Minnesota Employment Law Changes

By Mary L. Senkbeil

Minnesota made sweeping changes to employment laws in 2023 requiring employers to update their policies, practices and handbooks. Some are effective as early as July 2023, while others will not take effect until January 2025. In chronological order by effective date, here’s what’s new:

Effective July 2023

Non-Compete Agreements are Void and Unenforceable (July 1, 2023)

Minnesota joined California, North Dakota and Oklahoma in banning non-competes for most employees and independent contractors. Effective July 1, 2023, any agreement that restricts a Minnesota employee or independent contractor from working for another employer for a specified period of time, in a specified geographical area or in a capacity similar to the work they are performing for an employer is void and unenforceable. Except for franchisees (discussed below) the law does not apply retroactively (noncompete agreements signed prior to July 1, 2023 remain enforceable as long as they are reasonable). The new law does not apply: (a) to non-competes agreed upon and applicable to a seller of a business during the sale of the business; or (b) when agreed upon in anticipation of the dissolution of a business by the partners, members and shareholders of the business.

Nondisclosure agreements, agreements designed to protect trade secrets or confidential information, non-solicitation agreements and agreements restricting the ability to use client or contact lists or solicit customers of an employer remain valid and enforceable.

The law also prohibits choice of law and venue provisions in restrictive covenant contracts for Minnesota employees. That means employers cannot require any employee primarily residing and working in Minnesota to adjudicate restrictive covenant contracts with Minnesota employees in another state or deprive them of the substantive protections of Minnesota law.

The only retroactive provision of the new law relates to franchisee employers. Franchise agreements which restrict franchisees from hiring employees of the franchisor or another franchisee of the same franchisor are unenforceable even if signed prior to July 1, 2023. If any current contract violates this section, the franchisee must notify their employees of this law. By June 30, 2024, franchisors must amend existing franchise agreements to remove any restrictive employment provision that violates this law or sign a memorandum of understanding with each franchisee stating any contract provisions that violate this law are void and unenforceable and notifying the franchisees of their rights and obligations.

The new law can be found at Minn. Stat. § 181.988 (ban on noncompete agreements) and Minn. Stat. § 181.981 (franchisee agreements).

Additional Protections for Nursing Mothers and Pregnancy Accommodations (July 1, 2023)

Nursing Mothers: Employees who need to express milk gained additional protections. The law currently provides protection for nursing mothers to express milk following the first 12 months of the child’s birth. The new law removes that time limitation. Further, employers are now required to provide additional break times even if it would unduly disrupt their operations. Employers now have no excuse and must provide the additional break time. Employers cannot discharge, discipline, penalize, interfere with, threaten, restrain, coerce or otherwise retaliate or discriminate against employees for asserting their rights or remedies under this law.

Pregnancy Accommodations: In addition to more frequent breaks, employers must provide (and cannot claim undue hardship for) longer breaks as an accommodation for pregnancy. The new law makes clear that temporary leaves of absence and modifications to the employee’s work schedule or job assignments are forms of accommodations available to pregnant employees. These accommodations must be made even if an employer has only one employee.

Notice Required: Employers must inform their employees of their nursing mother and pregnancy accommodation rights upon hire and when they inquire about or request parental leave. This information must be provided in English and the employee’s primary language. Thankfully, the labor commissioner must make available to employers the text required by the notice in English and the five most common languages spoken in Minnesota. Employers who have employee handbooks must include these rights in the handbook.

Bloomington Earned Sick and Safe Leave Ordinance (July 1, 2023)

Employers with employees working in Bloomington take note! Bloomington’s Earned Sick and Safe Leave (ESSL) Ordinance requires all private employers and the city of Bloomington with employees working 80 or more hours per year in Bloomington to provide earned sick and safe leave. Employers with fewer than 5 employees are required to provide unpaid ESSL, employers with more than 5 employees must provide paid ESSL.

Accrual: ESSL accrues at a rate of 1 hour for every 30 hours worked, with a cap of 48 hours accrual per year and a maximum of 80 hours. Employers can skip accrual if they frontload employees’ entitlement to ESSL by giving them 48 hours each year (and paying out any unused ESSL at the end of the year) or giving them 80 hours each year (and not paying out unused ESSL).

Usage: Employees can begin using ESSL following their first 90 days of employment. Employers must allow use in increments consistent with current practices – i.e., if employers allow PTO use in increments of 1 hour, they must allow ESSL use in increments of 1 hour. However, employers cannot require use in increments of more than 4 hours.

