The Push for Paid Sick, Family and Medical Leave in Minnesota

On March 16, 2016, the Minneapolis Workplace Regulations Partnership Group (WPG) presented its findings and recommendations concerning paid sick time to the Minneapolis City Council’s Committee of the Whole. With many members of the media, business community, community activists and other interested persons in attendance, City Council members listened to the WPG’s report and asked a number of questions about the presented findings and recommendations. The City Council is expected to consider the WPG’s findings and recommendations on March 18, 2016, after which it will decide whether to draft and introduce an ordinance based on WPG’s report and establish a timeline for enactment and implementation of any ordinance that may be passed.

Minneapolis is not alone in considering new paid leave requirements for employees. Saint Paul also is looking into whether it should adopt a paid sick time ordinance, and the Minnesota Legislature is currently considering bills addressing paid family and medical leave and pre-empting local units of government from enacting laws that require employers to provide benefits or other working conditions that differ from what is required under Minnesota law. Although none of these laws have been passed, Minnesota employers should be aware of what is being proposed and be ready for potential changes that could be enacted this year.

Minneapolis Paid Sick Time

The WPG’s presentation of its findings and recommendations to the Minneapolis City Council’s Committee of the Whole (as well as Minneapolis Mayor Betsy Hodges, who attended the presentation) on March 16, 2016, was the culmination of a process that the Minneapolis City Council set in motion on October 28, 2015, when it established the WPG in response to criticism of the Working Families Agenda. The Working Families Agenda, which Mayor Hodges proposed earlier in 2015, included proposals for establishing paid sick and safety time and “fair scheduling” ordinances in the City of Minneapolis. After facing significant negative feedback concerning the Working Families Agenda, particularly with respect to the fair scheduling proposal — which would have mandated Minneapolis employers to post all employees’ schedules, including on-call shifts, 28 days in advance of the shift and pay “predictability pay” for any change of schedule within 28 days — the Minneapolis City Council dropped the fair scheduling initiative and established the WPG to tackle paid sick time.

The WPG, which includes 15 members and four alternates, conducted 11 business meetings from December 11, 2015 through March 14, 2016, as well as hearing from more than 500 people through 14 listening sessions conducted during January 2016. After considering the oral and written comments that were provided, and working through multiple proposals and drafts, the WPG ultimately presented the following key findings and recommendations March 16, 2016:

Findings:

• There are more than 300,000 individuals working in the City of Minneapolis, of whom about 25 percent are Minneapolis residents.
• About 100,000 people working in Minneapolis have no paid sick time.
• About 17 percent of all employees in Minneapolis are working in health care and social assistance fields.
• About 34 percent of all employees in Minneapolis are employed in health care (17 percent), education (11 percent) or food service and accommodation (6 percent); these industries have a greater risk of spreading infection and creating public health concerns, and also include a significant number of low-wage earners.
• Black and Latino Minneapolis residents are employed at much higher rates in one or more of the industries noted above.
• Smaller employers are less likely to offer paid sick leave to their employees.
• Research on cities with paid sick leave ordinances is limited but suggests modest public health improvement and a reduction of employees coming to work sick.
• Many employees of color (particularly in lower-wage, part-time positions) fear that taking time off if sick will put their job at risk or result in other forms of retaliation.
• Many employers already have established generous paid time off policies and fear administrative burdens associated with tracking any paid sick leave required under an ordinance differently than from their current practices.
• Many employers are concerned about the increased business costs associated with complying with any paid sick leave law.

Recommendations:

• Scope: (1) All employers with covered employees working in the City of Minneapolis (regardless of where the employer is located), except employers with one to three covered employees, should not be required to provide the mandated paid sick time; and (2) “covered employee” means any full-time or part-time exempt or non-exempt employee who works in the City of Minneapolis for at least 80 hours in a year for an employer (excluding the owner(s)).

• Usage: (1) Employees may use paid sick time for themselves or members of their extended families and household; (2) employees may use paid sick time for mental and physical illness or treatment, safety leave, and public health emergencies; (3) employees may use paid sick time in increments consistent with current business/payroll practices, as defined by industry standards or existing employer policy; (4) employees begin to earn paid sick time when employment starts and can begin using paid sick time after a provisional period established by the employer that is no longer than 90 days after employment begins; (5) employers may request documentation of illness/absence if there is a clear pattern of abuse; and (6) existing paid time off policies should be considered in compliance with any City ordinance if the policies meet the minimum standards established by the ordinance.

• Accrual Mechanism: (1) One hour per every 30 hours worked; (2) exempt employees are considered to work 40 hours per week unless there is evidence of regularly working less than 40 hours per week; (3) covered employees should be allowed to carry over accrued, unused paid time from one year to another year up to a total of 80 hours; (4) employers should be allowed to establish an annual cap on accrual at 48 hours; and (5) employers are not required to pay out accrued and unused paid sick time upon termination of employment.

