Minnesota’s Lawmakers and Governor Have Been Busy— New Employment Laws on the Horizon

The end of May 2023 found Minnesota’s Governor Tim Walz with a busy pen, signing into law several pieces of legislation that will impact Minnesota employers. The most sweeping is the Omnibus Jobs Bill, which contains the following major provisions:

1. Requires employers statewide to provide paid sick and safe leave—effective January 1, 2024
2. Bans noncompete clauses in employment contracts—effective July 1, 2023
3. Provides additional protections for nursing mothers, lactating employees, and pregnancy accommodation—effective July 1, 2023
4. Broadens parental leave—effective July 1, 2023
5. Modifies wage disclosure protection laws—effective July 1, 2023
6. Prohibits “captive audience” meetings—effective August 1, 2023
7. Provides wage protection for construction workers—effective August 1, 2023

Governor Walz also signed a bill legalizing recreational marijuana in the state, meaning the use, possession, and home-growing of marijuana will become legal on August 1, 2023. A corresponding change to the state’s Drug and Alcohol Testing the Workplace Act (DATWA) changes how employers conduct drug tests. Finally, another new law providing paid family and medical leave was enacted, effective in 2026.

1. Earned Sick and Safe Leave (ESSL)—Effective January 1, 2024

This law brings sick and safe leave requirements similar to local ordinances passed in Minneapolis, St. Paul, Duluth, and Bloomington to all Minnesota employers with at least one employee. However, the law does not preempt those cities’ ordinances. Beginning January 1, 2024, employees are entitled to 1 hour of leave for every 30 hours worked, to a maximum of 48 hours per year. Employees may carry over hours up to a cap of 80 hours on an accrued basis. Employers have the option of front-loading 80 hours of sick and safe leave at the beginning of each applicable benefit year.

Existing employer policies, such as PTO, may be sufficient to meet the law’s requirements, provided the accrual and usage requirements are met.

Unused ESSL is not payable to the employee upon termination.

Eligible Employee

ESSL covers employees who work for an employer for at least 80 hours per year in Minnesota. It includes temporary and part-time workers but excludes independent contractors and individuals employed by an air carrier as a flight deck or cabin crew member, provided certain conditions are met.

Use of Leave

• An employee may use accrued earned sick and safe time to care for their own or family members’:
  • Mental or physical illness, injury, or other health condition.
  • Need for medical diagnosis, care, or treatment of a mental or physical illness, injury, or health condition.
  • Need for preventive medical or health care.
• Absence due to domestic abuse, sexual assault, or stalking of the employee or employee’s family member, provided the absence is to:
  • Seek medical attention related to physical or psychological injury or disability caused by domestic abuse, sexual assault, or stalking.
  • Obtain services from a victim services organization.
  • Obtain psychological or other counseling.
  • Seek relocation or take steps to secure an existing home due to domestic abuse, sexual assault, or stalking.
  • 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.
• Closure of the employee’s place of business due to weather or when the employee is needed to care for a family member whose school or place of care has been closed due to weather or other public emergency.
• The employee’s inability to work or telework because the employee is:
  • (i) 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
  • (ii) 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; and 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.
• When it has been determined by the health authorities having jurisdiction or by a health care professional that the presence of the employee or family member of the employee in the community would jeopardize the health of others because of the exposure of the employee or family member of the employee to a communicable disease, whether or not the employee or family member has actually contracted the communicable disease.

Definition of Family Member

ESSL broadly defines “family member” beyond the usual spouse, children, and parents, specifically including nieces and nephews, aunts and uncles, children-in-law, siblings-in-law, and any “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.”

Other Requirements

ESSL also requires employers to:

• Include the number of earned sick and safe time hours accrued and available for use and the total number of earned sick and safe time hours used on earnings statements.
• Provide employees with a notice (by January 1, 2024) informing them about ESSL. This notice must be provided in English and the employee’s primary language if that is not English.
• Include a sick and safe time notice in the employee handbook if the employer has an employee handbook.

The Minnesota Department of Labor and Industry will prepare a uniform employee notice that employers can use and will make it available in English and the five most common languages spoken in Minnesota.

Next Steps

• Employers should review existing policies, then develop or revise policies to ensure they are compliant with the new laws.
• Create a mechanism to track the use of ESSL.
• Update earnings statements to reflect proper reporting of ESSL.