Reasons for use: ESSL may be used:

• For the employee’s own mental or physical illness, injury, health condition, need for medical diagnosis, care, including prenatal care, treatment or need for preventative care (including dentist and eye appointments);
• to care for a family member with a mental or physical illness, injury or health condition who needs medical diagnosis, care, including prenatal care, treatment or need for preventative care;
• due to domestic abuse, sexual assault or stalking of the employee or a family member when necessary to: (a) seek medical attention or other counseling services related to physical or psychological injury or disability; (b) obtain services from a victim services organization; (c) seek relocation; or (d) seek legal advice or take 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;
• due to the closure of the employee’s place of business by order of a public official to limit exposure to an infectious agent, biological toxin, hazardous material or other public health emergency; or
• to accommodate the employee’s need to care for a family member whose school or place of care has either been closed by a public official to limit exposure to an infectious agent, biological toxin, hazardous material or other public health emergency or due to inclement weather, loss of power, heating water or other unexpected cause.

Definition of “Family Member”: The ordinance defines “family member” as “an employee’s child, step-child, foster child, adult child, spouse, sibling, parent, step-parent, mother-in-law, father-in-law, grandchild, grandparent, guardian, ward, or members of the employee’s household.” Bloomington Ord. 2022-31, Art. I § 23.05.

Notice. Employers can request notice for foreseeable circumstances (e.g. medical appointments, court dates). More than 7 days advance notice cannot be required. Employers can deny the request for sick leave pay if the need was foreseeable and no notice was given. If the circumstances are not foreseeable, the employee must give notice as soon as practicable. Employers cannot request the employee find their own replacement due to an absence under the ordinance.

Employers can require medical documentation for the need for medical leave only if the leave was for 3 or more consecutive days and the employer provides health insurance benefits to the employee.

No Retaliation. Employers cannot retaliate against employees for requesting or using ESSL, informing any person about an employer’s alleged violation of the ordinance or making a complaint or filing an action to enforce a right to ESSL. If an employee exercises their rights to ESSL and, within 90 days of doing so, the employer materially changes the terms and conditions of employment, including terminating, constructively discharging, reducing wages or benefits or making other changes that affect the employee’s future career prospects, there is a presumption of retaliation. This presumption can be rebutted by presenting clear and convincing evidence the action was taken for a legitimate, non-retaliatory purpose.

Employer Records. In addition to maintaining accurate records of leave, employers must notify their employees of their available and used ESSL leave on employee paystubs.

Reinstatement of Leave. If an employee accrues ESSL under the Bloomington Ordinance, and transfers to a city without ESSL, the company must keep the ESSL leave available to the employee for 3 years. If the employee’s work move backs to Bloomington within 3 years, their Bloomington ESSL must be reinstated.

Employees who are separated and reinstated within 120 days must be provided their previously accrued ESSL that was not paid out upon termination.

Effective August 2023

Changes to the Minnesota Human Rights Act (August 1, 2023)

More Protection for Sexual Orientation and Gender Identity. In February, the legislature passed the Crown Act, including in the definition of “race” a person’s hair style. Shortly thereafter, the legislature changed the definition of “sexual orientation” under the MHRA and added protection for “gender identity”. Sexual orientation relates to people’s attractions to others and, under the MHRA, now means “to whom someone is, or is perceived of as being, emotionally, physically, or sexually attracted to, based on sex or gender identity.” The new law further states: “[a] person may be attracted to men, women, both, neither, or to people who are genderqueer, androgynous or have other gender identities.” Minn. Stat. § 363A.03, subd. 44. Gender Identity – a person’s own sense of gender – is separately defined as “a person’s inherent sense of being a man, woman, both, or neither. A person’s gender identity may or may not correspond to their assigned sex at birth or to their primary or secondary sex characteristics. A person’s gender identity is not necessarily visible to others.” Minn. Stat. § 363A.03, subd. 50. The MHRA now forbids discrimination based on sexual orientation and gender identity, along with race, color, creed, religion, national origin, sex, marital status, status with regard to public assistance, familial status, membership or activity in a local commission, disability or age. Minnesota employers should updated their EEO policies to reflect this change.

Claims survive death. Another notable change affecting the MHRA came with a change to the Survival of Claims statute (Minn. Stat. § 573.01 and Minn. Stat. § 573.02). Previously, if a decedent already had a cause of action for an injury before their death, and the injury did not contribute their death, the trustee appointed for the estate could maintain an action for “special damages.” The act was amended to allow the trustee to maintain an action for all damages arising out of the injury for which the decedent might have maintained an action if they lived and specifically states such causes of action survive the death of the decedent.

