Minnesota Employment Legislative Update 2024, Part IV: The Aftermath of Minnesota’s Legislative Circus

Quick Hits

• Minnesota Governor Walz signed employment-related legislation that amends laws addressing consumer data privacy, drug and alcohol or cannabis testing, employee misclassification, pay transparency, and restrictive covenants.
• Leave-related provisions address earned sick and safe time, paid family and medical leave, pregnancy accommodations, and parental leave.
• Wage- and pay-related legislation addresses rideshare drivers, pay transparency in job postings, and gratuities employees receive through debit, charge, credit card, or electronic payments.

This article highlights key bills signed by Governor Tim Walz enacting changes to a handful of employment laws, some of which we tracked from the beginning of our 2024 legislative update series.

“Tax” Omnibus Bill

The omnibus bill causing the legislature to descend into chaos was House File (HF) 5247 / Senate File (SF) 5234 (Session Law 127). This so-called “tax bill” contained a mash of other bills from different, and unrelated, industries. With less than two hours until midnight on the final day of the legislative session, the legislative package was amended to include the language of another eight bills:

• transportation, housing, and labor omnibus bill (HF 5242 / SF 5284);
• the health-related occupations bill (HF 4247 / SF 4570);
• higher education bill (HF 4024 / SF 4003);
• amendments to straw firearm purchases and trigger activators (HF 2609 / SF 5153);
• energy and agriculture appropriations omnibus bill (SF 4942 / HF 4975);
• human services appropriations omnibus bill (SF 5335 / HF 5280);
• health and human services appropriations omnibus bill (SF 4699 / HF 4571); and
• paid leave provisions (HF 5363 / SF 5430).

Governor Walz signed HF 5247 / SF 5234 into law on May 24, 2024. The omnibus bill includes several amendments and requirements affecting employers set to take effect on various dates.

Minnesota’s Earned Sick and Safe Time (ESST) Law Modified. Certain amendments to ESST are effective immediately, including:

• Employee Remedies for Noncompliance. Employers may be liable to all employees not provided or not allowed to use ESST for an amount equal to all ESST that should have been provided or could have been used, plus an additional equal amount as liquidated damages. If an employer does not possess records sufficient to determine the ESST an employee should have been provided, the employer is liable to the employee for an amount equal to forty-eight hours of ESST for each year ESST was not provided, plus an additional equal amount as liquidated damages.

• Base Rate. Employers must pay employees at the same “base rate” as the employee earns from employment when using ESST. Previously, the statute required employers to pay employees at the same “hourly rate.”

• Covered Employees.An employee is “any person who is employed by an employer, including temporary and part-time employees, who is anticipated by the employer to perform work for at least 80 hours in a year for that employer in Minnesota.” (Emphasis added.) The bill also eliminates the flight deck and cabin crew member exemption and adds new exemption categories.

• Bereavement Leave.Employees may also use ESST “to make arrangements for or attendfuneral services or a memorial, or address financial or legal matters that arise after the death of a family member.”

• Increment of Time Used. ESST may now be used in the same increment of time for which employees are paid, provided an employer is not required to provide leave in less than fifteen-minute increments nor can the employer require use of ESST in more than four-hour increments. Previously, the statute required employers to allow employees to use ESST in the smallest increment of time tracked by the employer’s payroll system, provided the increment was not more than four hours.

• Documentation. For employees using ESST for more than three consecutive scheduled workdays due to domestic abuse, sexual assault, or stalking of the employee or employee’s family member, an employer must now accept a written statement from the employee indicating that the employee is using or used ESST for that purpose if documentation cannot be obtained in a reasonable time or without added expense.

• Effects on Collective Bargaining Agreements. Employers and labor organizations may agree to waive the documentation requirements of ESST for all paid leave beyond the minimum amount ESST requires through a collective bargaining agreement so long as the waiver explicitly references section 181.9447, subd. 3 (documentation).

Required Statement to Employees. Employers must continue to provide employees, at the end of each pay period, information stating the total number of ESST hours available and the total number of ESST hours used during the pay period, but they now have options as to the manner of providing the information. Employers may choose a reasonable system for providing this information, including but not limited to, listing information on or attached to each earnings statement or an electronic system where employees can access this information. An employer that provides ESST information electronically must provide employee access to an employer-owned computer during an employee’s regular working hours to review and print. This amendment is effective July 1, 2024. Please note local paid sick leave ordinances may still require certain ESST information to appear on an employee’s paystub.