• Monitoring, Enforcement and Implementation: (1) the City should dedicate resources to a broad education effort; (2) the City should establish a dedicated point of contact for questions from employers and employees; (3) the City should commit a resource to report to the community on implementation of the ordinance for at least three years; (4) the City should pursue and support a partnership that includes employer, employee and community representatives to monitor and improve the ordinance; (5) the ordinance should state that employees are protecting from retaliation in any form; (6) employers should be required to display a poster (to be created by the City) in English and other languages; (7) employers should be required to provide employees with notice of their paid sick time rights at time of hire; (8) employers should be required to retain records for two full calendar years; (9) the City should establish enforcement processes that include individual relief for aggrieved employees and the imposition of economic penalties/license sanctions for employers who fail to comply with the ordinance; and (10) the City should prohibit city licensees from contracting for services where the licensee has actual knowledge that the contractor has failed to comply with paid sick time requirements.

As noted above, the Minneapolis City Council will be considering the WPG’s findings and recommendations on March 18, 2016, and is expected to take further action. Although it is difficult to predict a precise timeline for what may occur next, the WPG recommended at least a six-month delay between enactment and implementation, with an additional six months for implementation for employers with 24 or fewer covered employees.

Saint Paul Paid Sick Time

On January 26, 2016, Saint Paul Mayor Chris Coleman and the Saint Paul City Council announced plans to extend earned sick and safe time to all city government employees who do not currently receive the benefit by January 1, 2017. Additionally, on February 3, 2016, the Saint Paul City Council unanimously passed a resolution convening a task force to discuss the possibility of extending earned sick and safe time to all employees in Saint Paul. Mayor Coleman appointed the task force members on March 2, 2016, and last week the task force started a series of meetings that are currently scheduled to end on May 17, 2016. The task force ultimately will make recommendations to the Saint Paul Human Rights and Equal Economic Opportunity Commission, which will then make final recommendations to the Saint Paul City Council and Mayor Coleman.

As is the case in Minneapolis, it is difficult to predict a precise timeline for any action the Saint Paul City Council and Mayor Coleman may take, but it is likely that Saint Paul will enact some sort of paid sick time ordinance covering private employers in the relatively near future.

Statewide Paid Sick and Safe Time

In February 2015, legislation was introduced in the Minnesota Senate (Senate File No. 481) and the Minnesota House of Representatives (House File No. 549) that would require all Minnesota employers to provide nearly all employees with paid sick and safe time. The proposed legislation would also expand the coverage of existing Minnesota pregnancy and parenting leave laws and increase the amount of civil penalties that may be imposed on employers for violating such laws. Although neither bill was passed last year, it is possible that these bills (or related bills) will receive further attention in the Senate and House during the 2016 legislative session. 

For a detailed discussion of these bills, see Faegre Baker Daniels’ legal update, “Legislation Introduced That Would Require All Minnesota Employers to Provide Paid Sick Leave; Bill Also Would Expand Scope of Pregnancy & Parenting Leave Laws.”

State Pre-emption Effort

To combat efforts to pass employment laws at the municipal level, several Minnesota legislators joined together in 2015 to author bills in the Senate (Senate File No. 565) and the House (House File No. 1241) that propose precluding local units of government, including cities such as Minneapolis and Saint Paul, from enacting laws that require employers to provide benefits or other working conditions that differ from what is required under Minnesota law. These bills currently address prohibiting local units of government from: (1) requiring private employers to pay a minimum wage that exceeds the state minimum wage, and (2) requiring a private employer to provide a benefit, term of employment, working condition or attendance or leave policy (such as paid sick time) that exceeds the requirements of federal or state laws, rules or regulations.

More than 20 states have enacted similar laws, and last year the House bill gained some traction. It is not clear if or when either of these bills will be given material attention during the 2016 legislative session.

Family and Medical Leave

Last week, Minnesota Senators Sieben, Pappas, Franzen, Bakk and Hawj introduced a bill (Senate File No. 2558) addressing paid family and medical leave benefits. The proposed law would establish a state insurance program for employees that is modeled in many ways after the state’s unemployment insurance program. This program would be administered by the Department of Employment and Economic Development under a new division created for that purpose and would pay employees up to 55 percent to 80 percent of their average weekly wage (depending on income level) for up to 12 weeks per year for pregnancy-related medical conditions, bonding with a newborn, adopted or foster child, for their own serious health condition unrelated to pregnancy or to care for a family member who has a serious health condition. Benefits would be capped at a weekly amount equal to the annual statewide average weekly wage as defined under the state’s unemployment law, which currently is $988.00. 

The program would be funded by wage-based taxes paid by all taxpaying employers under the state’s unemployment insurance program and by all employees employed by such employers. The tax would be on the amount of wages that is subject to the FICA old age tax, which currently is $18,500. The maximum combined tax is 1.5 percent and the minimum tax is 0.1 percent. Taxes will be adjusted annually based on the level of revenue needed to pay benefits and to administer the program.

Currently, only three states — California, New Jersey and Rhode Island — have similar paid family and medical leave laws.

The bill was referred to the State and Local Government Committee, which passed the bill on March 14, 2016, and was referred to the Judiciary Committee (which is holding a hearing on the bill March 17, 2016). A companion House bill (House File No. 2963) has been introduced and referred to the House Job Growth and Energy Affordability Policy and Finance Committee.

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We will continue to closely monitor the paid sick time efforts in Minneapolis and Saint Paul — and the bills being considered by the Minnesota Legislature — and provide further information as the circumstances warrant. If you would like more information about the potential effect of the proposed laws addressed above, contact any member of Faegre Baker Daniels’ labor and employment practice. For further information about these and other developments at the Minnesota Legislature, contact a member of Faegre Baker Daniels’ governmental relations practice.