Minnesota Department of Labor and Industry page on this topic

2. Ban on Noncompete Clauses in Employment Agreements— Effective July 1, 2023

The new law prohibits any noncompete agreements with employees or contractors without regard to income, with a few limited exceptions:

• In connection with the sale of a business.
• In anticipation of the dissolution of a business.

Next Steps

Employers should consult with legal counsel to determine if any employment agreement will need modification to comply with this new law.

3. Additional Protections for Nursing Mothers and Pregnant Employees—Effective July 1, 2023

• Amends the current law by removing the 12-month time limit for expressing milk.
• Break time for expressing milk may run concurrently with other breaks, but they are not required to do so.
• Removes the language that allowed employers to deny the break time for expressing milk if it would “unduly disrupt operations.”
• Expands the requirement allowing pregnant employees more frequent restroom, food, and water breaks by including language allowing longer breaks for these purposes.
• Other accommodations, in addition to the existing requirements related to seating and lifting restrictions for pregnant workers, now include a temporary leave of absence, modified work schedules, or job assignments, as well as longer breaks.
• Added notice provisions requiring to inform employees of the related rights at the time of hire and upon any inquiry about these requirements or a request for parental leave.

4. Extends Parental Leave—Effective July 1, 2023

• Revises the definition of a covered employer from employers with 21 or more employees to employers with one or more employees.
• Removes any length-of-service requirement, allowing coverage on the first day of employment.
• No change to the 12-week leave entitlement.

Next Steps

Employers previously not covered will need to develop a parental leave policy. Currently covered employers should update policies to no longer reflect a length of service requirement.

5. Wage Disclosure Protection Laws Modified—Effective July 1, 2023

Amends the current Wage Disclosure Protection law by prohibiting employers from asking about or requiring an applicant or any other source to disclose the pay history for an applicant to determine wages and benefits.

Next Steps

Train those involved in the hiring process so that they can no longer inquire about an applicant’s wage history—update policies as necessary.

6. Prohibition on “Captive Audience” Meetings—Effective August 1, 2023

This statute bans employers from holding mandatory employee (“Captive Audience”) meetings for the purpose of communicating the employer’s opinion or religious or political matters. Employers are prohibited from threatening or taking any adverse action against employees who refuse to attend these meetings or receive information. Based on the experience of other states that have passed similar laws, it is likely that this statute will face court challenges.

7. Wage Protection for Construction Workers—Effective August 1, 2023

The section of the law requires contractors entering into a construction contract to assume liability for unpaid wages, benefits, and liquidated damages owed to a claimant by a subcontractor.

The Omnibus Jobs Bill also creates a state fund for in-state employers with 500+ employees. The program will reimburse eligible employers for expenses associated with providing reasonable accommodation to a maximum of $30,000 per grant. This section of the bill will expire in 2025 or when the funds are exhausted, whichever is earlier.

Legalization of Recreational Cannabis and the Impact on Minnesota’s Drug and Alcohol Testing in the Workplace Act (DATWA)

With the legalization of recreational cannabis, employers will need to be aware of required changes to their drug testing practices. Under the new requirements for DATWA, cannabis is excluded as a “drug,” generally removing THC from pre-employment or random testing. The law allows testing for THC under limited circumstances, such as safety-sensitive positions, or as required by state or federal law (e.g., DOT testing). The law does not prohibit employers from disciplining or discharging employees for cannabis use, impairment, or sale or transfer that occurs while the employee is working on the employer’s premises, or operating an employer’s vehicle, equipment, or machinery.

Next Steps

Employers will need to update their policies and drug testing practices to comply with these new regulations. A legal review of any policy is recommended.

Coming in 2026

The state’s Paid Family and Medical Leave, effective January 1, 2026, will provide paid time off when a serious health condition prevents employees from working to care for a family member or a new child, for certain military-related events, or for certain personal safety reasons.

Under this law, employers with one or more employees will be required to provide up to 12 weeks of partial wage replacement for a serious medical condition and up to 12 weeks related to pregnancy, bonding, safety, family care, or military leave. Leave is capped at 20 weeks per year.

Paid leave will be funded through a 0.7 percent payroll tax, with costs shared between the employer and employee.

Sources: Minnesota Omnibus Jobs Bill; Faegre Drinker Insight, May 23, 2023; Littler Insight, May 18, 2023.