Effects on More Generous Sick and Safe Time Policies. If an employer provides employees paid leave in an amount beyond the minimum ESST requires, and the employer permits employees to use such paid leave for personal illness or injury, then the employer must treat the entire paid leave balance as ESST and cannot otherwise restrict the amount of the paid leave it considers ESST. This requirement does not apply to any short-term or long-term disability or other salary continuation benefits. This amendment is effective January 1, 2025.

Minnesota’s Paid Family and Medical Leave (PFML) Law Modified. Minnesota passed its PFML law in 2023 requiring all Minnesota employers, beginning January 1, 2026, to provide most employees paid family and medical leave for up to twelve weeks with partial wage replacement for a single qualifying event. The program is funded by a payroll tax increase split between employers and employees. However, the legislature amended its PFML law by:

• increasing the payroll tax from 0.7 percent established in 2023 to 0.88 percent;
• adding or amending several definitions, including the terms “authorized representative,” “benefit year,” “financially eligible,” “initial paid week,” and others;
• requiring employers to grant leave in minimum increments of one calendar day;
• prohibiting applicants from applying for payment for benefits associated with intermittent leave until the applicant has eight hours of accumulated leave, unless more than thirty calendar days have lapsed since the initial taking of the leave; and
• providing an appeal process for the commissioner of the Department of Labor and Industry’s decision or determination.

Effective dates for changes and amendments in this law vary; however, payment of benefits and the payroll tax supporting the program take effect on January 1, 2026.

Employee Misclassification and Increased Monetary Penalties. Effective July 1, 2024, Minnesota law will prohibit and penalize misclassification of employees as independent contractors more drastically than before. The amended law also states that individual liability may exist for an owner, partner, principal, member, officer, and agent, on behalf of the person, who knowingly or repeatedly engaged in employee misclassification. The penalty is up to $10,000 for each individual an employer failed to classify, represent, or treat as an employee. The new law also changes the independent contractor test for construction employees.

Minimum Pay for Rideshare Drivers. Effective December 1, 2024, rideshare drivers must be paid at least $1.28 per mile and $0.31 per minute (does not include tips) with at least $5.00 for any single ride. An additional $0.91 per mile is charged for any transportation in a vehicle with wheelchair access, and if the rider or company cancels a ride after the driver has departed to pick up the rider, the rider must pay 80 percent of any cancellation fee. The new law also changes Minnesota’s laws governing transportation network companies. We will report in a future article on the new Transportation Network Company chapter in Minnesota Statutes.

Personnel Record Review and Access; Definition of Employer Changed. Effective July 1, 2024, “employer” means a person with one or more employees. Previously, it included persons with twenty or more employees.

Labor and Industry Policy Omnibus Bill

On May 17, 2024, Governor Walz signed SF 3852 / HF 3947 (Session Law 110) into law, which includes a wide range of new employment-related requirements.

Amendments to Pregnancy Accommodations. Effective August 1, 2024, during any leave provided as an accommodation for an employee under Minn. Stat. § 181.939, employers must maintain coverage under any group insurance policy, group subscriber contract, or healthcare plan for the employee and any dependents, but the employee must continue to pay any employee share of the benefits cost.

Parental Leave. Effective August 1, 2024, Minnesota’s parental leave law, providing employees with up to twelve weeks of unpaid leave, prohibits the length of leave from being reduced by any period of paid or unpaid leave taken for prenatal care medical appointments. Employers must maintain coverage under any group insurance policy, group subscriber contract, or healthcare plan for the employee and any dependents while the employee is on leave, but the employee must continue to pay any employee share of the cost of benefits.

The Drug and Alcohol Testing in the Workplace Act (DATWA) Modified. Effective August 1, 2024, employers may use “oral fluid testing” (defined term) as an alternative to drug and alcohol or cannabis testing for job applicants. Employers may request or require an oral fluid drug, alcohol, or cannabis test and allow an employee or job applicant to request a drug, alcohol, or cannabis test at no cost to the employee or applicant. Employees may request a follow-up test to a positive, inconclusive, or invalid test, but must do so within forty-eight hours of the original test result to remain eligible for the position. DATWA notice and retest procedures apply.

Salary Ranges Required in Job Postings. Effective January 1, 2025, employers with thirty or more employees must disclose the “starting salary range, and a general description of all of the benefits and other compensation, … to be offered to a hired job applicant” in job postings. Employers that do not plan to offer a salary range for a position must list a fixed pay rate.

