How Do These New Minnesota Laws Affect Your Company? Statewide Earned Sick and Safe Leave, Legalized Cannabis, CROWN Act, and More

Minnesota Gov. Tim Walz recently signed several new laws impacting employers. We described the prohibition on non-compete agreements in a previous alert. Other new laws—and how they impact your company—are described below.

Sick and Safe Leave Law

Effective Jan. 1, 2024, Minnesota's Earned Sick and Safe Leave (ESSL) law requires covered employers to provide paid leave to employees who work in the state for reasons including, but not limited to:

• Mental or physical illness, treatment or preventive care of an employee or their family member;
• Absence due to domestic abuse, sexual assault, or stalking;
• Weather or public emergency closure of the workplace or a family member's school or care facility; and
• When determined by a health authority or health care professional that the employee or a family member is at risk of infecting others with a communicable disease.

Eligible employees accrue a minimum of one hour of ESSL for every 30 hours worked (up to a maximum of 48 hours of ESSL per year). Employees must be permitted to carry up to 80 hours of unused ESSL into the following year unless the employer (i) provides 48 hours of ESSL for immediate use at the start of the year and pays out any unused time available at the end of the year or (ii) does not pay out unused ESSL but provides 80 hours for use at the start of every year.

An employer, pursuant to a written policy, may require up to seven days' advance notice if the leave is foreseeable or notice as soon as practicable if the leave is unforeseeable. Additionally, employers may require reasonable documentation regarding the need for ESSL when ESSL is used for more than three days in a row.

While the cities of Bloomington, Duluth, Minneapolis, and St. Paul have existing sick and safe time local ordinances, beginning Jan. 1, 2024, employers must follow the most protective and generous law that applies to their employees.

Who Is Eligible for ESSL?

Employees, including temporary and part-time employees, who work at least 80 hours in a year are eligible for ESSL. Employers are prohibited from retaliating or discriminating against employees who request or use the benefit.

What Are the Requirements for Employers Under ESSL?

The new law applies to any individual or business with one or more employees. There is no small employer exemption. Covered employers are required under the statute to:

• Provide notice to all employees of their rights to paid sick and safe leave;
• Publish notice of employee rights and remedies under the ESSL law in employee handbooks; and
• Maintain the confidentiality of employee and family member information regarding the need for ESSL.

The Commissioner of the Department of Labor and Industry (DLI) is tasked with the enforcement of the ESSL statute. Employers may be fined up to $10,000 for each failure to submit or deliver records required by DLI. Consider reviewing the DLI's ESSL fact sheet for employers.

Paid Family and Medical Leave Act

Minnesota's new Paid Family and Medical Leave (PFML) benefit program will go into effect Jan. 1, 2026. The statewide program provides eligible employees with up to 12 weeks of family leave benefits and up to 12 weeks of medical leave benefits, subject to annual limit of 20 weeks of combined leave.

Benefits include compensation through a state insurance program that is initially funded by the state's budget surplus, with ongoing funding from employer and employee contributions beginning Jan. 1, 2026. This financial compensation will not equal an eligible employee's full wages; instead, employees will receive:

• 90% of the portion of their weekly wages that is less than or equal to 50% of the state average weekly wage, plus:
• 66% of the portion of their weekly wages that is more than 50% of the state average weekly wage but less than or equal to 100% of the statewide average weekly wage, plus:
• 55% of the portion of their weekly wages that is more than 100% of the state average weekly wage.

Employees will submit benefits applications to a newly formed Family and Medical Benefit Insurance Division (Division) of the Department of Employment and Economic Development (DEED), which will determine and pay out the financial benefits on a weekly basis with pro-ration for intermittent leave, any hours worked for wages, worker's compensation payments, and the use of other paid time off that is not considered a supplemental benefit.

Eligible employees are also entitled to continued employee health insurance benefits during leave and, unless the employer can show an employee would not otherwise have been employed at the time the employee returns from leave, reinstatement to the same or equivalent position.

Who Is Eligible for PFML?

All Minnesota employees, except for self-employed individuals and seasonal employees employed for less than 150 days, qualify for PFML benefits if they meet financial eligibility requirements under the law. Independent contractors are also excluded. Independent contractors or those self-employed may elect to purchase coverage under the PFML program.

