On January 19, 2023, St. Paul, Minnesota Mayor Melvin Carter signed into law amendments to the Earned Sick and Safe Time (ESST) Ordinance, which will take effect 30 days later, on February 18, 2023. Four days later, on January 23, Bloomington enacted amendments to its forthcoming ESST Ordinance that will, like the law itself, first take effect on July 1, 2023. Below we highlight some of the more notable changes.
The amendments codify St. Paul's approach concerning employees who work in St. Paul for employers that do not have brick and mortar establishments in the city, expand the reach of the ordinance's anti-retaliation provisions, and solidify procedures that favor employees who exercise protected rights under the ordinance. Other amendments are minor and simply change the language in the ordinance without changing legal requirements.
Ordinance Applies to Work "in" St. Paul. The amendments are intended to better align the St. Paul ordinance with the Minneapolis Sick and Safe Time Ordinance, which was subject to litigation over whether it applied to employers that do not have brick and mortar work sites in Minneapolis but that employ people who perform work in that city. After a successful challenge at the trial court level, the Minnesota Supreme Court determined that the Minneapolis ordinance could apply to employees who worked in Minneapolis for employers with no physical site in that city. This issue became all the more critical as a result of the COVID-19 pandemic, which led to a significant increase in the number of employees who work from home some or all of the time. By regulation, St. Paul has been applying the same standard as Minneapolis, but the amendments clarify that this is, indeed, the law in St. Paul as well—employees accrue leave on hours worked in St. Paul, and employers need to allow use of leave only when the employee is scheduled to work in St. Paul, but employers may permit employees to use such leave for hours worked outside of St. Paul.
Notice to Employees of Employer's Year. Previously, St. Paul regulations defined a "reporting year" as "any consecutive 12-month period of time determined by an employer, and includes weekends and holidays." The amendments will now define "year" as "A regular and consecutive 12-month period, either calendar or fiscal, as determined by an employer and clearly communicated to each employee." Accordingly, employers must notify employees what "year" they use for compliance purposes. The language of the amendments could be read to require use of a calendar or fiscal year (rather than, for example, a year that starts with the employee's start date). Future FAQs or rules from the Department of Human Rights & Equal Economic Opportunity (HREEO) might clarify this issue.
Complying via Accrual or Frontloading Setup. The amendments add requirements governing how employers choose to comply with the ordinance. Under the ordinance, employers must either allow employees to accrue 1 hour of leave for every 30 hours worked, up to an annual accrual cap of 48 hours and overall accrual cap of 80 hours or must frontload leave at the beginning of each year; 48 hours during the first year of employment and 80 hours in each subsequent year. Under the amendments, if the employer wishes to change the method of compliance, it must do so at the beginning of the year and cannot change the method again until the next year. If the employer moves from frontloading to accrual, the employer must then carry over any unused portion of the frontloaded leave.
Carryover for Newly Hired Employees. The amendments have adjusted the language regarding carryover of unused leave from one year to the next to now read that employers must permit "an employee who has worked within the geographic boundaries of the city for more than one year to carry over accrued but unused sick and safe time into the following year" (emphasis added). For employers utilizing a non-anniversary year, the amendments have now created some confusion about what happens at the end of the employee's first partial year of employment. For example, consider an employee who is hired on March 1, 2023 by an employer using a calendar year basis accrual system. The employee accrues 48 hours of paid sick leave in 2023, and uses only 12 hours. As of December 31, 2023, the employee has worked in the city of St. Paul for only 10 months. What happens to the employee's accrued but unused 36-hour leave balance? The amendments suggest that the unused time would be forfeited and the employee would start 2024 with a zero balance. This would be a notable departure from the pre-existing requirements under the ordinance. We expect additional guidance from HREEO once it updates the Earned Sick and Safe Time Rules to conform with the amendments.
Expanded Anti-Retaliation Protections. The ordinance already prohibited retaliation against employees for using earned sick and safe time, and the amendments establish the standard of proof for retaliation claims. A person can show a violation when the person's exercise of protected rights is a motivating factor for an adverse job action. The employer may still prevail if it can prove that it would have taken the adverse action absent the protected activity. Per the amendments, employees are protected even if they mistakenly, but in good faith, allege a violation. Additionally, the amendments create a rebuttable presumption of retaliation if an employee experiences an adverse action within 90 days after exercising rights under the ordinance. For seasonal employees, the rebuttable presumption exists in the event of failure to rehire at the next opportunity for work in the same position, even if more than 90 days elapse between the protected activity and the date the individual is not rehired. The employer would then have to show by clear and convincing evidence that it took the adverse action for a permissible purpose. This is a higher standard for the employer to meet than exists under many other employment retaliation laws, including Title VII and the Minnesota Human Rights Act.
Enforcement. The amendments expand the statute of limitations from one to two years. The amendments provide additional details regarding how and when violations will be investigated. This includes adding specifying a 30-day period for employers to respond to charges. Failure to respond may result in the employer being barred from submitting evidence in its defense.
The amendments also contain procedural details. The Director of the Department of Human Rights & Equal Economic Opportunity must issue a reason for a finding of no violation and provide the complainant the opportunity to seek reconsideration. Employees may then file suit in district court within 45 days after a finding of no violation or a reconsideration in favor of the employer.
In the event of a finding of a violation, the Director must issue findings containing information specified in the Amendments. The employer is entitled to a hearing, where the city must prove the violation by the preponderance of evidence. The city may accept, reject, or modify the hearing examiner's findings, based only upon the record. The costs of the hearing may be levied on the employer.
The ordinance will not take effect until July 1, 2023, but the city is already making minor changes.
Accrual. Like the other three local ESST ordinances in Minnesota, Bloomington's requires accrual in whole-hour units rather than on a pro rata basis. With an accrual rate of 1 leave hour for every 30 hours worked, if a new employee works 20 hours in their first week of employment, they do not accrue any leave during that specific week. Instead, they will not accrue their first hour of leave until they work a full 30 hours.
As amended, the "whole-hour" approach to accrual does not change, but the ordinance now provides that employers may choose to have employees accrue leave on a pro-rata basis.
New Paystub Requirement. Originally, the ordinance provided that if an employee made a request, an employer would need to provide information about the employee's current accrued and used leave amounts. An employer had to provide this information in writing or electronically, and the ordinance laid out options, including listing the information on paystubs or having the information accessible to employees online. As amended, the ordinance removes the "upon request" language and replaces it with a mandate that accrued and used leave amounts appear on employees' paystubs.
Penalties & Damages. When first enacted, the ordinance included fines of "up to" $1,000 if employers committed a second or third violation against the same employee. The amendments now include a fine schedule that details what the fine will be for specific violations, along with fines for first-time violations of the anti-interference, -discrimination, and -retaliation provisions.
These amendments – and especially the clarification regarding employee coverage for employers without physical worksites in St. Paul – create a good reason for employers to revisit their paid time off or sick time policies to ensure they comply with the ordinance. Employers with employees that work in Saint Paul should monitor HREEO's website for revised FAQs or regulations that clarify the ordinance as amended. Similarly, those with employees that work in Bloomington should monitor Bloomington's earned sick and safe leave webpage, where it says rules and FAQs will be available during the first quarter of 2023. Employers should also note that, even if they do not have employees in Bloomington, Duluth, Minneapolis, or St. Paul, that the Minnesota legislature is once again considering passage of a statewide paid sick and safe leave law this session.
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