New Employer Recordkeeping Requirement. Effective August 1, 2024, employee earnings statements for each employee for each pay period must be retained by an employer under existing recordkeeping requirements.

Restrictive Employment Covenants Void in Service Contracts. Effective July 1, 2024, service providers (i.e., staffing agencies and similar entities) can no longer restrict their customers from directly or indirectly soliciting or hiring employees of a service provider. This does not apply to workers providing professional business consulting for computer software development and related services who are seeking employment through a service provider with the knowledge and intention of being considered for a permanent employment position with the customer as their employer at a later date. This section is not retroactive, and only applies to contracts and agreements entered into on or after July 1, 2024.

Wage Deductions for Credit Card Charges Modified. Effective August 1, 2024, gratuities received by an employee through a debit, charge, credit card, or electronic payment must be credited to the pay period in which they are received. If an employee receives a gratuity through a debit, charge, credit card, or electronic payment, the full gratuity amount indicated in the payment must be distributed to the employee no later than the next scheduled pay period.

Minnesota Human Rights Act (MHRA)

Governor Walz signed HF 4109 / SF 4782 into law, which makes several changes to the MHRA effective August 1, 2024. The legislation, now Session Law Chapter 105, expands:

•  the definition of “disability” to include persons with an impairment that is episodic or in remission and would materially limit a major life activity when active;
• the definition of “discriminate” to include harassment generally (rather than only sexual harassment); and
• the definition of “familial status” to include “the condition of one or more minors having legal status or custody with (1) the minor’s parents or the minor’s legal guardian or guardians or (2) the designee of the parent or parents or guardian or guardians with the written permission of the parent or parents or guardian or guardians.” The definition has also been expanded to include “residing with and caring for one or more individuals who lack the ability to meet essential requirements for physical health, safety, or self-care because the individual or individuals are unable to receive and evaluate information or make or communicate decisions.”

Deadline to File Civil Action Enlarged. Session Law Chapter 105 also enlarges the time a person can bring a civil action from forty-five days to ninety days upon receipt of notice that the commissioner dismissed the charge or there is a no probable cause determination, or after receipt of notice that the commissioner has reaffirmed a determination of no probable cause.

Enhanced Penalties and Punitive Damages. The new session law also provides enhanced penalties and punitive damages for private employers found violating sections 363A.08 to 363A.19 (unfair discriminatory practices) and 363A.28, subd. 10 (disparate impact cases). Before this amendment, civil penalties and damages were provided under section 363A.29, subd. 4, which included treble compensatory damages along with possible emotional damages and punitive damages capped at $25,000. The amendments require the court to order treble compensatory damages including emotional damages. More importantly, the court may also order punitive damages which are now essentially unlimited because the $25,000 cap no longer exists for private employers. These damages are in addition of the required civil penalty paid to the state by any employer found to violate 363A.08 to 363A.19 and 363A.28, subd. 10.

Minnesota Consumer Data Privacy Act

Governor Walz signed HF 4757 / SF 4782 (Session Law Chapter 121), which establishes the Minnesota Consumer Data Privacy Act. The act takes effect on July 31, 2025. The act largely tracks the Washington Privacy Act model but with some significant and unique differences. Generally, the act seeks to protect the collection, storage, use, and dissemination of consumer data by creating obligations for businesses who collect and use consumer data. The act creates six “rights” for consumers to exercise over their data. The act does not apply to people acting in a commercial or employment context. Minnesota joins the growing list of states with comprehensive data privacy laws.

Protections for Prospective Jurors’ Employment

Governor Walz signed HF 5216 / SF 5337 into law (Session Law 123), which includes provisions that provide additional protections for employees called to jury service. Effective July 1, 2024, an employer must release an employee from the employee’s regular work schedule, including any shift work, to permit the employee to attend court for prospective jury service. An employer must not require an employee to work an alternative shift on any day the juror must report for jury service. The law does not “prevent an employee from voluntarily requesting to work an alternative work schedule on any day the juror” must report for jury service, “as long as the employer does not encourage, prompt, or ask for the employee to make such a request.”

Ogletree Deakins’ Minneapolis office will continue to monitor developments and will publish updates on the Minnesota blog as additional information becomes available.

Editor’s Note: This article was updated on July 10, 2024, to correct the effective dates of certain provisions, as well as add minor clarifications to the text.

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