Changes to Minnesota’s Drug Testing Laws (August 1, 2023)

Because Minnesota decriminalized cannabis under state law, it changed the drug testing laws to conform. Federal employees and employers with federal contracts requiring testing for cannabis will be unaffected by the changes to the drug testing law. Other employers who require employees and job applicants to undergo drug testing may have to revise their policies in light of changes to Minnesota’s Drug and Alcohol Testing in the Workplace Act (DATWA).

Job Applicant Drug Testing is Prohibited for Many Jobs

The new law, effective August 1, 2023, allows applicant drug testing for all drugs, including cannabis, for employees working:

• In safety sensitive positions (where usage would threaten the health or safety of any person);
• As a peace officer or firefighter;
• In positions requiring face-to-face care, training, education, supervision, counseling, consultation or medical assistance to children, vulnerable adults, or patients receiving healthcare services;
• In positions requiring a commercial driver’s license; or
• In other positions where federal law requires drug testing.

Applicant drug testing for cannabis is not allowed for any other position.

New Limitations on Discipline for Cannabis Policy Violations

Employers can (and most should) have policies against the use and sale of cannabis (as well as alcohol and other drugs) at the work premises or while operating an employer’s equipment. The new law, however, limits when employers can take again against employees for policy violations related specifically to cannabis. Employers can discipline, discharge or take other adverse personnel action against employees for cannabis use, possession, impairment, sale, or transfer while they are working, when they are on the employer’s premises, or when they are operating the employer’s vehicle, machinery, or equipment if they have written work rules prohibiting such conduct, and those policies, along with their rights under DATWA if testing is anticipated or done, are communicated to employees:

Employers can also take action if they suspect that the employee does not possess “that clearness of intellect and control of self that the employee otherwise would have” due to consuming cannabis. Further, employers can take adverse action for cannabis use, sale or possession if authorized or required to under state or federal law, or if a failure to do so would cause an employer to lose a monetary or licensing-related benefit under federal law. Finally, within the constraints of confirmatory retests and second chances provided by DATWA, adverse action can be taken if cannabis testing verifies the presence of cannabis following a confirmatory test.

Employers who prohibit alcohol and drugs on their property should update their policies if they want to continue to prohibit cannabis. Employers who drug test employees should review and update their policies to ensure they conform to the new law.

Changes to Minnesota’s Lawful Activities Statute (August 1, 2023)

Since 1992, employers have been prohibited from refusing to hire a job applicant or disciplining or discharging an employee for their off-duty / off premises use of lawful consumable products – including food, alcoholic or nonalcoholic beverages or tobacco. The new law adds cannabis, lower potency hemp edibles and hemp derived consumer products to the list of lawful consumable products.

Effective January 1, 2024

Pay History Inquiries Prohibited under the MHRA (January 1, 2024)

Beginning January 2024, employers cannot request information about a job applicant’s pay history. Job applicants may voluntarily disclose that history and employers can use that information only to support a wage or salary higher than initially offered. Employers can also engage in discussions with job applicants about the applicant’s expectations or requests with respect to wages, salary, benefits or other compensation without violating the law.

Job applicants whose pay is a matter of public record under federal or state law are not covered under this law.

Minnesota Earned Sick and Safe Leave (January 1, 2024)

Effective January 1, 2024, employees who work at least 80 hours in the state of Minnesota are now entitled to accrue one hour of sick and safe leave for every 30 hours worked. This state law does not preempt city ordinances (e.g. Minneapolis, St. Paul, Bloomington and Duluth) and each is slightly different so employers with employees working in those cities will need to be cognizant of the differences and comply with both the state law and city ordinance. Remember, whatever benefits the employee the most is the law employers must follow.

Accrual: ESSL accrues at a rate of 1 hour for every 30 hours worked, with a cap of 48 hours accrual per year and a maximum of 80 hours. Employers can skip accrual if they frontload employees’ entitlement to ESSL by giving them 48 hours each year (and paying out any unused ESSL at the end of the year) or giving them 80 hours each year (and not paying out unused ESSL).

Usage: Employees can begin using ESSL as soon as it accrues, following 90 days of employment. Employers must allow use in increments consistent with current practices – i.e., if employers allow PTO use in increments of 1 hour, they must allow ESSL use in increments of 1 hour. However, employers cannot require use in increments of more than 4 hours.

