Minneapolis, Minn. (January 25, 2024) - The 2023 Minnesota legislative session brought about numerous changes to employment law that will have wide-ranging and immediate impacts on all Minnesota businesses. From non-compete agreements, to paid leave and pregnancy accommodations, many aspects of Minnesota employment law have been altered. Summarized below are the major developments and dates organizations should keep in mind to stay in compliance with the changes.
Non-Compete Ban (Minn. Stat. 181.988)
Minn. Stat. §181.988 includes a complete ban on non-compete agreements without regard for position or compensation level. This new law affects both employees and independent contractors. It does not apply retroactively and any non-compete agreements entered into prior to July 1, 2023 are still valid.
The exception to this law is when the agreement is made: (1) during the sale of a business where the agreement prohibits the seller from temporarily operating a similar business within a reasonable geographic area and for a reasonable length of time, or (2) in anticipation of the dissolution of a business in which the partners, members or shareholders agree to refrain from carrying on a similar business within the reasonable geographic area where the business has been transacted. As defined by the law, a "covenant not to compete" does not include nondisclosure, non-solicitation, and confidentiality agreements.
The new law prohibits Minnesota employers from requiring employees to agree to, as a condition of employment, adjudicate outside of Minnesota a claim arising in Minnesota or deprive an employee of substantive protection of Minnesota law when a controversy arises in Minnesota.
State-Wide Earned Sick and Safe Leave (Minn. Stats. §§181.9445-9448 and 177.50)
Starting January 1, 2024, employers with one or more employees will be subject to statewide paid sick and safe leave. Employees are entitled to accrue one hour of sick and safe leave for every 30 hours worked. Employees are entitled to a maximum of 48 hours per year — unless the employer agrees to a higher amount — and can carry over accrued hours, up to 80 total hours annually. Employers have the option of front-loading up to 80 hours of sick and safe leave at the beginning of each benefit year. Employers must include the amount of sick and safe time leave in the employee's earned income statements. This law does not preempt the applicable laws of a municipality, but rather serves as a baseline for employers.
The definition of "family member" was amended to be more broad, thereby including nieces and nephews, aunts and uncles, children in law, siblings in law, any individual related by blood or whose close association with the employee is equivalent of a family relationship, and up to one individual annually designated by the employee. Employees are also able to use sick and safe leave to address domestic abuse, sexual assault or stalking of the employee or a family member.
Sick and safe leave time may be used when the employee's or employee's family member's place of business is closed due to the weather or they need to care for a family member whose school or place of business has been closed due to bad weather. It can also be used for the employee's inability to work or telework because the employee is: (1) prohibited from working by the employer due to health concerns related to a public emergency, or (2) seeking or awaiting results of a diagnostic test for a communicable disease related to a public emergency and the employee has been exposed to such a disease. The employee may also use this time when health authorities determine that the presence of the employee or family member in the community would jeopardize the health of others because of the exposure to a communicable disease. If an employee uses more than three consecutive days of sick and safe time, the employer can request reasonable documentation to ensure it is covered.
Nursing Mothers, Lactating Employees, and Pregnancy Accommodations (Minn. Stat. §§181.939)
The various amendments to the pregnancy accommodations go into effect on July 1, 2023 and now apply to employers with one or more employees, but do not include independent contractors. Minn. Stat. §181.939 removes the 12-month limitation on the employer requirement to provide break times for employees needing to express breast milk. In addition to removing the limitation, the breaks provided for above can run concurrently with other breaks, but are not required to do so. The law clarifies that a "clean, private, and secure" space is provided for employees to express milk in privacy. Lastly, an employer can no longer deny an employee a break to express milk if the break would "unduly disrupt operations".
The amended law also includes more protections for pregnancy accommodations. The law has been broadened with regard to accommodations not requiring a health care provider's certification to include more and longer restroom, food and water breaks. Additionally, there is a provision for reasonable accommodations that an employer should consider that include a temporary leave of absence, modification of work schedules and job assignments, and providing longer breaks, in addition to the already included lifting-related accommodations.
Paid Family and Medical Leave (House File -2 268B.01-.29) and Unpaid Parental Leave (Minn. Stat. §181.940 to 181.944)
As part of changes to Minnesota employment law, the Governor signed House Bill 2, the Paid Family and Medical Leave Act (PFML Act). This Act and its associated payroll tax will not go into effect until January 1, 2026. The amendments require all employers to provide most employees paid family and medical leave for up to 12 weeks with partial wage replacement related to a serious health condition.
The amount an employee can get in weekly benefits is linked to each individual employee's income level, but no more than the state's average weekly wage. For example, the state's average weekly wage in 2023 is $1,287. In order to fund this program, a 0.7% payroll tax will be paid by employers and employees. If an employer provides private benefits that meet or exceed state requirements, they can apply to opt out of the state plan.
Regarding unpaid leave, an employee no longer must be employed with the employer for at least one year or to work at least half-time. All employees will be immediately eligible for up to 12 weeks of unpaid leave upon hire. The amendments to these sections went into effect on July 1, 2023.
Wage Protection for Construction Workers (Minn. Stat. §181.165)
The law creates a section targeted at wage protections for construction workers. Contractors are now required to assume liability for any unpaid wages, fringe benefits, and liquidated damages owed to a claimant by a subcontractor at any tier when a construction contract is formed. This assumption of liability cannot be contracted around and any attempt to will be deemed void. When liability for unpaid cost arises, contractors may pursue subcontractors for actual and liquated damages from any subcontractor that caused the damages.
The law also requires subcontractors to provide payroll records within 15 days when they are requested by a contractor. When payroll records are requested, they must include details of the contract, the unions involved, and contact information for the subcontractor. The law took effect August 1, 2023.
Recreational Cannabis Bill and Amendments to Minnesota's Drug and Alcohol Testing in the Workplace Act (DATWA)(Minn. Stat. §§181.950-.957)
With the move to legalize recreational cannabis in Minnesota, the legislature amended the Drug and Alcohol Testing in the Workplace Act (DATWA) and the changes to DATWA went into effect on July 1, 2023. The law has been amended to generally exclude cannabis from the definition of "drug" and create a separate category for "cannabis testing," which provides more limited scenarios where testing and discipline will be permitted. One such group who is subject to testing is defined as "safety-sensitive positions," which is defined broadly to include "a job, including supervisory or management position, in which an impairment caused by drug, alcohol, or cannabis usage would threaten the health or safety of any person".
The amendments to DATWA prohibit employers for performing pre-employment screens for cannabis and refusing to hire an applicant simply because they tested positive for the presence of cannabis. The amendments do not prohibit employers from taking action against an employment for cannabis use, impairment, sale or transfer that takes place while the employee is working, on the employer's premises, or while operating the employer's vehicles or equipment.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