To be financially eligible for benefits, an employee must have earned at least 5.3% of the state average annual wage over their base period, or the most recent four completed calendar quarters before the employee's application for benefits. Currently, this amounts to annual earnings of about $3,500. The employee can aggregate wages earned from multiple employers to satisfy the financial eligibility test.

Employees receiving severance pay or social security disability benefits are not eligible for financial PFML benefits. Nor are employees using their vacation, sick, or other paid time off or disability insurance in lieu of PFML. However, an employer may elect to provide benefits such as salary continuation, vacation leave, sick leave, or other paid time off as a supplemental benefit payment, which may be added to the amount of PFML benefits received so that the employee receives their regular wage or salary. Employees may choose, but cannot be required to use supplemental benefits concurrently with their PFML.

Employees taking or requesting PFML are protected against discrimination, retaliation, and interference. The new law gives employees a right to sue for double damages plus attorney's fees, authorizes class actions, and proscribes a penalty ranging from $1,000 to $10,000 per violation.

What Are the Requirements for Employers Under the PFML Program?

The law applies to all Minnesota employers, regardless of size, including out-of-state employers of Minnesota employees, Minnesota government employers, nonprofits, faith-based organizations and other typically tax-exempt associations.

Employers can limit intermittent use of the leave to 480 hours in any 12-month period so long as the employee is allowed to take any remaining PFML continuously.

Employers may require the employee to provide at least 30 days' notice where the need for leave is foreseeable or to give notice as soon as practicable otherwise. The notice must be sufficient to make the employer aware of the need for leave and anticipated timing of the leave.

What Are the PFML Premiums for Employers?

Beginning Jan. 1, 2026, employers must pay quarterly premiums to the family and medical benefit insurance account based on the taxable wages paid to each employee. Employers are required to pay at least half of the premiums and may require employees to pay up to half of the premiums through a wage deduction.

Premium rates, summarized in the table below, depend upon the employer's participation in the family and medical benefit program and/or a private plan:

Participation of Employer	2026 Premium Rates
Both family and medical benefit programs	0.7%
Medical benefit program only; approved private plan for family benefits	0.4%
Family benefit program only; approved private plan for medical benefits	0.3%

Employers with fewer than 30 employees may be eligible for a small business exception that provides a reduced amount of premiums. Employers may also elect to offer a private plan in lieu of premiums, as long as the private plan provides the same or greater benefits or protections as the statewide plan and is approved by the Division. Employers are subject to a penalty if they fail to submit required quarterly wage details to the state.

How Should Employers Prepare for the PFML Program?

Although the law does not become effective until 2026, and much remains for DEED to spell out about the law's implementation, Minnesota employers will be required to:

• Submit wage detail reports specifying the quarterly wages received and hours worked for each employee in mid-2024; and
• Provide notice of the program to employees in mid-2025 (DEED will provide a poster).

Further guidance and regulations are expected leading up to the effective date of the program. In the meantime, employers should prepare for the effective date of the statute by reviewing private plan options, consider the interplay between federal FMLA leave and the statewide leave, and plan to update their policies and handbooks.

Legalization of Recreational Marijuana

In legalizing recreational cannabis use, Minnesota legislators significantly modified the state's Drug and Alcohol Testing in the Workplace Act (DATWA) and altered the availability of adverse employment actions based on off-duty cannabis use effective Aug. 1, 2023.

Changes to Workplace Testing for Cannabis Under DATWA

Cannabis—marijuana, THC, cannabis products and hemp-derived consumer products—are no longer considered "drugs" under DATWA. However, employers may still implement work rules and policies prohibiting cannabis impairment, use, sale or transfer while working, operating employer machinery, equipment, or vehicles, or on employer premises.

