questions about the state’s ESST program to assist employers with compliance.
Changes to Minnesota Paid Leave
The new amendments update some of the definitions under PLL, establish a disability insurance offset, allow for an employer to provide an employee with wage replacement during an absence, set parameters for refunds if the total amount of paid benefits under PLL and supplemental benefits exceed the employee’s usual salary, and include other technical and administrative updates. Some important highlights of the changes to PLL under the recent amendments include:
Authorized Representative: Minnesota’s PLL originally indicated only the individual employee could apply for leave. However, the new amendment allows an authorized representative, who is over 18 years of age, designated by the person or their legal representative, to apply for paid leave benefits on behalf of the individual. This can be a family member, guardian, or other person designated by the individual or the individual’s legal representative.
Funding: PLL will be funded through payroll taxes and may be split between employees and employers. The tax rate has been increased under the recent amendments to 0.88% because it was determined that the initial rate of 0.7% would not meet the anticipated funding demand. Half of the tax rate for funding PLL may be charged to employees.
Small employers (those with 30 or fewer employees) are eligible for a small employer premium rate if their average worker wage is equal to or less than 150% of Minnesota’s average wage. The small employer premium rate is 75% of the annual premium rate, with 25% paid by the employer and the remaining paid by the employee through wage deduction. Small employers may also be eligible for assistance grants issued through DEED.
Intermittent leave: The amendment spells out that while intermittent leave is allowed under PLL, employers are required to grant leave in minimum increments of one calendar day.
Appeal Process: A framework for appeals, which includes a hearing and an ability to appeal to a court of appeals, has been established under the new amendments.
Calculation of Benefits: Benefits will now be calculated based on the average hours the employee worked during the two quarters prior to applying for benefits.
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Upcoming Paid Leave Law Deadline for Minnesota Employers in 2024
Even though the state’s PLL doesn’t go into effect until January of 2026, employers must submit their first quarterly wage detail report by October 1, 2024, which is based on wages paid between July 1, 2024, and September 30, 2024. The report needs to be submitted through DEED’s employer portal. An explanation about the report and how to submit it is available on DEED’s website.
There is good news for employers with Minnesota Unemployment Insurance accounts. Under DEED’s guidance, they will not need to provide anything further than their usual wage detail report submitted for unemployment purposes. DEED will convert the employer’s unemployment insurance account to a joint unemployment insurance/paid leave account and employers only need to submit one wage detail report for both accounts.
Employers with no Minnesota Unemployment Insurance account will need to create a Paid Leave Only account, and per DEED’s guidance, they can be created this summer.
Changes to Minnesota Earned Sick and Safe Time
In addition to those summarized below, the ESST amendments also include additional details outlining who is excluded as an employee under the law, allow documentation from the employee for safe leave if documentation cannot be obtained in a reasonable time frame without added expense, update record-keeping requirements, and include a weather event exception for specific professions who are required to respond during weather events.
Base Rate: The amendments clarify that employers must pay ESST at an employee’s “base rate.” Base rate does not include overtime, shift differentials, holiday pay, gratuities, commissions, or bonuses.
- For employees paid on an hourly basis, the base rate is the hourly rate the employee would earn while working.
- For employees paid on an hourly basis who receive multiple hourly rates, the base rate is the rate the employee would have been paid for the time when ESST is taken.
- For employees paid on a salary basis, the base rate is the same rate guaranteed to the employee had they not taken ESST.
- For employees paid on commission, piecework, or any basis other than an hourly or salary rate, the base rate must be at least the highest applicable minimum wage whether local, state or federal.
Increments of ESST Use: The initial law required employers to allow employees to take ESST in the smallest increment of time used in the employer’s payroll system. Under the new amendments, employers are no longer required to allow employees to use ESST in less than 15-minute increments. Additionally, employers cannot require the use of ESST in increments of more than 4 hours.
Eligible Reasons for ESST: The amendments add bereavement reasons as eligible reasons to take ESST, such as time off to arrange for or attend funeral or memorial services and to address financial or legal matters that arise after a family member’s death.
Earnings Statements: The amendments no longer require employers to list an employee’s ESST balance on their earnings statements. However, employers must still provide to each employee the total number of ESST hours available and used each pay period by written or electronic means. If an employer provides the information electronically, employees must be allowed time during the workday to use an employer-owned device to access and print their ESST balance.
Employers with More Generous Policies: The amendments to ESST further define how an employer’s more generous policy coordinates with ESST. Under the new amendments, employers who provide employees with paid time off which can be used for illness or injury beyond the minimum amount required under ESST must now permit their employees to use all the paid leave provided to them consistent with the manner in which leave may be used under ESST. The employer’s entire paid leave policy must comply with ESST standards. Employers cannot restrict differently the paid leave they provide for illness or injury over the minimum standards under ESST.
The only exception to this is paid leave accrued by an employee before ESST took effect on January 1, 2024. An employer may require employees who use paid leave accrued prior to January 1, 2024 to do so in accordance with the employer’s applicable policy in effect on December 31, 2023. However, the employer must not require an employee to use leave accrued on or after January 1, 2024 before using leave accrued prior to that date.
Next Steps for Employers
Employers have time under the PLL to align their policies and meet the upcoming deadlines under the law. The amendments to ESST took effect immediately upon signing of the law, so employers should be reviewing and amending their paid sick leave policy in a timely manner to conform to the changes under the recent amendments.
For employers looking for assistance with navigating the complexities of paid leave law compliance, GovDocs Paid Leave product provides the information you need to ensure you have the most up-to-date paid leave requirements to keep you in compliance.
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