Reasons for use: ESSL may be used:

• For the employee’s own mental or physical illness, injury, health condition, need for medical diagnosis, care, or treatment or need for preventative medical or health care;
• to care for a family member with a mental or physical illness, injury or health condition who needs medical diagnosis, care, including prenatal care, treatment or need for preventative medical or health care;
• due to domestic abuse, sexual assault or stalking of the employee or a family member when necessary to: (a) seek medical attention related to physical or psychological injury or disability caused by the domestic abuse, sexual assault or stalking; (b) obtain services from a victim services organization; (c) seek psychological or other counseling; (d) seek relocation or take steps to secure an existing home; or (e) seek legal advice or take 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;
• due to the closure of the employee’s place of business due to weather or other public emergency or an employee’s need to care for a family member whose school or place of care has been closed due to weather or other public emergency;
• in the case of communicable diseases, the employee is prohibited from working either by their employer, health authorities having jurisdiction or if a healthcare official prohibits the employee from working or is awaiting test results related to a communicable disease; or
• when it has been determined by health authorities having jurisdiction or by a health care professional that the employee’s family member would jeopardize the health of others because the employee or their family member has been exposed to a communicable disease.

Definition of “Family Member” is Very Broad: In addition to the individuals commonly thought of as family members (spouse, children, parents, grandparents and grandchildren), the ESSL definition of “family member” includes aunts and uncles, nieces and nephews, and any other individual related by blood or whose close association with the employee is the equivalent of a family relationship and up to one individual annually designated by the employee.

Notice. Employers can request notice for foreseeable circumstances (e.g. medical appointments, court dates). More than 7 days advance notice cannot be required. Employers who require notice must have a written policy containing reasonable procedures for employees to provide notice. Employers can deny the request for ESSL if the need was foreseeable and no notice was given, provided they have provided the written policy to the employee. If the circumstances are not foreseeable, the employee must give notice as soon as practicable. Employers cannot request the employee find their own replacement due to an absence under the ordinance.

Documentation: Employers can require reasonable documentation for the need for the leave only if the leave was for 3 or more consecutive days. If the employee is using ESSL for their own health or to care for a family, reasonable documentation may include a signed statement by a healthcare professional. However, if the employee or the employee’s family member did not receive services from a healthcare professional, or could not obtain documentation from the healthcare professional in a reasonable time or without added expense, the employee’s statement that they are using ESSL for those purposes must suffice. If the employee is using ESSL for safety purposes, the employer must accept a court record, documentation signed by a volunteer or employee of a victim’s services organization, an attorney, a police officer or antiviolence counselor. Employers cannot require disclosure of details of domestic violence, sexual assault or stalking, or details of an employee’s or an employee’s family member’s medical condition. Moreover, written statements may be written in the employee’s first language. That means if the doctor’s note is in French, and French is the employee’s first language, it must be acceptable to the employer, even if the employer cannot understand what is written.

No Retaliation. Employers cannot retaliate against employees for requesting or using ESSL, informing any person about an employers alleged violation of the ordinance or making a complaint or filing an action to enforce a right to ESSL.

Notice and Posting: Employers must give notice to all employees that they are entitled to earn sick and safe time, the amount of sick and safe time available, the accrual year and a copy of the written policy for providing notice of using ESSL. This notice must be in English and the employee’s primary language. If the employer has a handbook, notice of the employee’s rights and remedies under the ESSL must be included.

Employer Records. In addition to maintaining accurate records of leave, employers must notify their employees of their leave available and used on employee paystubs.

Confidentiality and Nondisclosure. All records submitted or obtained and requests for leave received by the employer for ESSL use must be treated as confidential and may only be disclosed if requested or consented to by the employee, where ordered by a court or administrative agency or when otherwise required by federal or state law.

Reinstatement of Leave. Employees who are separated and reinstated within 180 days must be provided their previously accrued ESSL that was not paid out upon termination.

Next Steps: Employers with PTO policies should review them to ensure they meet the requirements of the new law. Employers who do not have PTO policies should start planning for and adopting them. Employers should also work with their IT Department and/or payroll provider to ensure proper accruals will be made and represented on employee’s pay stubs. Employers with handbooks should revise them to include a policy addressing ESSL and required leave request notices.

Getting Ready for the Minnesota Paid Family and Medical Leave Act (January 1, 2026)

The Minnesota Paid Family and Medical Leave Act, (PFML) a state-administered mandatory paid family and medical benefit insurance program, becomes effective January 1, 2026. The statute will be implemented in stages in order to build the necessary administrative infrastructure. The program will be administered by the Family and Medical Benefit Insurance Division, a new division of the Department of Employment and Economic Development (DEED) and will provide up to 20 weeks of paid leave per employee per year. Employees apply through DEED and DEED determines the employee’s eligibility for benefits and weekly and maximum benefit amounts available.

All employers in Minnesota are covered by the Act, regardless of their size and number of employees in the state.

Who is eligible for PFML?