Such policies or workplace rules must be compliant with the DATWA testing requirements, which depend upon an employee's position:

• The DATWA testing rules for cannabis have not changed for the following positions: (1) safety-sensitive positions; (2) peace officers; (3) firefighters; (4) positions requiring face-to-face care, training, education, supervision, counseling, consultation or medical assistance to children, vulnerable adults, or healthcare patients; (5) positions requiring a commercial driver's license or subject to federal or state motor vehicle regulations requiring testing; (6) employment positions funded by a federal grant; and (7) positions for which state or federal law requires cannabis testing. "Safety-sensitive position" continues to mean a job, including any supervisory or management position, in which an impairment caused by drug, alcohol or cannabis usage would threaten the health or safety of any person.
• For all other position types, employers must adhere to the following new rules:
  • Employers cannot require cannabis testing for the sole purpose of determining the absence or presence of cannabis, meaning employers are not allowed to conduct pre-employment testing or random testing of employees for cannabis.
  • Instead, employers may only conduct cannabis testing if they have a reasonable suspicion that an employee: (1) is under the influence of drugs or alcohol; (2) violates the employer's written rules prohibiting cannabis use, possession, sale or transfer during work; (3) was personally injured or caused personal injury to another employee; or (4) caused a work-related accident or was operating or assisting in operating machinery, equipment or vehicles involved in a work-related accident.

Adverse Employment Actions Based on Cannabis Use

Employers may still enforce their workplace policies prohibiting cannabis impairment, use, sale or transfer while working, operating employer machinery, equipment, or vehicles, or on employer premises. Employers may also discipline or discharge an employee if failure to do so would violate state or federal law or regulations, or cause an employer to lose a federal monetary or licensing-related benefit.

Employers do need to keep in mind, however, that cannabis use is now protected under Minnesota's lawful consumable products law, meaning that an employer is prohibited from disciplining or discharging employees (or refusing to hire applicants) who use cannabis outside of work.

Key Takeaway

Employers should review written policies that address medical and recreational cannabis use at work or on work property. Additionally, drug testing policies should be revised to make sure they are consistent with the new law.

CROWN Act

Effective Jan. 31, 2023, the Minnesota Create a Respectful and Open World for Natural Hair (CROWN) Act amended the Minnesota Human Rights Act (MHRA) to expand the definition of "race" to include "traits associated with race, including but not limited to hair texture and hair styles such as braids, locs, and twists" and protects employees from adverse employment actions due to hair texture and/or hair styles associated with race.

Employers should review their grooming or personal appearance standards to ensure all relevant policies are facially neutral and conform to this new legal protection. The Minnesota Department of Human Rights (MDHR) is expected to issue further guidance on the application of the new law.

New Law Regarding Inquiries into Applicants' Salary History

The Minnesota Human Rights Act has also been amended to prohibit employers from inquiring into, considering, or requiring disclosure of an applicant's salary history for the purpose of determining the applicant's compensation. However, an employer may consider any pay history that is voluntarily disclosed by an applicant for negotiation purposes.

The new law goes into effect Jan. 1, 2024, except for employment covered by a collective bargaining agreement (CBA). In that case, the new law is effective on the date of implementation of the applicable CBA that is after Jan. 1, 2024.

Added Protections for Lactating Mothers and Pregnant Employees

Effective July 1, 2023, protections for nursing mothers and pregnant employees were expanded: the law requiring employers to offer employees paid breaks to express breast milk eliminates the provision that those employees must have given birth within the previous 12 months. Another change eliminates language that said employers did not have to provide paid breaks if doing so would "unduly disrupt" their operations. In addition, the room provided by the employer for lactating mothers must be "clean, private, and secure," in addition to existing requirements, including that the room not be a bathroom, is shielded from view, is free from intrusion from others, is close to the work area, and has an electrical outlet.

"Reasonable accommodation" for pregnant employees may now include temporary leave of absence, a change in work schedule or job duties, or longer break periods.

The pregnancy accommodations now apply to employers with one or more employees (down from 15).

Employer-Sponsored Meetings and Communications

Effective Aug. 1, 2023, employers are prohibited from taking disciplinary or "any adverse employment action" against an employee who declines to attend an employer-sponsored meeting or declines to receive or listen to employer communications if those communications are intended to communicate the employer's opinion about a religious or political issue. However, such communications may be conducted as long as attendance or receipt of the communication is "wholly voluntary."

We Can Help

Maslon's Labor & Employment Group is available to answer questions about any of the new legislation. Please contact us if you have concerns about how to protect your company's legitimate business interests in light of these changes.