Knowledge Center / Blog
Minnesota Legislative Update: What You Need to Know
Minnesota’s 2023 legislative session was a busy one! Five of the many bills that were passed will impact employers in the state. Employers will need to review and update their current employment practices and policies to comply with these changes.
Ban on Non-Competes
Effective July 1, 2023, Minnesota employers are prohibited from entering into nearly all non-compete agreements with employees or independent contractors. This law is not retroactive, and only applies to agreements with non-compete provisions signed on or after July 1st, 2023. Any non-compete language and agreements that were in place prior to July 1, 2023 remain valid. The ban is effective for all employees and independent contractors regardless of their job position or income level. Exceptions to this ban include some non-competes related to the sale or dissolution of a business entity.
Legalization of Cannabis
Effective August 1, 2023, individuals in Minnesota 21 years of age or older are legally allowed to use Cannabis recreationally. This new law protects employees from being fired, disciplined, or denied from a job for using Cannabis outside of working hours and off company premises. Employers are restricted from testing for Cannabis in drug screens for employees and applicants. Exceptions to this testing include:
- Commercial drivers
- Safety sensitive positions
- Any other positions that federal law requires testing of Cannabis
- If an employee appears to be impaired while on the job
- If an employee is involved in a workplace accident
Earned Sick and Safe Leave (ESSL)
Effective January 1, 2024, employers in Minnesota will be required to offer employees Earned Sick and Safe Leave (ESSL). Independent contractors and certain employees in the airline industry are not covered. ESSL is accrued at 1 hour for every 30 hours worked for any employees working 80 hours or more each year. Employees can earn a maximum of 48 hours each year, though employers are able to offer employees more if they wish. ESSL hours can be carried over from year to year, but employers can cap the number of hours accrued at 80 hours. ESSL can be used for a number of reasons, including:
- For the employee’s own sickness or illness
- For the employee to take care of a family member who is sick or ill
- For absence due to domestic abuse, sexual assault, or stalking of the employee or the employee’s family member
- The closure of a business due to weather or a public health emergency, or to care for a family member whose place of business or school has closed for the same reasons
- The employee is unable to work or telework because the employer prohibits them from going to work because of health concerns related to the transmittal of a communicable disease or illness
- Because health authorities or a health care professional has deemed the presence of the employee or family member in the community would jeopardize the health of others.
Employers are required to maintain an employee’s insurance coverage while the employee is taking ESSL. When an employee returns from ESSL, employers are required to continue their employment at the same pay.
The Minnesota Secure Choice Retirement Program is set to begin operating in January 2025, but the program may be implemented in several phases over a two-year period. Employers with 5 or more employees will be required to participate if they do not sponsor their own retirement plan. Covered employers will be responsible for enrolling their employees in the program, transmitting contributions, and providing information about the program to employees. Employees are also granted several options, including:
- Contributing either pre-tax or after-tax
- Opting out of the program completely
- Changing their contribution rate
- Directing the investments of their account
- After separation of employment, opting to leave their account with the state for distribution at a later date or taking a distribution in the form of a lump sum or other options to be determined by the board
Paid Family and Medical Leave
Effective January 1, 2026, Minnesota employees will be provided with Paid Family and Medical Leave. Employees will get up to 12 weeks of Medical Leave or Family Leave per qualifying event, with benefits capped at 20 weeks of combined Medical and Family Leave if you have more than one qualifying event in the same year. Qualifying events include a serious health condition that prevents employees from working (Medical Leave), when employees need time to care for a family member or a new child (Family Leave), for certain military related events, or for certain personal safety issues.
The state-run leave program is funded through premiums in the amount of 0.7% of employee taxable wages. Employers may pass up to half of this cost (0.35%) on to their employees through a wage deduction.
Minnesota’s Department of Employment and Economic Development highlights a couple of key dates for employers to be aware of:
- Starting in mid-2024, most Minnesota employers will be required to submit a wage detail report, which will detail the quarterly wages received and hours worked for each employee.
- Starting in late 2025, employers must notify their employees about the program. The Paid Family and Medical Leave program will provide language for this notification.
- Starting in January 2026, employers will also be required to submit any premium payments due.
This information does not constitute legal advice.