The 2023 Minnesota Legislative session has begun and two legislative employment proposals that have been in the mix in previous years may finally be enacted because of Democratic control of both chambers of the legislature. It is expected that some form of these two proposals will become law this session. The first would create a statewide paid family and medical leave program administered by the Department of Employment and Economic Development (DEED) and the second would require employers to provide a minimum amount of paid sick and safe time benefits to employees.

S.F. 2-H.F. 2 Paid Family and Medical Leave

This proposal creates a family and medical benefit insurance program administered by the Commissioner of Employment and Economic Development (DEED). The bill would create a new family and medical benefit insurance account with the state, and within that account, DEED would be required to maintain a premium account for each employer. Eligible employees would make a claim against the state benefit account (as opposed to the employer or the employer’s insurance provider) and benefits would be paid by the state.

Benefits would be available to employees who are unable to perform their work due to one of the following reasons:

  • A serious health condition of the employee or their family member
  • Safety leave
  • To provide family care
  • Bonding leave
  • Pregnancy or recovery from pregnancy
  • A qualifying emergency arising from military service

Maximum benefits will be calculated by applying a formula to an employee’s average work week and weekly wage during the base period with the highest number of wages. Benefits will be paid weekly. In a single benefit year, employees are eligible to receive up to 12 weeks of the Paid Family and Medical Leave benefit. Applications for benefits are submitted to DEED, not to the employer.

The proposed statute does not apply to independent contractors unless they apply to be covered and outlines its own definition of an independent contractor.

The bill discusses the requirement that an employee submit certification for certain types of leave. Leave can be intermittent. No benefits are paid for the portion of any week in which the employee receives vacation pay, sick pay, paid time off, workers compensation benefits or disability insurance benefits (paid in whole or in part by the employer).

An employer can apply to DEED for use of a private plan that provides paid family or paid medical benefits. Plans must meet the state requirements and are subject to approval by DEED.

Employer premium rates in the current proposal, beginning January 1, 2024, would be as follows:

  • For employers participating in both family and medical benefit programs – 0.6%
  • For an employer participating in only the medical benefit program and with an approved private plan for the family benefit program – 0.486%
  • For an employer participating in only the family benefit program with an approved private plan for the medical benefit program – 0.486%

Account premiums would be paid quarterly on taxable wages paid to employees. Beginning January 1, 2026, the Commissioner of DEED is required to adjust the annual premium rates based on the formula determined by DEED.

S.F. 34-H.F. 19, Earned Sick and Safe Time

Although several cities already have enacted sick and safe time ordinances, the legislative proposal would make earned sick and safe time (ESST) a state requirement. This proposal would require all Minnesota employers to provide their employees up to 48 hours of ESST per year. The paid time off would accrue at a rate of 1 hour for every 30 hours worked. The bill defines an employer as any person who has one or more employees and includes both public entities and private businesses.

Employees may use earned ESST to:

  • Care for themselves or a family member’s mental or physical illness, injury or other health condition.
  • Seek preventative medical or health care.
  • Seek relief from domestic abuse, sexual assault or stalking of themselves or a family member, including obtaining services from a victim’s services organization.
  • Obtain psychological counseling, relocation or legal advice/legal action for sexual assault, domestic abuse or stalking.
  • Deal with the closure of employee’s place of business due to weather or public emergency.

An employer must permit an employee to carry over accrued but unused ESST to the following year. At no time can the employee have more than 80 hours of unused ESST, unless allowed by the employer.

An employer can fulfill the obligation to provide ESST with a paid time off (PTO) policy, provided the accrual and use of PTO complies with the ESST statute. Construction employers can meet the ESST requirements by paying prevailing wage.

Employees of a business that has acquired or merged retains any sick and safe time accrued during their employment if they are retained by the new employer.

The Commissioner of Labor and Industry enforces this policy, and it would be effective 180 days after final enactment of the legislation.

Conclusion

This is a summary of only a portion of each bill. Both proposals will undoubtedly change as they progress through committees of both houses. Employers should expect that some form of both proposals will be adopted.

Our government relations team will be tracking the progress of these two proposals. If you would like updates on one or both proposals, please contact Phyllis Karasov.