Most Minnesota employees are eligible for PFML. Only independent contractors, federal employees, self-employed individuals and those employed in the hospitality industry for no more than 150 days during any consecutive 52-week period are excluded. Also excluded are those employed exclusively by a private plan employer that has been approved by DEED.

Unless the leave is for bonding with a new child, or the leave is intermittent, the leave requested must be based on a single event of at least 7 consecutive calendar days (unless related to pregnancy or a chronic health condition).

Paying for PFML

PFML premiums must be paid quarterly on the taxable wages paid to each employee during the period. The premium is 0.7% and employers can choose to pay the entire premium or pay 50% of the premium and deduct the other 50% from the employee’s pay and deposit it into their benefit account. These amounts must be reflected on the employee’s pay stub.

Small businesses (those with 30 employees or less and less than $3M in gross annual receipts) can apply for assistance grants from the department to defray the costs. Grants are considered yearly and on a first come, first served basis until funds run out. Small businesses may also qualify for a wage exclusion, reducing the amount of premiums paid.

Private Employer Plans.

Employers may satisfy their obligations under the law by substituting a private plan (approved by DEED) that provides paid family, paid medical, or paid family and medical benefits. The plan must offer, at a minimum, the same rights, protections and benefits provided to employees under the PFML.

Reasons for Use

Leave may be taken for an employee’s own serious health condition, including pregnancy, leave to care a family member with a serious health condition, parental leave to bond with a new child, safety leave for certain needs when workers or their loved ones experience sexual or domestic violence, and leave to deal with the impact of a loved one’s military deployment.

Bonding leave may be used before the placement or adoption of a child, including where the employee is required to attend counseling sessions, appear in court, consult with the attorney or doctors representing the birth parent, submit to a physical examination and travel to another country to complete an adoption.

Definition of Family Member: The definition of “family member” is not as broad as that under the ESSL, but includes all children (foster, adult, stepchild, legal ward), parents, grandparents, spouse or domestic partner, parents of spouses, spouses of children and “an individual who has a relationship with the applicant that creates an expectation and reliance that the applicant care for the individual.”

Minimum and Maximum Benefit Periods
The minimum period to receive benefits is 1 work day in a work week. The maximum for leave availability is broken into two categories: (1) medical leave, including for pregnancy or recovery from child birth; and (2) all other types of leave covered by the PFML. Workers can receive 12 weeks of leave in each of the two categories per benefit year. If a worker needs leave from both categories, the total leave is limited to 20 weeks per benefit year.

Employees may also take intermittent leave and employers can limit that leave to 480 hours (60 days) in a 12 month period. If employers do limit intermittent leave, employees can take any remaining leave (to the extent they have it available) continuously.

Notice of Leave to Employer

If the need for leave is foreseeable, employees must provide their employer at least 30 days’ advance notice. If the leave is not foreseeable, notice must be given as soon as practicable. Employers can require compliance with their usual and customary notice and procedural requirements for requesting leave, including call out policies and procedures.

No Retaliation
As with other statutes providing employee rights, employers are prohibited from retaliating against employees seeking leave benefits, including discharging, disciplining, penalizing, interfering with, threatening, restraining, coercing or otherwise discriminate against them.

Wage Reporting (beginning July 2024)

The commissioner will set up and must maintain a premium account for each employer. Employers must begin submitting quarterly wage detail reports electronically in a format prescribed by the commissioner beginning July 1, 2024 and begin paying into the account, quarterly, starting January 1, 2026.

Notice to Employees

Beginning November 1, 2025, employers are required to post a notice of all benefits available under the statute in a conspicuous place. This notice will be prepared by the DEED commissioner. If a language other than English is spoken by five or more employees in the workplace, the notice must be posted in that language as well, if such notice is available through DEED. Starting November 1, 2025, employers must also provide written notice to each employee within 30 days of their employment or 30 days before premium collection begins, whichever is later.

Accessing Benefits. Like unemployment insurance benefits, employees will need to apply to the state for PFML benefits. The state will gather the required information, process the claim and pay benefits out of the state insurance fund.

Relationship to Other Leaves

Employers may require leave taken under PFML to run concurrently with leave taken for the same purpose. Employees who are fully compensated by the use other paid leave are ineligible for PFML benefits but receive the same protections provided by PFML (i.e. no retaliation, job protection). Additionally, employees can choose PFML and use other benefits (such as ESSL) to supplement their paid leave. Employers cannot, however, require employees to use their other paid benefits.

Next steps: More regulations will follow. Before enactment, employers should decide if they want to allocate any cost of the program to employees and determine if they want to institute a private plan approved by DEED.