Legislation impacting all workplaces throughout the state and beyond was passed during Minnesota’s 2023 legislative session. This article highlights three employment law changes with widespread impact that all employers should know but may not have seen in the 279-page Minnesota labor omnibus bill Governor Tim Walz signed on May 16, 2023.
Minnesota Noncompete Ban
The Minnesota legislature banned covenants not to compete signed on or after July 1, 2023. Covenants not to compete (or noncompetes) in any agreement or contract with an employee or independent contractor signed after this date are void and unenforceable, unless they meet limited exceptions involving a business sale or dissolution. Minnesota’s law, codified at Minn. Stat. § 181.988, has no effect on agreements entered before July 1, 2023.
Employers cannot circumvent the new law with choice of law and venue provisions in employee contracts because the new law also limits choice of law and venue provisions. An employee primarily residing and working in Minnesota may now void any provision of an agreement or contract with the employer that: “(1) require[s] the employee to adjudicate outside of Minnesota a claim arising in Minnesota; or (2) deprive[s] the employee of the substantive protection of Minnesota law with respect to a controversy arising in Minnesota.”1
Minnesota Pregnancy and Parenting Leave
As of July 1, 2023, Minnesota employees are eligible for up to 12 weeks of unpaid pregnancy and parenting leave as of the first day of their employment. This is a stark difference from previous eligibility requirements for this leave.
Previously, employees had to work for an employer with 21 or more employees for at least 12 months working an average number of hours equivalent to the employer’s full-time employee to be eligible for this leave. The labor bill revised the definitions of “employee” and “employer” used in Minn. Stat. §§ 181.940 to 181.944, which encompasses Minnesota’s pregnancy and parenting leave statute. Now, all employers having at least one employee must provide this leave to employees regardless of their length of service or hours worked for the employer.
Minnesota’s pregnancy and parenting leave is unpaid leave that may be taken for the following reasons:
- By an employee who is the biological or adoptive parent (employee is adopting a child) in conjunction with the birth or adoption of that child; or
- By a female employee for prenatal care, or incapacity due to pregnancy, childbirth, or related health conditions.
Leave under this law “may be reduced by any period of: (1) paid parental, disability, personal, medical, or sick leave, or accrued vacation provided by the employer so that the total leave does not exceed 12 weeks”;2 or (2) leave taken under the Family and Medical Leave Act of 1983 (FMLA) for the same qualifying reason available under Minnesota’s pregnancy and parenting law.
Minnesota Earned Sick and Safe Time (ESST)
Beginning January 1, 2024, employees working at least 80 hours a year in Minnesota must earn paid ESST. The leave shall be earned by those employees regardless of their classification as full-time, part-time, or temporary employees.3 ESST is defined to include all the employers paid leave systems. Thus, employers may satisfy ESST obligations by modifying current PTO policies rather than creating new leave.
ESST shall be available for the employee’s use for any of the following reasons:
(1) Employee’s own
a. Mental or physical illness, injury, or health condition;
b. Need for medical diagnosis, care or treatment of a mental or physical injury, or health condition; or
c. Need for preventative medical or health care.
(2) To care for a family member
a. With a mental or physical illness, injury, or health condition;
b. Who needs medical diagnosis, care or treatment of a mental or physical injury, or health condition; or
c. Who needs preventative medical or health care.
(3) Absence due to domestic abuse, sexual assault, or stalking of the employee or employee’s family member for the purpose of:
a. Seeking medical attention related to physical or psychological injury or disability caused by domestic abuse, sexual assault, or stalking;
b. Obtaining services from a victim services organization;
c. Obtaining psychological or other counseling;
d. Seeking relocation or taking steps to secure an existing home due to domestic abuse, sexual assault, or stalking; or
e. Seeking legal advice or taking 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.
(4) Closure of the employee’s place of business due to weather or other public emergency
(5) To care for a family member whose school or place of care closed due to weather or other public emergency
(6) Employee is unable 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.
(7) Absence due to the proper health authorities or a health care professional determining that the presence of the employee or a family member of the employee in the community would jeopardize the health of others because of the exposure of the employee or family member to a communicable disease, whether or not the employee or family member actually contracted the communicable disease.
Employees have the right to use ESST “in the smallest increment of time tracked by the employer’s payroll system, provided such increment is not more than four hours.”4 This paid leave must be provided at the employee’s hourly rate of pay. Employers cannot require an employee to find a replacement worker to use ESST. There are also strict requirements on when and what documentation employers can require to produce confirming leave is taken for an ESST-qualifying reason. Notably, the ability to ask for documentation is not available to the employer unless the employee uses ESST for more than three consecutive days.
Three options for ESST earning schedules are itemized in the statute. Employers can implement any of these options or provide greater benefits to employees.
- Option 1: Employees must earn one (1) hour of ESST for every 30 hours the employee works in Minnesota up to a maximum of 48 ESST hours earned per year.5 Unused ESST shall carry over to the next year for the employee to use up to a maximum of 80 hours.
- Option 2: Employee earns 48 ESST hours on January 16 (or first day of year7 determined by the employer), which are available for immediate use. Unused ESST will be paid out to the employee on December 31 (or end of the year). The cycle repeats each year.
- Option 3: Employee earns 80 ESST hours on January 1 (or first day of year determined by the employer), which are available for immediate use. Unused ESST are forfeited as of December 31 (or end of the year).
Employers rehiring an employee within 180 days of termination, however, must restore the employee’s unused ESST existing at the time of termination and make those hours available for immediate use upon rehire.
This article highlights only three employment law changes. Many more were made during the 2023 legislative session. Employers are encouraged to review this guidance and consult with a Gislason & Hunter LLP attorney to ensure best practices are used.
1 Minn. Stat. § 181.988, subd. 3.
2 Minn. Stat. § 181.943(a).
3 Independent contractors and certain air carrier flight deck and cabin crew employees are excluded from eligibility for ESST.
4 SF 3035-4 at 130.1-3 (to be codified at Minn. Stat. § 181.9447, subd. 5).
5 Exempt employees working in bona fide executive, administrative, or professional capacities, or as an outside salesperson exempt from overtime under the federal Fair Labor Standards Act (29 U.S.C. § 213(a)(1)) are considered to work 40 hours per week for purposes of this law “except that an employee whose normal workweek is less than 40 hours will accrue earned sick and safe time based on the normal workweek.” SF 3035-4 at 127.11-12 (to be codified at Minn. Stat. § 181.9446(c)).
6 For simplicity sake, this article uses a calendar year. Employers may use a fiscal year, anniversary year, etc.
7 “Year” is defined in the ESST law as “a regular and consecutive 12-month period, as determined by an employer and clearly communicated to each employee of that employer.” SF 3035-4 at 126.18-19 (to be codified at Minn. Stat. § 181.9445, subd. 11).
