UPDATE: On May 24, 2023, Governor Walz signed this bill into law.

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The Minnesota legislature has passed a sweeping Omnibus Jobs Bill that Governor Tim Walz has said he will sign. This legislation will significantly impact Minnesota employers in a variety of ways.  Among other things, it will create state-wide paid sick and safe time obligations, render non-compete agreements in Minnesota unenforceable, create additional paystub requirements, prevent mandatory employer-sponsored meetings, and increase protections for pregnant workers.  Some provisions in the Omnibus Jobs Bill are effective as early as July 1, 2023, with earned sick and safe time provisions effective July 1, 2024.  Employers must take heed and establish a plan for compliance with this broad legislation.

Say Hello to State-Wide Earned Sick and Safe Leave

Perhaps the most significant obligations set forth in the Omnibus Jobs Bill are those requiring employers to provide paid sick and safe time to all Minnesota employees, including temporary and seasonal employees, with very limited exceptions. The Earned Sick and Safe Leave (ESSL) provisions in the state law are similar to those in the Minneapolis, St. Paul, and Bloomington ordinances, but the state law does not preempt such ordinances.  Employees will be entitled to accrue one hour of ESSL for every 30 hours worked, up to a total of 48 hours per year, and employees will be able to carry over ESSL, which may be capped at 80 hours.  In the alternative, employees may front-load 80 hours of ESSL. ESSL may be used for time off due to the employee’s own medical concerns or to care for a family member (the definition of which is broad), to address certain needs associated with domestic violence for the employee or a family member, in connection with school, work, and care facility closures due to weather or public emergencies, and related to communicable diseases. 

Employers must provide notice regarding ESSL to employees and must include certain information in their handbooks if they have one.  The law prohibits retaliation and its provisions will affect attendance points systems.  Additionally, information about accrued sick and safe time must be included on earned income statements to employees.  The Commissioner of the Department of Labor and Industry will enforce the statute and may impose fines.  The law also creates a private right of action.  As a result, employers should review their policies and handbooks to ensure they comply with the statute and are prepared to provide ESSL to their employees.

Say Goodbye to Non-Competes

The Omnibus Jobs Bill also prohibits all non-compete agreements with an employee or independent contractor working for the employer, regardless of the person’s income. This major change to Minnesota’s employment landscape would be subject to only two limited exceptions. Non-competition agreements will be valid and enforceable if they restrict similar business in a reasonable geographical area for a reasonable period of time and are agreed to: (1) during the sale of a business; or (2) in anticipation of the dissolution of a business. Notably, the bill’s definition of a “covenant not to compete” does not include nondisclosure, confidentiality, trade secret, or non-solicitation agreements.  Courts may award attorneys’ fees to individuals required to enforce their rights under this law. The ban is set to take effect on July 1, 2023, but is not retroactive in effect, meaning that any agreements entered into between employers and employees before the effective date will remain enforceable in Minnesota.

To Meet or Not to Meet: Is there a Choice?

The Omnibus Bill also includes a provision heavily promoted by organized labor, banning employers from holding mandatory employer-sponsored “captive audience” meetings.  The provision prohibits employers from threatening to take or taking adverse action against employees for failing to attend mandatory meetings or refusing to receive communications on matters relating to unionization, political, or religious topics.  As a means of enforcement, the provision includes civil remedies, including reinstatement, back pay, establishment of benefits to which the employee would have been entitled (including seniority), injunctive relief, any other relief needed to make the employee whole, and attorneys’ fees.  The provision is modeled after a Connecticut statute that passed last year.  Just like the Connecticut statute, this provision faces significant constitutional challenges on two fronts.  First, the provision likely violates the Supremacy Clause of the U.S. Constitution, as the federal government already regulates the propriety of employer-sponsored meetings through the National Labor Relations Act.  Second, the provision likely violates the First Amendment of the U.S. Constitution through its efforts to regulate and limit employer speech.  As a preview of what may come, a challenge to the Connecticut captive audience ban is pending in federal court.  It is also notable that Wisconsin previously passed a similar law that was challenged in court and ultimately struck down as part of a legal settlement. It is likely that this Minnesota provision will face a similar challenge.

Bumping Up Protections for Nursing Mothers and Pregnancy Accommodations

The Omnibus Jobs Bill also broadens protections for lactating employees and increases pregnancy accommodation rights. These changes in the law will become effective July 1, 2023.

Specifically, the following changes were made for lactating employees:

• Minnesota law previously limited the need to provide breaks to express milk to the first 12 months following the birth of a child. The Omnibus Jobs Bill removes the 12-month time period, such that the need to provide reasonable breaks to express milk will no longer be time-bound;
• The Omnibus Jobs Bill also removes provisions that previously permitted employers to deny breaks if doing so would unduly disrupt operations. Employers may no longer deny reasonable break time for employees to express milk; and
• The lactation space provided must also now be a “clean, private, and secure” room or other location close to the work area. While not a change in the law, it is worth remembering that this space must not be a bathroom or toilet stall, and it must also include access to an electrical outlet.

The Omnibus Jobs Bill also includes updates to Minnesota’s pregnancy accommodation provisions, including a need to provide the following modifications as a reasonable accommodation:

• More frequent or longer restroom, food, and water breaks (note: employers may not claim undue hardship with respect to requests of this nature);
• Temporary leaves of absence;
• Modification in work schedule or job assignments;
• More frequent or longer break periods; and
• The law has now been expanded to cover employers with one or more employees (previously, the limit was 15 or more employees).

The Omnibus Jobs Bill expands reinstatement rights to allow any employee who has been on a leave under section 181.939 (the section that provides protections for nursing mothers, lactating employees, and pregnancy accommodations) to return to their same position or one of comparable duties.

Notice provisions have also been added, requiring employers to inform employees of their rights under the law at the time of hire as well as when an employee makes an inquiry about or requests parental leave. Such notice must be provided in English and any primary language as identified by the employee. For employers that maintain a handbook, the notice must be included in it. The state will make sample text available.

Broadening Parental Leave

Minnesota’s unpaid parental leave law was also amended. While the law previously required employers of 21 or more employees to provide for certain parental leave, the law has been amended to apply to employers with one or more employees. The bill also removes limitations that previously existed limiting benefits to employees with a minimum length of service and hours worked. Effectively, this means that all Minnesota employers will be required to provide 12 weeks of parental leave to all employees immediately upon the commencement of employment.

While parental leave under this law is unpaid, there is currently a paid family leave bill pending in the legislature that is also expected to pass this session.  Stay tuned for further updates on this significant legislation.   

Creation of a Reasonable Accommodation Fund

The Omnibus Jobs Bill provides for a state reasonable accommodation fund for certain employers domiciled and having their principal place of business in Minnesota with 500+ employees. The grant program will reimburse eligible employers for the cost of expenses incurred in providing reasonable accommodations for individuals with disabilities who are applicants or employees. Reimbursement awards will be capped at $30,000 per eligible employer in a fiscal year, with additional caps for one-time reasonable accommodation expenses. The fund is created as part of an account in the special revenue fund.  The section will expire in 2025, or when money appropriated for its purpose expires, whichever is later.

Conclusion

These critical changes to Minnesota law will require action by all Minnesota employers.  In the near term, Minnesota employers can:

• Review, and in many cases amend, their policies relating to PTO and sick time policies, and enact and provide notice of an ESSL policy;
• Ensure that a mechanism is put in place to ensure proper tracking of ESSL accrual and use;
• Review earnings statements to ensure proper ESSL reporting on all Minnesota pay statements;
• Review of employment agreements and contracts that might have non-competition provisions;
• Review and amend as needed pregnancy lactation accommodation policies and ensure proper notice is provided to employees of the same; and
• Consider the impact of the mandatory employer-sponsored meetings provisions on any meetings being organized.

The penalties for non-compliance can be significant, and as employers navigate the myriad issues in this legislation, experienced employment law counsel can provide invaluable insight and assistance to help mitigate the risk of fines and enforcement action.

In addition to the above, a paid family leave bill continues to make its way through the Minnesota legislature, which will result in even more sweeping obligations for Minnesota employers.  We are continuing to monitor the progress of that bill and will provide additional updates as warranted.